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This is not something that we have chosen to do, it is something that we have been instructed to do by HMRC. HMRC are following a change in case law following several cases on this topic. Until now, following previous HMRC guidance, GoCardless has benefited from a VAT exemption applying to the supply of payment services, which meant that we did not need to charge VAT (Value Added Tax) on the fees that we charged for our services to merchants operating in the UK. HMRC has now informed us that our services no longer fall within the scope of the VAT exemption and we have been instructed by HMRC to charge VAT on all our fees at the UK Standard Rate, which is currently 20%.
VAT will be applied to all fees that we charge including transaction fees, any monthly or annual commitment fees, fees for failures, chargebacks, refunds or high value transactions, add-on fees for Plus or Pro packages and any account servicing fees. When transaction fees are capped, VAT will be calculated on the capped amount.
No, we will only be charging VAT on our fees. This means that if your total transaction value is £200, the GoCardless fee before VAT will be £2 + 20 pence. The amount of VAT on that transaction will be 20% of our fee, in this case £0.44. The total GoCardless fee on this transaction will therefore be £2.64 (£2 + 20 pence + VAT).
Yes, VAT will be charged on all services provided to customers whose legal entity is located in the UK.
We are required to apply VAT to our fees regardless of your VAT status.
If charging VAT creates a significant impact on your business, we will consider how we can work with you to mitigate this impact. If you activated your account or signed a contract before 1 June 2020, you have been able to provide us with documentation to demonstrate your VAT exempt status, or that your business falls under the VAT registration threshold from the 15 June 2020 to the 1 August 2020 through an online form. If you have applied, we are currently assessing the impact of the VAT charge on your business.
Applications for our VAT relief fund are now closed.
Please keep in mind we will be reviewing all cases before we provide an answer to anyone so you will not be hearing back from us before 15 August 2020. We are conscious that this creates uncertainty for you but it enables us to allocate the VAT relief fund to merchants most in need of it.
If we need any additional documentation than what you have already provided us, we will be reaching out directly to you.
Yes. If your fees are deducted directly from your payouts, a monthly VAT invoice will be available to you in your GoCardless dashboard from September onwards.
If you normally pay by invoice, a VAT invoice will be sent by email from September onwards.
VAT invoices include a breakdown of the VAT amount charged.
As we will be accounting for VAT to HMRC from 14 April 2020, it is our intention to fund this VAT cost until 31 August 2020. VAT will only be charged, in addition to fees, on our invoices from 1 September 2020. As we are amending our systems to be able to account for VAT correctly, a VAT invoice covering the period 14 April 2020 to 31 August 2020 will be made available to you from September 2020 onwards. This invoice is for your records and VAT recovery position only. It will stipulate that no further payment is required to GoCardless for this 14 April 2020 to 31 August 2020 period.
If we have asked you to provide us your VAT registration number, you can do so here. This will bring you to the VAT status registration form where you will be able to fill your VAT registration number after having selected “VAT registered” in the VAT Status field.
We will be charging VAT to all new customers from 1 September 2020 onwards. This includes all new customers who activate their account on, or after 1 June 2020.
Please also see the note above relating to the provision of VAT invoices to our customers from 14 April 2020 onwards.
If you have agreed with HMRC to use the VAT Flat Rate Scheme, available for entities with an annual turnover of £150,000 or less (excluding VAT) then we will not consider you to be eligible to benefit from our VAT relief fund. The flat rate scheme is an administrative easement, so although businesses using this scheme cannot recover VAT on individual invoices, the scheme is designed to reflect this by allowing them to pay VAT on sales at a lower rate than 20%.
Help & resources
GoCardless (company registration number 07495895) is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017, registration number 597190, for the provision of payment services.
GoCardless SAS, an affiliate of GoCardless Ltd (company registration number 834 422 180, R.C.S. PARIS), is authorised by the ACPR (French Prudential Supervision and Resolution Authority), Bank Code (CIB) 17118, for the provision of payment services.