Is the PayOurSchool service liable for VAT?

Yes, because this is a service being provided to you by PayOurSchool; a service provided to accept money conveniently from your parents to your school accounts is liable for VAT in the UK. Most educational establishments can claim this VAT back via tax declarations.

As you are aware, there is no licence fee, maintenance fee or other recurring charge to use the PayOurSchool module. The only fee to pay is a per-transaction charge of 1.5% of each non-cash transaction. VAT is applied at the standard rate (currently set by the government at 20%), and is applied to the transaction fee ONLY - so this is 20% on the 1.5%.  On cash transactions there is no per-transaction charge and hence no VAT to be applied.

To ensure robust VAT compliance, the VAT will be collected on your behalf at the time of the transaction and deducted from your disbursement of funds, the same point as when the 1.5% transaction fee is collected. This means no additional VAT will need to be paid or accounted for at the end of the financial year or in your tax returns. The money disbursed to your school account each week will be the value of the payments, minus both the transaction fees and the VAT on the transaction fees. This is no different to paying the VAT for the Messenger system or other software.

Examples;

Activity Cost Fee Amount Total Amount Paid by Parent VAT Amount Amount requisitioned to school bank account in weekly transfer Net Amount after VAT reclaim
£10.00 £0.15 £10.00 £0.03 £10.00 - £0.15 - £0.03 = £9.82 £9.85

To aid in VAT reclaim, reports will be available from within the PayOurSchool interface so that you will have all the information to hand on how much VAT has been collected on your behalf for these transactions fees. How much you can claim back is worked out for you in an easy to use report, saving your school a great deal of time that would usually be required to calculate such a figure.

You will need the VAT number for PayOurSchool (not Groupcall) which you can request from us or see in the VAT reports.

Posted in: PayOurSchool FAQs