Charged 20% VAT for use of card payment on Sumup

[Isobel201]

Hi all, just something that I've had on my mind. Is it normal for a business to charge what he said "20% VAT" to pay for a service. The value he quoted originally was £100, and I wanted to pay on my credit card. So I paid £120 in total because I presume he used the sumup paying service. However, I use three other businesses who have quoted me how much to pay, and haven't added that amount on. One of them is a riding school, a gutter cleaning service, and car cleaning service. Was he right to charge £20 extra?

If they are VAT registered then yes. Are the other businesses you use VAT registered? If not, that would explain them not charging you VAT.

They shouldn't be charging different amounts depending on how you want to pay. I suspect he was trying to illegally evade VAT, but when you wanted to pay via a traceable method, i.e. card, he added the VAT. At the very least, ensure you get a proper VAT invoice showing the VAT charged and his VAT registration number. It's not unheard of for businesses to add VAT illegally when they're not actually VAT registered. The other businesses may not have been VAT registered so can't legally add VAT.

SumUp is just the card processing service. He will be charged 1.69% if you paid with your card against his machine or 2.5% for a ‘card not present’ payment link

20% VAT is between him and HMRC, but the SumUp software allows the business to configure for VAT and whether they would type in the total sale (enter £120 and calculate the £100 / £20 split) or that they type in the amount and it adds the VAT so he would have put £100 (and it adds £20 for you to pay.

Its correct if he is VAT registered and he quoted £100 plus VAT, but if he just quoted £100 then he should have been explicit, and should give you an invoice / receipt breaking it down

I’m guessing that he typed £100 into the app and had it configured to charge 20% extra

I guess the riding school wouldn't be VAT registered because they are under a charity now. But the gutter and car cleaning services are. I didn't get a proper invoice off him of any breakdown of cost, just a message saying I had paid via Sumup which is neither use nor ornament.

Thanks very much yeah that's explained things. I'll let it go, I was just wondering.

@Tomikka I found this thread as I've just started charging VAT and am looking at my SumUp - do you know if I just put my total in, and SumUp work out for the customer what amount of it is VAT? So if my item is £20, I wouldn't want to put in £20 and then SumUp to show it as £24, it's not clear on the app what would be charged to the customer.

@Isobel201 as I've put in my message to a PP above, I'm unsure how SumUp does it - I think you can do a total and then add VAT, or you can do a total inc VAT (though I still have to figure it out myself). If he quoted you £100 inc VAT then I would contact him, as he may have accidentally charged too much

@lilkitten
By default SumUp will only charge the amount that you put in, and won’t account for VAT

If you are VAT registered then you can add the details under ‘Profile’, ‘Taxes’

I am not VAT registered, therefore can choose to disable VAT or enable VAT as ‘not VAT registered 0%’

As I have not needed to I am not fully up to speed, and there are choices that you can take.

if you’re dealing directly with the public then the norm would be inclusive prices and enter £24 and have SumUp know that it would be £20 item cost with £4 VAT
But you can configure a business to business style transaction that you will enter £20 and the total by SumUp becomes £24

There are some useful guides in the SumUp help, but you can also do some mock tests as you go through the settings to see that entering £20 results in a £24 transaction but not swiping a card (these will come up as failed transactions in your payments summary)
You can process a payment if you want to double check the email/text receipt details - and refund to cancel straight away

www.sumup.com/en-gb/running-business/taxes/what-is-vat/

Charities still have to charge VAT on VATable services, it depends on the turnover not charitable status. If the turnover of everything you sell that is not VAT exempt is less than £90,000 per year you don't have to charge VAT.

Unethical tradespeople will hapily charge you a VAT-free price if you pay in cash but will charge you VAT if you use any traceable banking system (whether credit card or BACS) which will make the income be part of what is audited for VAT. If there's a lower cash-in-hand price they are a tax cheat. I don't know why these cheats get less vitriol on the so called "benefit scroungers"

It gets annoying that the unethical ones give the rest of us a bad name. It's mainly older customers coming in and asking if we'll do it cheaper for cash - I'm inclined to say it'll cost more as it costs me more to bank cash than card payments do! I'm autistic and can't comprehend breaking rules, I have to bite my tongue rather than enquire why people don't want to be ethical

@Tomikka thank you, you've given me more advice than SumUp's customer service have. Their guides online seem more aimed at B2B, and it says it will automatically add VAT to your total, no advice seems obvious for B2C. I have a market tomorrow, the first one with VAT, and didn't want to accidentally add 20% to my VAT-inclusive price (as could have been the case with the OP). I've tried a transaction and it looks good so far

When asked for a cash discount my friend tells them that she would be committing an offence as that would mean charging more for card payment

Lots of tradies openly offer "vat free for cash" before the customer even asks. We've even had it over the phone at first contact asking for prices for things like replacement fence panels and re-roofing a garden shed (different firms).

A lot of VAT registered businesses will quote you £100 (the net amount excluding vat). There has been a misunderstanding between you and the business. You thought the price was £100 and he assumed you realised it was £100 plus vat.

For the other bills you paid, they told you the total amount to pay.

I saw a thread recently about tradies taking cash, I don't know if I'm just good at picking them but everyone I've used has given me an invoice and taken card payment. I can turn against people for their morals though, so I have turned down quotes in the past based on them trying to dodge tax etc