VAT question

[Kelly A]

Hi all,

I have been tying myself in knots with this one. Whilst going through my listings on eBay I realised I am paying VAT on eBay fee's twice (I think) so please can you help me work this out.

This is an example of how I came to this idea.
First eBay now charge VAT on fee's every month but I have been including this in my price already.

I pay £9 for an item and sell it for £11.26.
VAT is included in purchase price so I claim that back so I can forget the first amount of VAT on that £9.

That leaves £2.26 so I divide the £2.26 by 6 and that gives the amount of VAT i pay = 0.38p.
Then at the end of the month eBay charge me VAT on the fee's for this sale £1.08 selling fee's divide 6 = 0.20p VAT charged by eBay.
But I have already paid VAT in the £2.26 because I divided it by 6 and eBay's selling fee of £1.18 was out of the £2.26.

0.38p VAT on that £2.26 margin
+ 0.20p at the end of the month for the £1.18 eBay selling fee's

Did I already pay the 0.20p VAT on the eBay selling fee's when I divided the £2.26 by 6 in the 0.38p ?
Because £2.26 margin
£1.18 eBay selling fee + 0.20 Vat + 0.70p profit + 0.18p VAT = £2.26 margin
This makes up the 0.38p I pay HMRC. Then eBay charge me the 0.20p on top of this at the end of the month (which I claim back) but have I already paid it out of the £2.26?

It was hard to explain so I hope you can understand my example.

Thank you in advance for any help you can give to clear this one up for me.

[robbob]

hmmmm - thats about as confused as i have ever seen anyone be - im somewhat confused but lets give it a go.

ok back to step one

I pay £9 for an item and sell it for £11.26.

when you buy item are you paying £7.50 + vat 20% 1.50 vat = £9.00 paid to uk vat registered supplier?
i will presume this is the case

Ok you also have ebay fees lets call this 1.08 including vat - say 90p net vat 18p and 1.08 cash paid across to ebay

when you are selling its simple 11.26 cash received - 9.38 net sale and 1.88 vat = 11.26 sales price

Your vat return will be as follows - gross vat net

output 11.26 - 1.88 - 9.38

expense 1 - 9.00 - 1.50 - 7.50
expense 2 - 1.08 - .18 - 0.90
expense total 10.08 -1.68 8.40

vat payable to hmrc 1.88-1.68 = £0.20

Your profit is the net of vat income less the net of vat expenses = 9.38-8.40 = £0.98 this amount will be subject to tax - lets hope you dont have any paypal fees !!!


Looking at cashflow

11.26 sales income less 10.08 expenses = 1.18 cash before you pay vat - vat paid 0.20 leaves you with the 0.98 taxable profit

[Kelly A]

Thank you for your help Robbob I appreciate it,

I have confused myself big time with this but if i'm right it will mean a substantial saving.

Your are right in that I am paying from the last example £1.50 from the £9 purchase price.

Here is an example hopefully it will be more clear from this.

Purchase price £9.99
Sell price £13.28
eBay category fee's 9%
PayPal 2.4% + 20p

VAT already paid on purchase of £9.99 is £1.67.

eBay Final value fee £1.20
Paypal 32p + 20p add on fee
Profit £1.01
Vat of remaining £3.29 0.55p

I worked out from these fee's of the final value fee of £1.20 >+ 24p is VAT
profit of £1.01 >+ 20p is VAT
paypal of 52p >+ 10p is VAT

This makes up the 55p VAT I have paid from the £3.29.

But because eBay will charge me 20% VAT on the 9% final value fee of £1.20 which is the 24p from above in my monthly invoice which i will claim back my question is can I deduct the 24p from the sales price as it will be charged in my invoice by eBay and then claimed back as in input by me please?