In his Pre-Budget Report on 24 November 2008 the Chancellor announced that the standard rate of VAT will be reduced to 15% on 1 December 2008. This means that for any sales of standard-rated goods or services that take place on or after 1 December 2008 providers should charge VAT at the new rate of 15%.
This article provides help for SellerDeck users to implement this change on their web sites
Only standard-rated sales are affected. There are no changes to sales that are zero-rated or reduced-rated for VAT, or to VAT exemptions.
SellerDeck Catalog & Business ranges, SellerDeck Enterprise & SellerDeck Designer
If you are using the tax-exclusive pricing model, where the prices of individual products are entered exclusive of tax, changing the VAT rate from 17.5% to 15% will update all prices automatically. Versions of SellerDeck prior to v9 only supported this type of pricing.
The tax charged on each order placed after the tax change will be automatically reduced to 15%, and if prices are also displayed inclusive of VAT, they will be adjusted automatically.
We have identified one issue with the taxation module with SellerDeck, which means that if you edit the order line of an existing order (by double-clicking on it) the tax will be changed to the wrong rate.
To prepare your site for the VAT rate change and lock the tax settings of your existing orders, please follow the instructions in our Knowledge Base article here
I am using tax-inclusive pricing. What do I need to change?
SellerDeck Version 9 introduced the ability to enter prices inclusive of tax (‘Inclusive of Tax’ checked under ‘Product Prices Entered’ in ‘Business Settings | Tax’). In this case, since prices are entered individually, they will have to be changed individually.
]I have set up custom tax rates. What should I do?
If you have set up custom tax rates, you will need to recalculate them on the same basis that you did originally, using 15% instead of 17.5% for the standard rate, and change them manually.
Depending on how many products you have, you may wish to set up new rates and change your products to them, to make it easier to change back to the old ones if and when the 17.5% rate is restored.
When should I update my site with the new tax rate?
Strictly speaking you should update your web site with the tax change as close as possible to midnight on Sunday 30th November. Unfortunately, SellerDeck does not enable a tax change to automatically take effect at a preset time and date. You may wish to consult your accountant or the tax office about how rigidly this requirement is likely to be enforced.
What about orders that are placed before 1st December, but not shipped until after?
The requirement differs according to how you take payment.
If payment is received before 1st December:
According to HMRC, if you have received a payment or issued an invoice before 1 December 2008 for goods that will be provided (or services delivered) after 1 December 2008 then you can choose whether to account for VAT at the new rate of 15%. If you do, and you have already issued a VAT invoice at the old rate, you will need to issue a credit note to the customer. You do no need to tell HMRC about it.
Your choice may depend on several factors, including your Terms and Conditions, customer expectations, and what is most practical. If in this instance you decide not to account for VAT at the new rate, then you do not need to do anything. Normal VAT rules apply, the actual tax point occurs when you receive payment, and VAT is charged and accounted for at the old rate (see http://www.hmrc.gov.uk/vat/charge-transactions.htm#1)
If payment is received after 1st December:
If you are processing card payments offline or using card pre-authorisation, then VAT must be charged at the rate then in force. In this instance, SellerDeck’s records and reports will reflect the rate that was in force when the order was placed. This cannot be changed, and you will need to make manual adjustments outside SellerDeck.
What if I have an item on back order from before 1st Dec that I ship after?
You should treat it as if it were a separate order. If payment was taken before 1st Dec, you do not need to do anything unless you choose to account for the VAT at the new rate. If payment was taken after 1st Dec, you must charge VAT at the new rate. SellerDeck will still reflect the rate that was in force when the order was placed. This cannot be changed, and you will need to make manual adjustments outside SellerDeck.
What about the order confirmation they already received?
The default SellerDeck order confirmation page and email include disclaimers indicating that they do not constitute VAT receipts. You should charge the VAT that is in force on the day you receive their payment or ship their order – whichever is the sooner. If this differs from the amount given in the order confirmation, it would be good practice to notify the customer and provide an explanation. Most customers will already be aware of the VAT change, and should understand the reason for the discrepancy once it is explained to them.
What should I do about refunds, returns and cancellations?
If you have to issue a refund after 1 December for an order placed before, you must refund the full amount that was paid and account for it at the same VAT rate. Above all you must be consistent about how you account for VAT in each instance.
For more information see the HM Revenue & Customs guidelines:
http://www.hmrc.gov.uk/pbr2008/measure1.htm
This article is provided in good faith for the assistance of SellerDeck users. The information in it is correct to the best of our knowledge, but SellerDeck does not warrant or guarantee the information provided and cannot accept responsibility for any inaccuracy. It does not constitute general tax advice or guidance. It is your responsibility to assure yourself that your business practices conform to all mandatory regulations and requirements.
This article provides help for SellerDeck users to implement this change on their web sites
Only standard-rated sales are affected. There are no changes to sales that are zero-rated or reduced-rated for VAT, or to VAT exemptions.
SellerDeck Catalog & Business ranges, SellerDeck Enterprise & SellerDeck Designer
If you are using the tax-exclusive pricing model, where the prices of individual products are entered exclusive of tax, changing the VAT rate from 17.5% to 15% will update all prices automatically. Versions of SellerDeck prior to v9 only supported this type of pricing.
The tax charged on each order placed after the tax change will be automatically reduced to 15%, and if prices are also displayed inclusive of VAT, they will be adjusted automatically.
We have identified one issue with the taxation module with SellerDeck, which means that if you edit the order line of an existing order (by double-clicking on it) the tax will be changed to the wrong rate.
To prepare your site for the VAT rate change and lock the tax settings of your existing orders, please follow the instructions in our Knowledge Base article here
I am using tax-inclusive pricing. What do I need to change?
SellerDeck Version 9 introduced the ability to enter prices inclusive of tax (‘Inclusive of Tax’ checked under ‘Product Prices Entered’ in ‘Business Settings | Tax’). In this case, since prices are entered individually, they will have to be changed individually.
]I have set up custom tax rates. What should I do?
If you have set up custom tax rates, you will need to recalculate them on the same basis that you did originally, using 15% instead of 17.5% for the standard rate, and change them manually.
Depending on how many products you have, you may wish to set up new rates and change your products to them, to make it easier to change back to the old ones if and when the 17.5% rate is restored.
When should I update my site with the new tax rate?
Strictly speaking you should update your web site with the tax change as close as possible to midnight on Sunday 30th November. Unfortunately, SellerDeck does not enable a tax change to automatically take effect at a preset time and date. You may wish to consult your accountant or the tax office about how rigidly this requirement is likely to be enforced.
What about orders that are placed before 1st December, but not shipped until after?
The requirement differs according to how you take payment.
If payment is received before 1st December:
According to HMRC, if you have received a payment or issued an invoice before 1 December 2008 for goods that will be provided (or services delivered) after 1 December 2008 then you can choose whether to account for VAT at the new rate of 15%. If you do, and you have already issued a VAT invoice at the old rate, you will need to issue a credit note to the customer. You do no need to tell HMRC about it.
Your choice may depend on several factors, including your Terms and Conditions, customer expectations, and what is most practical. If in this instance you decide not to account for VAT at the new rate, then you do not need to do anything. Normal VAT rules apply, the actual tax point occurs when you receive payment, and VAT is charged and accounted for at the old rate (see http://www.hmrc.gov.uk/vat/charge-transactions.htm#1)
If payment is received after 1st December:
If you are processing card payments offline or using card pre-authorisation, then VAT must be charged at the rate then in force. In this instance, SellerDeck’s records and reports will reflect the rate that was in force when the order was placed. This cannot be changed, and you will need to make manual adjustments outside SellerDeck.
What if I have an item on back order from before 1st Dec that I ship after?
You should treat it as if it were a separate order. If payment was taken before 1st Dec, you do not need to do anything unless you choose to account for the VAT at the new rate. If payment was taken after 1st Dec, you must charge VAT at the new rate. SellerDeck will still reflect the rate that was in force when the order was placed. This cannot be changed, and you will need to make manual adjustments outside SellerDeck.
What about the order confirmation they already received?
The default SellerDeck order confirmation page and email include disclaimers indicating that they do not constitute VAT receipts. You should charge the VAT that is in force on the day you receive their payment or ship their order – whichever is the sooner. If this differs from the amount given in the order confirmation, it would be good practice to notify the customer and provide an explanation. Most customers will already be aware of the VAT change, and should understand the reason for the discrepancy once it is explained to them.
What should I do about refunds, returns and cancellations?
If you have to issue a refund after 1 December for an order placed before, you must refund the full amount that was paid and account for it at the same VAT rate. Above all you must be consistent about how you account for VAT in each instance.
For more information see the HM Revenue & Customs guidelines:
http://www.hmrc.gov.uk/pbr2008/measure1.htm
This article is provided in good faith for the assistance of SellerDeck users. The information in it is correct to the best of our knowledge, but SellerDeck does not warrant or guarantee the information provided and cannot accept responsibility for any inaccuracy. It does not constitute general tax advice or guidance. It is your responsibility to assure yourself that your business practices conform to all mandatory regulations and requirements.