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bigduckontax
bigduckontax, Accountant
Category: Tax
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Experience:  FCCA FCMA CGMA ACIS
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Might be a silly question but it just t me and i need to

Customer Question

Hi , might be a silly question but it just hit me and i need to understand if it is right or wrong . I factor my invoices with a factoring company that charges me a 3.5% fee on each invoice INCLUSIVE of the vat e.g £100 +£20 Vat , when the invoice is uploaded onto the platform it is loaded as a single number and not broken into value of invoice plus vat yet the fee is charged at 3.5% per invoice + vat on the fee , of which i receive 90% of the total value and the 10% balance when the client pays the invoice . is this the correct way of doing it as i am charged a 3.5% fee on the vat that i pay to HMRC ???? thank you.
Submitted: 5 months ago.
Category: Tax
Expert:  bigduckontax replied 5 months ago.

Hello, I am Keith, one of the experts on Just answer, and pleased to be able to help you with your question.

For the purpose of this answer I have assumed that you are registered for VAT. If you are not, please advise.

The fee of 3.5% which you are charged has VAT added. This VAT is an input and should be reclaimed on your quarterly return in the normal manner.

I do hope that I have resolved your conundrum for you.

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