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When does a VAT liability arise when payments are made by PayPal?
My client is VAT-registered and uses the cash accounting scheme for all of his sales. Many of these are paid for through PayPal but the online payment business is holding about £10 000 of money received from customers. This is because of a contractual problem with PayPal not the customers.
My question concerns the timing of output tax payments in relation to PayPal sales. Is the key date the time when my client receives the money from PayPal or when the customer makes the payment to it? And am I correct in saying that the key figure for output tax purposes is the money paid by PayPal to my client ie after deduction of their fees?
Finally and just out of interest would the position be any different if my client was on the flat rate scheme?
Query 18 538 – Cash Man
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