Paypal payments in the new fees system

It shouldn't, but at the moment the Sales Invoices generated on the sellers behalf by Delcampe are not fit for purpose for UK tax purposes. They are for the total amount, not just what the Seller charges, so they already inflate the taxable turnover, and the entire invoice amount will be treated as taxable income, with , unlike previously, no means of showing the tax office the fees which would be allowable expenses for tax purposes.

For completeness a transaction should show on 3 statements (buyer, seller ,delcampe) and only show items specifically related to each of them.

For the Buyer it should show item costs, buyer fees, import fees, postage costs.

For the Seller it should show item costs, postage costs.

For Delcampe it should show buyer fees, import fees.

Just received a reply from Support :

PayPal charges will be calculated on the total amount of the payment request. Since PayPal is an optional payment method, the charges will be borne by the seller. For example, if an invoice is composed as follows
Item price : 100€.
Platform fees : 10.30€
Shipping costs : 5€.
The PayPal charges will be calculated on an amount of 115.30€

Now, if you need a document to provide for your tax return, you can you the invoices sent to your buyers.
The amounts you receive and the ones sent by your buyers are mentioned.

I've Sent the following reply:
Thanks for getting back to me Marion, but this has not answered my question.

Where in your terms and conditions does it state that the seller is to pay paypal fees on expenses related to delcampe's fees to the buyer. they should have nothing to do with me as a seller. I am happy to pay transaction costs on any seller fees and my income which was previously the case. Buyer fees should not be coming anywhere near my paypal account.

The invoices/receipts to my buyers prove I have received payment from them for the transaction. They do not prove Delcampe has requested (and received payment) for fees from me and that that is compliant with UK tax law. That is whhy I have requested an invoice addressed to me.

The fact that I am receiving buyer fees into my paypal account is increasing my turnover as they are payments to me. In his Q and A, Sebastian specifically said that I would only receive the sales amount and postage into my paypal account, and that is not what has occurred, and that has caused this issue.

The fees are no longer buyer fees, they are being paid to the seller by the buyer, and then the seller is remitting them to you. They are now seller fees, at least within paypal and need to be invoiced as such. This is now two separate (but interlinked) transactions and an invoice is required for both. I have no way of offsetting the fees in my tax affairs without a valid VAT invoice from yourself addressed to me.

As you are deducting payments from a UK business (me) you probably need to be paying UK VAT on them. Please can you confirm what VAT is being paid (if any) on buyers fees and in what jurisdiction (Buyer, Sellers or Delcampe's).

Exactly. The wording, and price breakdown on the invoices, are completely inadequate. And if the Delcampe platform fees are included anywhere in the invoice that is sent on the sellers behalf by Delcampe,, then the seller needs a matching invoice from Delcampe to the seller for those fees.

I will now add in the text box for each of these payment requests that the actual purchase price is x and the remainder is a new purchase fee charged by Delcampe. That's not enough for the tax office, but at least the customer knows about it. Because I think that many people are not aware of this and otherwise blame me for the drastic price increase. Delcampe obviously wants to cover this up in this way. If customers then say that they no longer like Delcampe, then that's the way it is. It's not my fault, I'm just writing the truth and Delcampe caused all of this. Of course, this still means that these errors must be corrected by Delcampe.

Ebay does this well for sales tax/IOSS VAT. It includes the line Sales tax (eBay collected) £x.xx on the buyer invoice.packing slip. Its consise and shows where the money goes.

The sales tax also does not appear anywhere in your ebay payments statement, you only get the payment net of that as it is deducted before it gets to your account. Ebay seller fees are then deducted and you receive a full VAT invoice for those fees at the end of the month.

Les informations ne sont plus disponibles car le compte de cet utilisateur est supprimé (Règlement RGPD)

Les informations ne sont plus disponibles car le compte de cet utilisateur est supprimé (Règlement RGPD)

The Mangopay Payment I received , I just realised, was for an invoice for items sold on Monday, so just before the system changed. That may explain why there was no fees in the pop up box for that transaction. Have you had a MangoPay payment under the new system, and if so, did the popup box show the fees?

Les informations ne sont plus disponibles car le compte de cet utilisateur est supprimé (Règlement RGPD)

No. Normally I always have around ten sales a day at Delcampe. Yesterday and today there were two together so far. I'm not surprised, even though I didn't expect it to be quite so bad. Let's see what the next few days bring and whether I'll even book a subscription here or break up camp. Of the two customers, only one has paid (with PayPal) so far.

Where they have always been, clearly itemised and invoiced by paypal in the sellers online paypal account. The Paypal fees are only a direct transaction between the seller and paypal, and are documented accordingly, so they are irrelevant to the issue of Delcampe platform fees..

Les informations ne sont plus disponibles car le compte de cet utilisateur est supprimé (Règlement RGPD)

Yes, ideally, Paypal fee should be split proportionately, so sellers shouldn't have to pay Paypal's commission fee on the proportion of the payment that is being transferred by Paypal to Delcampe from the Sellers Paypal account.
But I doubt that is going to happen. And, at least Paypals' commission fee is taken directly by Paypal, and is already adequately documented for tax purposes, unlike the Delcampe platform fee which goes through an intermediary (the selller), without adequate documentation.

Just found the following guidance on HMRC regarding VAT registered traders refusing to supply invoices.

Lien (https)

Long story short they are under an obligation to provide an invoice as a UK VAT registered company.

Its many years since I used Ebay for selling, I only sell on Delcampe at the moment, but the invoicing system you describe is what I envisaged happening on Delcampe, not the inadequate mess that has actually happened. Its bad enough for me, who have relatively low sales volumes, it will be even more of a nightmare for those with a high number of transactions.

Just picked up on this.

Looks like Delcampe and Paypal are the winners again.

There is no way that Delcampe's fees should, effectively, be transiting through PAYPAL.

We should not be paying PAYPAL fees on Delcampe commissions! That's obscene.

I imagine the Delcampe commissions may even have a VAT element to them.
Goodness what implications that might have!

The net figure for sales is still useable but I am effectively paying a fee on the 'Partner' amount due to Delcampe. This is not reasonable or fair.

I have also noted that there has been a shift of Buyers towards using PAYPAL. So that makes things worse.

Alan Catherall
[Hoatzinstamps]

The VAT and turnover issues are what really bother me, a few extra pence on paypal fees while annoying can be accounted for.

As a non VAT registered business I know I'm not allowed to request any VAT on my invoices to be paid to me. Equally I need to pay VAT to all my suppliers, and that invoice /receipt is used as proof of an allowable expence for HMRC. The conflating of the seller and delcame fees on the current invoices does not inspire confidence, nowhere in the new system is it declared what VAT is being paid and to which country.

For Delcampe my fear is that they are paying VAT in the buyers country, and that delcampe then recieve a second VAT bill from the sellers country as the return of fees from the sellers account could cause it to be considered a taxable transaction.

I'm not so sure about using the net figure. The gross amount has touched your account so that's the level HMRC require for a declaration (in paypal at least, accounting in mangopay is such a mess I dont know what HMRC would make of it). Worst case is that you end up having to pay income tax and NI (and VAT if registered) on the gross amount, with no recourse for claiming the fees as an allowable expence. Thats why I'm pushing for an invoice to cover this.

Even if they provide an invoice, it may push you over VAT registration thresholds if you are close.

It's not only obscene, it completely contradicts Delcampe's statement that "sellers do not receive the platform fees themselves, they will not be included in the payments they receive", whereas in fact, the sellers do receive the platform fees into there own account, before those fees are forwarded to Delcampe.
The sellers are in effect acting as agents, collecting fees on behalf of Delcampe. That is absolutely not the way we were told the system would work.

Lien (https)

United Kingdom sellers who aren't VAT registered (and are not limited companies) shouldn't have to worry about properly accounting for PayPal fees - providing you're compiling your accounts using Cash Basis. And if not, why not?

All you need is a clear record of money in and out of your business. Therefore, simply keep a record of PayPal (and other) payments received to your bank account and have a separate record of stock purchases and expenses.

Since the introduction of Cash Basis, I've stopped using an accountant as it's now very simple to file accounts with HMRC. I have a business partnership with the wife and our accounts consist of two spreadsheets - money in and out.

Lien (https)

I think that incorrect. Even if you are just declaring net taxable income as your income is low you need to have records to show how you got there. That needs to include cash and e-money accounts as that is when you got paid.

Your Paypal account is a separate e-money account in your name for tax purposes.You should be declaring the income you recieve from customers in full. You then need to deduct the paypal fees and any other deductions as an allowable expense, which need to be supported by a receipt or other documentary evidence (paypal statement for their fees). Same with any purchases from the paypal account or are you not accounting for purchases from paypal also? Paypal can (and do) provide records to HMRC and its an electronic paper trial that can be followed.

Similarly a till would be an cash account in a shop. Customers payments go in the till which are then declared in full to HMRC. You can't spend the money from the till and ignore it in your tax calculations, income does not start from the time it hits the bank account. Any payment in cash from a till needs a receipt/invoice to claim it as an allowable deduction.

Maybe for limited companies or ones that are VAT registered. However, Cash Basis was introduced to drastically simplify tax for small businesses. I'm the first to moan about daft government policies but this new rule is excellent and we have saved more than £6000 in accountancy fees since its introduction.

We have just one PayPal account, and that's a business one. Money received in that is transferred to our business bank account. Ditto for money received on the other selling platform. We do not use the PayPal account for purchases.

HMRC are aware of PayPal fees. I've never been audited, but if they did I can always download the information they need from the PayPal website.

I think you are incorrect. Even under the 'cash basis' system, when calculating the figures for tax purposes, the paypal receipts need to be broken down into gross receipt (income) and fees (expenses), and not just recorded as a single 'net' income amount. From my understanding, all 'cash basis' means is that the income is recorded in the accounts on the day you are actually paid the income, and not in the day you generate an invoice for payment, and the expenses are recorded on the day you actually paid the bill, and not on the day the bill was generated. Also, the rules about when you have to start filing more detailed accounts (rather than just a simple basic income & expenditure statement) depend on the turnover threshold, and that threshold would be the gross amount of anything invoiced by the seller, so would include the so called 'buyer fees' if those are on the invoice.

But surely, when calculating even just the basic income & expenditure totals (the money in and money out spreadsheets you mentioned) the income would be the gross amount received by you (including received into the paypal account), and the expenses would be all the allowable expenses paid by you (including the fees paid by you in the paypal account)

HMRC are aware of paypal fees yes, and allow them to be declared as an allowable expence just as any other banking charges.

As mjocovers says cash basis only changes the date invoices are added to your accounts. it does not change any records you need to keep to prove your turnover, or what allowable expenses you can claim.

Your paypal account is now not only being used for remitting your sales to you. In the new system your paypal account (not delcampes) is being used to remit buyer fees to them. The complaints here are that that should not be happening, but if it is we need sufficient documentation from delcampe to prove this as an allowable expense. If not you may end up having to pay tax on this income.