Evening, If we sell something for £100.00, customer pays by paypal, our fee from Paypal is £2.00 (e.g) So we create the invoice in our accounting software (xero) - How do we handle the paypal fee of £2.00? Do we send the customer an invoice showing: 1 x Product @ £100.00 1 x Paypal Fee @ -£2.00 ? So should we be creating the invoice for £100.00 with £16.66 of vat? Or should be creating an invoice for £98.00 with £16.33 of vat and show a separate line for a £2.00 paypal fee which is vat exempt? Just I understand the paypal fee's are vat exempt - so I would rather be paying the VAT on the £98.00 that we actually get, rather than the £100.00 as VAT registered business. Also, the paypal fee, can we account that as a bank fee, or should we account for it under a different name? Any help would be appreciated.