VAT charged by Payroll Service Companies?

[vallianteffort]

I have a concern about a payroll company I have approached about out sourcing my payroll services. I am not VAT registered yet they have invoiced me £300 vat on a £1500 payroll. I initailly thought I'd only pay a £3 charge per person per pay run? Can they charge VAT on the total payroll or should it be on the services they provide?

 

[kulture]

I would have thought that the VAT was on the service charge and not the payroll payment. I would change company.

 

[vallianteffort]

That's what I thought I was agreeing to? I can't find any clear info about VAT on payroll

 

[Newchodge]

Do they make the salary payments or just calculate the payroll?

 

[Newchodge]

If a payroll company is VAt registered it must charge Vat on the charges it makes for its services.

 

[vallianteffort]

they calculate the payroll and provide payslips but I make the payments

 

[Newchodge]

and did they charge you £1500 to do that? If not, they have made a mistake so talk to them about it. although an organisation that deals with figures should not make that kind of mistake.

Also you might find their rates a bit high.

 

[kulture]

Yes, it has to charge VAT on its service charge. £300 sounds like an error. Especially as you actually pay the payroll and all they should be charging you for is calculating and producting the payslips.
I would definately talk to them and get them to correct their error. I would also take my business elsewhere. This kind of error is unacceptable.

 

[vallianteffort]

I will speak to them but I've got a feeling they are a scam. I haven't paid them yet so thanks for your help.

 

[Newchodge]

I will speak to them but I've got a feeling they are a scam. I haven't paid them yet so thanks for your help.

Let us know how it goes

 

[Mr D]

If paying say £5 per person for payroll then they'd charge you £1 VAT per person.
There's no reason for them to charge you VAT on payments you are making to staff.

 

[The Online Accountants]

You should be paying PAYE tax and National Insurance plus any pension payments - on your employees' pay figures.

If the payroll company is VAT registered they should charge VAT on their invoices, to you, for doing the work.

I would go back to them and question how they have arrived at the VAT charge.

 

[JEREMY HAWKE]

It is against the law I guess !