SumUp ↔ Xero (UK): bullet‑proof reconciliation and VAT on fees for trades featured image
Integrations

SumUp ↔ Xero (UK): bullet‑proof reconciliation and VAT on fees for trades

TrainAR Team 1 month ago 4 min read

SumUp ↔ Xero (UK): bullet‑proof reconciliation and VAT on fees for trades

UK plumbing, electrical and HVAC firms love SumUp for quick card payments on site. But the Xero posting and reconciliation can get messy: fees netted off, daily payouts, refunds, and questions about whether there’s VAT on the fees. This guide gives you a clean, UK‑specific setup that reconciles first time and keeps your VAT return right.

UK trades desk showing Xero with a SumUp Clearing flow: gross sales → fees → net payout

Who this is for

  • UK trades (plumbing, electrical, HVAC, roofing, landscaping) taking in‑person card payments with SumUp
  • Owners, office admins and bookkeepers reconciling in Xero

TL;DR

  • Create a SumUp Clearing account in Xero. Post gross sales there; post fees to Merchant/Bank charges; transfer the net payout to your real bank.
  • Use VAT‑coded sales in Xero (20%, 5%, 0%, Exempt) that match what you sell. Let the SumUp → Xero integration map VAT per product/rate where available.
  • For VAT on SumUp fees: use the monthly SumUp tax invoice to decide treatment. Many UK accountants treat SumUp fees as reverse‑charged services (supplier outside UK). Check your invoice wording and follow your accountant’s advice.

Prerequisites and references

  1. Create a clearing account
  • Accounting → Bank accounts → Add Bank Account → Add it anyway → Name: “SumUp Clearing” (Bank account type). Don’t connect a feed.
  1. Set up chart of accounts for fees
  • Create or confirm an Expense account: “Merchant fees” (code e.g., 430) with tax treatment “No VAT” by default (you will override per bill if reverse charge applies).
  1. Connect SumUp (if using the app)
  • In the SumUp → Xero app, map products/categories to Xero revenue accounts and VAT rates (20%, 5%, 0%/Exempt) appropriate for your services/materials.
  • Ensure payouts post to SumUp Clearing. Fees will come in as Bills from SumUp.
  1. Bank rule for payouts
  • When a SumUp payout hits your real bank, set a bank rule to “Transfer to SumUp Clearing”. This clears the balance once fees and sales are posted.

Daily posting flow (with the SumUp app)

  • Sales: app posts a daily invoice into Xero, split by VAT rate. Allocate to SumUp Clearing when paid by SumUp.
  • Fees: app posts a Bill for the day’s fees to Merchant fees.
  • Payout: bank feed shows the net amount; reconcile as a Transfer from SumUp Clearing to your real bank.
  • Result: SumUp Clearing should trend to zero after each payout cycle (allow for timing delays if payouts span days).

Manual method (no app)

  • Sales: create a daily Sales invoice (Customer: “SumUp Daily Sales”) with lines grouped by VAT rate (20%, 5%, 0%, Exempt). Receive payment to SumUp Clearing.
  • Fees: post a Bill from Supplier “SumUp” for the day/month fees to Merchant fees. If your SumUp tax invoice indicates reverse charge, code with the appropriate reverse charge tax code per your accountant’s guidance.
  • Payout: match the bank line as a Transfer from SumUp Clearing.

Example journal logic

Sales (gross)   Dr SumUp Clearing
Sales (net VAT) Cr Sales 20% / 5% / 0% / Exempt
VAT Output      Cr VAT Control
Fees            Dr Merchant Fees
Payable to SumUp/clearing  Cr SumUp Clearing
Bank payout      Dr Business Bank
                 Cr SumUp Clearing

Refunds and chargebacks

  • Refund: create a Credit Note against the original daily sales invoice using the same VAT code. Refund payment from SumUp Clearing. The eventual bank outflow is a Transfer to SumUp Clearing.
  • Chargeback: post the chargeback fee to Merchant fees and the reversal against the original sales; clear via the clearing account.

VAT on SumUp fees (UK)

  • Check SumUp’s monthly tax invoice for your entity: does it state reverse charge? If yes, many UK businesses apply a reverse charge VAT code in Xero on the fee bill. This usually nets to zero VAT due if you’re fully taxable but must be reported on the VAT return.
  • If your accountant treats fees as exempt financial services instead, use an Exempt/No VAT code on the bill. Always follow your accountant’s advice and keep the invoices on file for MTD.

Troubleshooting

  • Clearing account doesn’t zero: check date ranges. Payouts may include multiple days; ensure all daily invoices and fee bills are posted before transferring.
  • Wrong VAT on sales: correct the VAT mapping in the SumUp app or adjust the daily invoice lines before approval.
  • Duplicate sales: avoid posting from both SumUp app and manual CSV at the same time; pick one method.

Logos (for quick recognition)

Short video: overview of UK VAT, SumUp and Xero

A light intro to how SumUp and Xero sit alongside VAT and MTD for UK trades.