One part of my business is shipping on behalf of artists. The sales are all through their own online stores with the order details being fowarded to my shipping software. The prints are shipped in bulk to me but are at no time my property. After packing the prints for an order I ship them via UPS / DHL / Royal Mail. When I bill the customer I bill them for the exact shipping costs that I am passing on to them. I then add packaging cost and a fee for my services. These are all detailed separately on my invoices. The majority of shipping costs are zero rated as they're overseas so I can't claim any input VAT. All of the artists are not VAT registered so they won't be able to claim any VAT back on my invoices. If I have to charge VAT on the shipping costs its going to be a lose/lose situation all round.
I understand that I need to charge VAT on the packaging costs and my fees. Where the shipping charges come in though I feel like they should be treated as a disbursement. They tick all the boxes for being a disbursement as the original sale is the artists responsibility not my own. All contact between artist and the customer is between them. Ownership of the product passes between the artist and the customer.
Main points from HMRC re: Disbursements and my thoughts below.
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- You paid the supplier on your customer’s behalf and acted as the agent of your customer
your customer received, used or had the benefit of the goods or services you paid for on their behalf.
Yes, although the shipping accounts are in my name. All labelling on packages make it appear to come from the individual artist and the return address is c/o myself. All shipping emails, etc are between artists store and customer direct.
- - It was your customer’s responsibility to pay for the goods or services, not yours.
Yes, the artist received the funds for shipping the order and needs to pay the costs to ship it to the customer.
- - You had permission from your customer to make the payment
Yes, all artists expect me to arrange shipping once orders are packed.
- - Your customer knew that the goods or services were from another supplier, not from you
Yes, artists know I will be using DHL / UPS / Royal Mail for shipping services.
- - You show the costs separately on your invoice. / You pass on the exact amount of each cost to your customer when you invoice them.
Yes, the shipping costs are individually broken down on the invoices.
- - The goods and services you paid for are in addition to the cost of your own services.
Yes, I charge a separate 'per item' packing fee for my services.
Any advice and clarification on this will be very appreciated. I don't think Lavender2306 who commented on the other thread I saw has been active lately but if they are around I'd appreciate input.
Thanks!