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UBER EATS VAT ADJUSTMENT

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UBER EATS VAT ADJUSTMENT

Every now and then a customer messages me to ask if I know what the situation is with uber eats and how to work with the VAT adjustment and how to account for it.

Having looked online these people are not alone, it is a regular question and people don’t seem to be getting the answers from Uber Eats. 

Example of issue:

Total Orders £600.58

Uber Eats Fee – £180.24 

Net Sales + £420.34

“Vat Adjustment” + £23.26

Total Payment + £443.60

Clearing it up

We asked Ryan Gray from Gray Accountancy to break this down for us. 

Uber are registered for VAT in the Netherlands. As a Dutch VAT registered business, it can treat its supplies to the UK as intra-community supplies of services and therefore, free from VAT, providing that Uber can prove that the merchant is VAT registered. The merchant would however have to account for VAT under the ‘reverse charge’ mechanism.

The 58p VAT Adjustment arises from where Uber charges the customer VAT on the £3.50 charge for the delivery. They refund the VAT back to the merchant for the reasons mentioned above. Alternatively, it could be because the delivery driver isn’t VAT registered, and therefore it is not fair for the merchant to have to pay the output VAT on the delivery charge without being able to claim any input VAT for the delivery. Unfortunately, Uber doesn’t give much clarification on what the reasoning is. 

Almost all MTD accountancy software will account for the reverse charge for you assuming it is entered correctly. When entering your invoices, you should be able to select this option from the Tax Rates selection. For example, when entering data into Xero, you are given the tax rate option ‘Reverse Charge Expenses (20%)’. Most accounting applications offer support on how to account for this within their system.