vat on square charges

[Adchem]

Hi There

I have just become VAT registered. If I take a payment from a domestic customer for say £120 the VAT would be £20. If they pay by square I would receive £117.90. Does the square charges lower the VAT and how do I account for it on Quick books desktop. Do I assign a special code and is this subject to VAT reclaim.

I just don't want to get my first VAT return wrong!!!

Thanks a lot everyone!!!

[Sam_400º]

This is stuff to check with your accountant really 👍

VAT is charged on the full sale amount, so on a £100 sale the vat is £20 as you say. The Square fees are part of your operating costs so you’d deal with them the same way as any other charge/costs for the purposes of both tax and vat. The fact that the fee from Square is removed at the point you receive your funds doesn’t change the amount of vat due for your sale. 

Hope that helps - but @ me if I’ve misunderstood your question 👌

[Adchem]

Thanks for that Sam. Do the square charges have VAT included or are they zero rated. I understand that they don’t reduced the VAT and are an operating cost.