Are payment service providers going to become VAT collectors? Paul Anning and Alistair Godwin (Osborne Clarke) examine HMRC’s proposals.
Building on the 2017 call for evidence HMRC has launched a formal consultation into implementing a VAT ‘split payments’ system. If adopted this could effectively make payment service providers (PSPs) both card issuers and merchant acquirers collectors of merchants’ VAT liabilities. This may require significant changes to PSPs’ (and potentially card schemes’) technology systems and contractual arrangements.
Why is HMRC looking at introducing a split payments system?
As a reminder of how VAT works if a customer buys a widget for £120 and VAT has been applied at the standard rate of 20% this means that £20 of that amount is VAT and £100 is the VAT-exclusive price. While the customer is contractually required to pay the merchant the full £120 it...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
Are payment service providers going to become VAT collectors? Paul Anning and Alistair Godwin (Osborne Clarke) examine HMRC’s proposals.
Building on the 2017 call for evidence HMRC has launched a formal consultation into implementing a VAT ‘split payments’ system. If adopted this could effectively make payment service providers (PSPs) both card issuers and merchant acquirers collectors of merchants’ VAT liabilities. This may require significant changes to PSPs’ (and potentially card schemes’) technology systems and contractual arrangements.
Why is HMRC looking at introducing a split payments system?
As a reminder of how VAT works if a customer buys a widget for £120 and VAT has been applied at the standard rate of 20% this means that £20 of that amount is VAT and £100 is the VAT-exclusive price. While the customer is contractually required to pay the merchant the full £120 it...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
b5c1a11f-e7c0-4890-9c79-3f37c487dc4c.jpg?sfvrsn=e5765d47_1)
