Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Taxable Person Manual

From
HM Revenue & Customs
Updated
, see all updates

Issues to consider: identifying disbursements in particular areas and trades: postal charges

Companies often use the Post Office to deliver goods to their customers. The supply by the Post Office is exempt, but it is made to the company, not to the customer. The company must therefore charge VAT when it passes on this charge to its customer, even if that charge is separately itemised and is exactly equal to the amount charged by the Post Office.

In contrast, some firms, particularly in the direct mail field, specialise in providing a service of posting material on behalf of their client. This service usually involves receiving a list of customers from their client, addressing and printing material, putting the material in envelopes and taking it to the Post Office. The responsibilities of the direct mail firm cease when the material is accepted for safe delivery by the Post Office, and thus in these circumstances, the supply of postage is by the Post Office to the client, with the direct mail firm acting as agent of the client. Direct mail firms may therefore treat the postage charge as a disbursement if they meet all the conditions of both section 25.1 of Notice 700: The VAT Guide, and section 3.2 of Public Notice 700/24 Postage and delivery charges.