Our terms of service

GoCardless VAT Faqs

Why is GoCardless charging VAT on its fees?

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%.

Which fees does VAT apply to?

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.

Will VAT be applied to the overall amount of my transactions?

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).

What if I am using your borderless payments capability or multi-scheme offerings to collect payments from abroad, will I still be charged VAT on the fees for those services?

Yes, VAT will be charged on all services provided to customers whose legal entity is located in the UK.

My goods or services are VAT exempt or my business falls under the threshold for VAT registration. Do I still need to pay VAT?

We are required to apply VAT to our fees regardless of your VAT status.

For existing customers

If charging VAT creates a significant impact on your business, we’ll 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 can provide us with documentation to demonstrate your VAT exempt status, or that your business falls under the VAT registration threshold and we will assess the impact of the VAT charge.

If the goods or services that you supply are VAT exempt - you will need to provide us with any of the following documentation which is relevant and available to you:

  • A copy of an invoice showing goods/services that you sell that are VAT exempt
  • Ruling letter from HMRC confirming exempt status (if available)
  • A copy of a partial exemption method either agreed with HMRC (if available)
  • A partial exemption calculation done and input onto a VAT return (if available)
  • A Charity Commission registration number if a charity 

If your business falls under VAT threshold - you will need to provide us with: 

  • A copy of your statutory accounts for the previous 12 months or latest available (if available)
  • A copy of an invoice showing that VAT has not been charged on the goods/ services that you sell

If you have any questions on these documents, you can have a look at our help page here.

You are welcome to complete this form and share the documentation mentioned above so we can assess how you can benefit from help from our VAT relief fund. We will be accepting form applications until the 1 August 2020. 

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. 

Click here to apply for the GoCardless VAT relief fund

Will you provide a VAT invoice?

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.  

You’ve asked me to provide my VAT registration number, how can I do this?

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.

What are my options for terminating my contract / closing my account?

  • If you are a Micro-Enterprise (as defined in the Online Payment Services Agreement, or any separate contract you have with us), you can terminate your agreement with us immediately by contacting Customer Support or your dedicated Customer Success Manager. 
  • If you are not a Micro-Enterprise, and have no other contract with us aside from the Online Payment Services Agreement, a one month written notice period applies for any termination.
  • If you are contracting with us through a separate Payment Services Agreement, please refer to the termination provisions which set out your right to terminate. 
  • Of course, once your contract terminates we won’t be able to keep collecting payments for you. If you’re VAT exempt or under the VAT threshold, we would recommend that you first read our FAQs for further information about how we may be able to assist, before considering to terminate the contract.

I am a new customer to GoCardless and am in the process of activating my account. Will I be charged VAT?

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.

What happens if I am on a flat rate VAT scheme?

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%.


GoCardless Ltd., Sutton Yard, 65 Goswell Road, London, EC1V 7EN, United Kingdom

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, 23-25 Avenue Mac-Mahon, Paris, 75017, France

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.