VAT stands for Valued Added Tax. VAT is collected on behalf of HM Revenue & Customs in the UK. VAT is added to the total of all goods and services provided by businesses. The current VAT rate in the UK is 20% and a lower rate of 5% for condoms and books.
When adding funds on XTrader, the VAT breakdown will be shown on the invoice. VAT is not charged at this point, it simply shows as a breakdown for accounting purposes for when the funds have all been used up by you buying stock.
*For example if £500 is added the VAT breakdown will be shown on the invoice, but the entire £500 will be added to your balance. Once you have used up all of that £500 placing orders £83.33 would have been used up paying VAT.
Royal Mail charge us VAT as they are a business to business service, so we will charge VAT for postage at checkout. This is sometimes questioned by customers as Royal Mail is VAT free for public postal services. Unfortunately this is not the same for businesses.
If you are in a VAT free zone upon proof of address we can grant a VAT free account. VAT will then not be shown on invoicing or checkout.