Things aren’t going well between Smiths News and Hurendra Bhatt. He used to pay for news supplies to his store, Universal News in Islington, by BACS. Then it all went pear-shaped as far as he was concerned.

He writes: “I would like to bring to your attention how Smiths News conducts its business. Recently, as a change in policy, Smiths News refused to accept BACS payment for no apparent reason.”

When Hurendra asked why, Smiths News said that BACS had never been a payment option “despite BACS being used by myself and other retailers for the past 29 years”.

He adds: “I made alternative arrangements to pay via cheque. Payment via cheque should incur no charges, according to HMRC - which states that VAT should not be chargeable on cheque payments. For clarity on the matter, I have included an email from both Islington Council and Trading Standards which both state that VAT should not be chargeable.”

Actually ‘clarity’ would not be a word I would have used. I tried to read VAT Notice 701/49: finance, but there were reams of it and it left me needing a lie-down.

He also sent me a long trail of emails where Smiths, at one point, suggested he pay by direct debit.

To this he replied: “What assurance will be given to us in writing that your firm will not send unwanted magazines/oversupply of papers or any materials and unsolicited items, without our prior approval if we pay by direct debit? The reason we are asking for assurance in writing is because we have had bitter experience in the past and have noticed your marketing department overrides our interests by supplying these. Thereby you would invoice them and we have to ask for the credit on return.”

Furthermore, he adds that his service charge surely should include any processing charges for whatever type of payment used.

Along the way the NFRN got involved. Someone said they had checked the website and said it did not show that the charge was exempt and recommended further checking with his accountant. Someone else suggested he simply claim it back with his Vat returns.

Then I had the bright idea of asking Smiths. Marie Kirven, customer service manager, replied: “Following investigation by our accounts and finance team, we responded to Mr Bhatt and explained we are not in any way working outside the rules of HMRC. We were unaware as to where he was getting his advice from on the subject so, in including his original email to you, we’ve been able to look at it again and respond to the specific guidance he has received.”

She explained that the guidance dealt with activities such as counting money and transferring it. What Smiths is doing is “banking the cheques and updating our ledgers to reflect settlement of debts; that is an administrative activity and as such Smiths News is charging an admin fee.”

There was a lot more in this vein and now I know more than I ever wished to know about Vat.