u/Crowdfunder101

I buy scrap metal from customers and typically pay via bank transfer a week later.

However, I’m considering offering an express payment option, so for £5 they can have the payment made same-day.

Because customers are not VAT-registered, the VAT aspect is only recorded and paid when I sell the metal to an end dealer.

I’m wondering what the best way of dealing with this is? Should I deduct £5 from the total that I pay the customer (eg they’re owed £100 so I give them £95) or do I take £5 up-front and run it through my till as a regular payment which includes 20% VAT?

The former doesn’t appear to include VAT - but do I need to pay VAT since I’m going to be paying them anyway, just that it’s quicker. Or is the speediness classed as a service?