Complicated VAT Question - being charged VAT on international postage by 3rd party fulfilment centre

[Danny Whitaker-Leach]

Hi,

I have reached out to HMRC but they at the moment are taking a while to come back to me and I think its because its such a complicated scenario so any help (even directing HMRC) would be appreciated.

I sell on Amazon / ebay etc globally and instead of self fulfilling I have recently started using a 3rd party fulfilment centre to pick, pack and post my orders.

The invoice they provides breaks this down into pick fees, storage fees, postage fees, packaging fees etc.
I know from dealing with it myself before I moved to fulfilment centre that Royal Mail don't charge VAT on packages outside of EU (for example US / Canada).
However, the fulfilment centre are charging me VAT on these packages claiming that they are providing a service and so it falls under the scope of VAT.
On these packages they charge me a pick and pack fee, storage fees, packaging fees etc which all get charged the VAT, but I am arguing that because they are separating out the postage element that it shouldn't be vattable because it isn't from Royal Mail.

Does anyone have any experience with this or any ideas who is correct?

Again I have called HMRC and they weren't able to give me a straight answer there and then but said they would come back to me which as of yet they haven't so any help in the meantime is appreciated.

Thanks

Danny

 

[Mr D]

The place of supply of the service is where?

 

[Danny Whitaker-Leach]

Sorry they are based in the UK also

Danny

 

[STDFR33]

I don’t understand why you think that the service shouldn’t be VATable?

 

[Danny Whitaker-Leach]

Few reasons really
They don’t add a margin onto the postage charge from Royal Mail as far as I am aware
The service they are providing is the pick and pack not the postage

 

[KAC]

Have you read this leaflet?

 

[Danny Whitaker-Leach]

Yes and that directs you to 744B because it’s transport of goods outside of UK/EU

I know for a fact if doing it myself there is no VAT charge on the postage from Royal Mail

the confusion lies within is the postage a service they are doing when they are not charging for it and that is where the complication is coming from

 

[Mr D]

Yes and that directs you to 744B because it’s transport of goods outside of UK/EU

I know for a fact if doing it myself there is no VAT charge on the postage from Royal Mail

the confusion lies within is the postage a service they are doing when they are not charging for it and that is where the complication is coming from

Do it yourself and you provide the service.
Someone else providing the service for you isn't the same.

Presumably of course they investigated what they need to charge VAT on before they started operating their services subject to VAT.

 

[lesvatadvice]

The fulfilment centre are not selling Royal Mail postage. They are selling you a fulfilment service which is entirely vatable. You cannot split down their service into vatable and non-vatable elements.