[rahimnathwani]

How would the supermarket save money by charging a separate service fee? Many of the items sold in supermarkets (e.g. bread and milk) aren't subject to VAT, whereas (almost) all services attract VAT at 20%

[ValentineC]

I'm guessing it has something to do with claiming the VAT on processing fees as input tax: https://www.gov.uk/guidance/vat-guide-notice-700#section4