Value-added tax (VAT)

A number of our members have raised inquiries about VAT on invoices and we'd like to guide you on its appropriate usage. We've encountered some scenarios where the addition of VAT to an invoice led to a payment dispute between members.  

VAT charge eligibility 

Businesses operating on the Exchange with a taxable turnover of more than £85,000 are required to register for VAT. Members below this threshold can, however, also be registered for VAT.

Members can only charge VAT once they've received their VAT number and this has been verified by the Exchange. Once they've successfully been registered, they are eligible to charge VAT on their invoices in addition to their base rate for services. 

For more on VAT eligibility, visit GOV.UK. 

How to check if a member is VAT registered

If you see VAT on an invoice and would like to confirm that the other member is VAT registered, you can find that information in their company profile on the Exchange. 

Types of VAT charges on the Exchange

 There are two types of VAT charged by members on the Exchange. The standard 20% VAT or the 10% Flat Rate scheme.  

VAT charges by registered members are necessary and cannot go unpaid regardless of whether the payer of the invoice is VAT registered or not. 

 
Quotes

All quotes submitted on the Exchange are excluding VAT. The VAT charge is added to the invoice when created with the total gross amount due. Any instructions from the load poster about VAT payment in the load notes will be disregarded upon receipt of the invoice. 

VAT regulations on the Exchange

VAT cannot be applied to invoices unless a VAT number has been verified by our Exchange team. Any member on the Exchange using VAT unlawfully could face prosecution by HMRC. 

We strongly recommend all members posting more than 20 loads per month to be VAT registered. This is for your own protection and peace of mind. Becoming VAT registered means you can reclaim VAT where appropriate and grow your business without worrying about crossing the VAT threshold and being penalised by HMRC. As with any important business decision, we recommend that you consult with your accountant and take advice where appropriate.

Please also note that following Brexit, there have been changes to the charging of VAT for goods being transported to Europe.

For more information on whether you need to register for VAT to move goods into Europe, please visit the following Government websites: 

• Exports, sending goods abroad and charging VAT

• VAT on goods exported from the UK (VAT Notice 703)