VAT question

nice_r_naughty

I think I might be losing my marble but the question has me stumped:

I have to provide a client with a cost for a piece of work which includes postage also. I do not normally do so and have always been quoting prices exclusive of VAT, which is fine. Postage rates, as far as I know, include VAT already so for example, according to An Post, sending 20,000 direct mail letters will cost me €0.36 per item including VAT.

The question is - do I send the client a quote in 2 parts, one for postange that includes VAT and one for the service that doesn't???

thanks for the help!

Toblerone1978

nice_r_naughty wrote: »

I think I might be losing my marble but the question has me stumped:

I have to provide a client with a cost for a piece of work which includes postage also. I do not normally do so and have always been quoting prices exclusive of VAT, which is fine. Postage rates, as far as I know, include VAT already so for example, according to An Post, sending 20,000 direct mail letters will cost me €0.36 per item including VAT.

The question is - do I send the client a quote in 2 parts, one for postange that includes VAT and one for the service that doesn't???

thanks for the help!

Please note that postage is exempt from VAT (assuming its within the EU). This means that you or your client cannot claim VAT on the postage cost, as it doesn't include VAT.

This section in the Revenue's website might help or be relevant. You will note that the Revenue state they consider postage cost to be part of the solicitor's charge, which is applicable to VAT.

However I think your postage cost for this client is extreme and there is ground for it to be considered as an outlay, which would mean its not taxable in the hands of the solicitor and therefore you can pass the cost to the client without charging VAT.

However the easiest and safest way would be for the client to pick up the tab for the postage directly.

barneystinson

Toblerone1978 wrote: »

Please note that postage is exempt from VAT (assuming its within the EU). This means that you or your client cannot claim VAT on the postage cost, as it doesn't include VAT.

This section in the Revenue's website might help or be relevant. You will note that the Revenue state they consider postage cost to be part of the solicitor's charge, which is applicable to VAT.

However I think your postage cost for this client is extreme and there is ground for it to be considered as an outlay, which would mean its not taxable in the hands of the solicitor and therefore you can pass the cost to the client without charging VAT.

However the easiest and safest way would be for the client to pick up the tab for the postage directly.

What you are quoting is specific to solicitors - this may be more relevant to the OP: http://www.revenue.ie/en/tax/vat/leaflets/vatguide_2008.pdf

9.11 Postage and insurance - reimbursement
Where amounts are charged separately for postage and insurance and paid over in their entirety to An Post or to the insurer on behalf of customers, suppliers may treat such charges as not being subject to VAT.

If, for example, a trader charges an extra c5 for posting an order and such amount of postage is actually paid over to An Post, the c5 may be treated as exempt. Similarly, if a car hire company charges c50 for motor insurance and that amount is actually paid over in full to insurers the c50 is treated as exempt.

However, if a charge is made for posting and/or insurance, and a lesser amount is paid over by the supplier to An Post or to the relevant insurance company, the charge made to the customer is regarded as part of the total price of the goods/service supplied, and is subject to the VAT rate applicable to the goods/service in question.

Toblerone1978

You are correct barneystinso, the piece is specific to solicitors. But in my experience (and Revenue offices agreed with me on this), one can use this info brief to determine how outlay on similar type invoicing by other professionals.

I still stand by my statement that the easiest and safest way would be for the client to pick up the tab for the postage directly, to avoid any potential confusion, particularly given the amount involved.

trad

For 20,000 units it looks like An Post will charge you €0.36 per unit if properly presented

http://www.anpost.ie/AnPost/AnPostDM/ContentPage.aspx?NRMODE=Published&NRNODEGUID={0B1512C4-6CF8-4C27-B148-927EBEEE3689}&NRORIGINALURL=%2fAnPost%2fAnPostDM%2fProductsAndServices%2fPostAim%2fPostAim.htm&NRCACHEHINT=Guest#Application