Self Employed, Self Assessment Tax/Paypal/Fiverr

[Saf123]

Hi Guys

I am self employed and I have a few questions

1. Is the Paypal fee I pay when receiving money from a client an allowable expense when filling out a self assessment.
2. If a customer places an order with me for £100 through Fiverr, do I put my sales down as £100 or £80 which is the actual amount I receive after Fiverr take their commission


Thank You

 

[Newchodge]

1. Yes
2. Sale £100, expenses £20

 

[Saf123]

1. Yes
2. Sale £100, expenses £20

thank you!

 

[TheCyclingProgrammer]

2. Sale £100, expenses £20

Probably, but may depend on the contractual relationship between OP and Fiverr. If it's considered a direct sale from OP to customer and Fiverr take commission then I would agree - Fiverr should probably be invoicing OP for this commission if that is the case.

However it could be contracted in such a way that Fiverr are effectively reselling OP's service with a percentage markup on top. In that case there is effectively two transactions - Fiverr are making the sale to the end customer of £100 and OP is making a sale of their services to Fiverr of £80.

I had a quick look at Fiverr's TOS and based purely on their statement that it is the seller's obligation to deal with any VAT would suggest that the £20 is a commission for services and that the sale is directly between OP and the customer, but IANAL or an accountant - the terms also make no reference to commission either.

https://www.fiverr.com/terms_of_service

Not very conclusive unfortunately. It would be worth speaking to Fiverr because you need to report your turnover accurately (especially if you're anywhere near the VAT threshold).

 

[TheCyclingProgrammer]

I just remembered that I actually purchased something from Fiverr on behalf of my business a few years ago so I logged into my account to look at the invoice generated.

The invoice was made out to MyCo and was in the name of "Fiverr International Ltd", based in Israel.

Therefore, as far as I'm concerned, the transaction was between MyCo and Fiverr, not MyCo and the person who actually performed the gig.

IMO this means that Fiverr are actually reselling your services with markup on top and therefore you should be recording a sale of £80, not £100. Any withdrawal fees charged by Fiverr and any PayPal fees deducted from this £80 would be expenses.

 

[Newchodge]

MO this means that Fiverr are actually reselling your services with markup on top and therefore you should be recording a sale of £80, not £100. Any withdrawal fees charged by Fiverr and any PayPal fees deducted from this £80 would be expenses.

So the invoice whould be made out to Fiverr?

 

[TheCyclingProgrammer]

So the invoice whould be made out to Fiverr?

Only if OP needs to produce an invoice, I imagine Fiverr do not require one. But hypothetically yes, that's the way I see it. OP has sold their service to Fiverr for £80 and Fiverr have re-sold it to the buyer for £100 (they also charge an admin fee too).

Fiverr then adds this £80 to the seller's account. They seem to optionally charge additional admin fees to sellers depending on the method of withdrawal and there may be PayPal fees or exchange rate gains/losses to account for.

 

[Newchodge]

So if the end client has an issue with the product, they sue Fiverr?

 

[TheCyclingProgrammer]

So if the end client has an issue with the product, they sue Fiverr?

Buyers are encouraged to work with the "seller" to resolve issues but if you want to obtain a refund or raise an issue/dispute further you need to go through Fiverr.

https://buyers.fiverr.com/en/article/order-cancellation

Fiverr appear to be effectively acting as an agent.