VAT calculation inconsistency?

[dmo_admin]

We are new to Actinic and would be grateful for some help with the following.

There appears to be a problem with the way in which VAT is worked out (see below). Perhaps we have done something wrong in the way we have set up the store (www.decanimusic.co.uk)?

Any advice would be much appreciated as the person who does the order processing is getting quite frustrated by this.

Many thanks.


The first two items are exempt from VAT, while the 3rd is subject to VAT (the ex-VAT price is showing here).

Rise Up & Sing Third Edition
Option - Select one: - 2 £5.50 £11.00

Rise Up & Sing Third Edition
Option - Select one: - 2 £45.00 £90.00

Rise Up & Sing Third Edition- 1 £73.40 £73.40
11-CD Set Instrumental CD

__Totals__

Subtotal: £174.40
Shipping & Handling: £5.00
Total Tax: £13.22
Total: £192.62

I make it 51p short in the VAT - on many other transactions there is no problem with VAT. Do you think it might be the combination of VAT-able and non-VAT-able items in the same order that is causing this?

[leehack]

Check your tax settings on your shipping costs, the usual area where people make a mistake on this.

[malbro]

The first two items are exempt from VAT, while the 3rd is subject to VAT (the ex-VAT price is showing here).

Rise Up & Sing Third Edition
Option - Select one: - 2 £5.50 £11.00

Rise Up & Sing Third Edition
Option - Select one: - 2 £45.00 £90.00

Rise Up & Sing Third Edition- 1 £73.40 £73.40
11-CD Set Instrumental CD

__Totals__

Subtotal: £174.40
Shipping & Handling: £5.00
Total Tax: £13.22
Total: £192.62

I make it 51p short in the VAT - on many other transactions there is no problem with VAT. Do you think it might be the combination of VAT-able and non-VAT-able items in the same order that is causing this?

It would appear that Actinic is basing the VAT on shipping on the percentage of the total that is due VAT. So instead of taking the VAT on the 5.00 it is only taking VAT on a proportion of it. I get 13.21 on my calculator.

As far as I know you have to charge the VAT on all the shipping but VAT is a complex area.

[Mike Hughes]

Actinic is charging VAT on shipping on a pro-rata basis. There is a setting for this somewhere but TBH I can't find it.

The details are in HMRC note 700/24. This is the relevant bit:

2.3 What if I have to deliver the goods and I make a charge for this?

The important test is whether delivery is included in the contract. You are making a single supply of delivered goods if, under the contract, you have to deliver the goods to a place specified by the customer. This might include the customer’s:

own address;
friends or relatives; or
their own customers.

The position is not affected by whether the charge you make for delivery is separately itemised or invoiced to the customer. In either case there is a single supply for which the VAT liability is based on the liability of the goods being delivered. For example, any element of the price attributed to the doorstep delivery of milk and newspapers will also be zero rated. On the other hand any element attributed to the delivery of standard rated mail order goods will be standard rated.

Typically, the price of the various items is used as the basis for deciding what the VAT liability should be on the delivery charges.

Mike

[leehack]

settings | business settings | shipping - top left of the window

[Mike Hughes]

Ah, yes. I thought it should be there but couldn't see the pro-rata option.

It appears that pro-rata VAT on delivery charges is only an option if you are using tax exclusive pricing. Which kinds of makes sense. You can't really tell actinic that the delivery price includes VAT only to tell it that the VAT rate used for shipping should be pro-rata.

So, re the original post. Pro-rata is correct but you can change it in the Shipping VAT drop down if you want to.

Mike