Readers’ forum: Intermediary

Our company acts for large charities providing a financial intermediary service concerning online donations made to the charity by its supporters. We provide the link between a bank’s merchant services such as Barclaycard or WorldPay and the charity.

Our fee to the charity is made up of three elements: we charge 2.5% of the amount paid by the donor as a processing fee plus a transaction fee of 3p for each payment. We also make a monthly management charge to the charity to cover the ongoing cost of support given including maintaining the hosted system as well the cost of our staff in the payments department who provide support to the charities.

We have always treated our fees as a mixed VAT supply of exempt financial intermediary services and a standard rated management charge. HMRC has always accepted this basis of calculation.

However...