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**Mike Hughes** · 07-Jun-2011, 08:31 AM

Ok. Here's my take on this:

1. The main problem is that the preferred solution with VAT on postage being pro-rate with order value is likely to confuse the customer as the totals aren't going to be at all clear.

2. The VAT being applied pro-rata probably isn't really a problem as such for the business. You can do the sums for various different mixes but I suspect the VAT applied to the postage will work out much the same whether it's applied pro-rata or just to the Boxes shipping.

3. At the end of the day if you're selling to consumers you need to be showing them the VAT inclusive price. So I would set my shipping charges to be be 'VAT Inclusive - pro-rata'* and let Actinic do the sums behind the scenes.

* Of course Actinic might not have this setting in which case you need to get on to Bruce about it.

** In the meantime you might want to add a comment at checkout along the lines of " Where both books and boxes are ordered, VAT is applied on delivery charges in proportion to the mix of books and boxes. This works out cheaper for most of our customers so please forgive us if the totals look slightly confusing."

Mike

**fleetwood** · 07-Jun-2011, 10:23 AM

Cheers Mike

Yes, I already add all sorts of explanations into t&c and next to product, regarding post and VAT, but at the end of the day, its still very confusing.

Unfortunately, the VAT applied to the postage dosen't work out much the same, which is the biggest issue. Depending on the product mix (Vatable to non vat), the costs mess about due to the pro-rata postage calculation, meaning that if you order just boxes, you 'apparantly' pay one charge for postage, yet if you order a mix, you pay a different charge, for the box element.

example:
customer orders 1xbox pack at �20 plus VAT = �24
postage charge is �10 plus VAT = �12
Total cost �30 plus �6 VAT = �36

customer now adds 1 book at �10, which has an associated postage charge of �2. Total �12.

customer would expect to pay �48

but the VAT on the postage changes
the vatable element of postage now calculates as 20/30 x �12 = �8

The total now becomes
Boxes �20
Book �10
Postage on vatable element �8
Postage on zero rated element �4
VAT on Boxes �4
VAT on vatable postage element 80p
Total �46.80

So customer added a �10 product plus �2 postage, and the total extra payable for this �12 value is......�10.80 !!!

yes, I know its cheaper, so customer should be OK with this, but still stupidly confusing.

So we try a workaround, and make the box product INCLUSIVE of postage.

here the customer orders 1xbox pack at �30 (incl postage) plus VAT = �36

again, customer adds 1 book at �10, which has an associated postage charge of �2. Total �12.

customer would expect to pay �48

Now the pro-rata postage system calculates the vatable element of postage as: 30/40 x �2 = �1.50

The total now becomes
Boxes �30 (incl postage)
Book �10
Postage on vatable element �1.50
Postage on zero rated element �0.50
VAT on Boxes �6
VAT on vatable postage element �1.80
Total �49.80

Here the customer added a �10 product plus �2 postage, and the total extra payable for this �12 value is......�13.80 !!!

We need to able to tell the system that, hey, the boxes should be excluded from your pro-rata calculations - but we can't.

3. At the end of the day if you're selling to consumers you need to be showing them the VAT inclusive price.

Exactly - which is why I am struggling with this. I don't want my customers seeing all this VAT mess.

To make it worse, there seems to be no clear route to showing VAT INCLUSIVE prices throughout (other than using simple tax - which does not work with pro-rata shipping - so is a non starter. If selling zero rated and regular vatable goods, you have to use pro-rata shipping to satisfy VAT man).

As an example of this - I have now added the postage on boxes directly to the box product, using component and choices (customer selects zone next to product to add correct postage - not ideal as pointed out in OP).

I wish to show VAT INCLUSIVE prices. The product shows price INCLUSIVE of VAT. The component shows it EXCLUDING VAT. I can't see how to get the component to display INCLUSIVE too!

So my product looks like this:
BOXES �20 (inclusive of VAT at 20%)
plus shipping surcharge to NI �10 (exclusive of VAT)

(stupidly confusing!)

In addition, the site shows one way (product VAt inclusive, plus component VAt exclusive), the checkout a different way (product and component shows VAT exclusive - so the customer sees different price next to product if they view checkout or the product listing) - and the invoice layout is different too.

I'm not convinced that Actinic can perform an all inclusive layout (across product display, checkout and invoice layouts), unless you elect for simple tax.

At the end of the day, I am slowly resigning to the fact that:
1) Actinic (all flavours) is built to satisfy designers, rather than sellers. More and more design options are built in each new release (as requested by us!), but the working practices in the real world are often overly complex.
2) Actinic is heavily biased towards B2B usuage, rather than B2C (and that the design team probably have very little experience of the B2C world)

**Mike Hughes** · 07-Jun-2011, 12:31 PM

Hi Martin,

I'm totally with you on this. What you need is a 'VAT inclusive : pro-rata' option on shipping charges so you can tell actinic that the customer should be charged �12 for the shipping inc VAT (�10 for the box and �2 for the book) and the VAT element in that is calculated correctly by Actinic based on the pro rata value mix of boxes and books).

The calculations aren't complicated. Actinic just needs to use the VAT inclusive shipping charge and work back to calculate the VAT due from that.

I'd suggest getting on to Bruce about it.

In the meantime I suspect the scripts could be changed so that the pro-rata setting works the other way around. i.e. instead of adding the VAT to the order it calculates the VAT on an inclusive basis and leaves the totals alone.

What happens if you open an existing order after this is always a problem as Actinic has a habit (fixed yet?) of recalculating stuff it should be leaving alone.

Mike

**fleetwood** · 07-Jun-2011, 01:36 PM

To clarify, whilst I do need to be able to display VAT inclusive prices at all stages to my customers, I don't just want a work back from the total, as you suggest. I want to be able to seperate out postage on the vatable goods from postage on the zero rated goods, so that the total postage is not reallocated by the pro-rata postage system.

I can understand that you may be prevented from applying your own weighting to where the postage applies, to prevent abuse (the �100 VAT item goes post free, whilst the �1 zero rated widget attracts the full postage charge, therefore avoiding VAT on the postage), but where the goods ship seperately, as our boxes do, due to them being so big, I would like to be able to split the order down accordingly. I could always do this manually after receiving the order (boxes on one order, books on another), but the customer would still have all the confusion on the website and checkout, and its a lot of messy work for us to do.

At the very least, I would like a resolve on the apparant inability to show all prices and costs inclusive of VAT, at all stages of the process. In posting, I was hoping someone was then going to tell me how this could actually be done

.

I will contact Bruce at some point. However, having recently reported 2 bugs directly, I'm not overly convinced that such action is taken that seriously, unless there are a lot of peeps shouting about the same. Back ordering regularly causes my system to crash. Having tried endlessly, making copious notes, I can't pin down an exact sequence of events, although on calling the bug in, I did get Actinic help to crash their version too. On repeat though, the exact same sequence didn't crash a second time. Without an exact sequence to replicate, I was left feeling that my report wouldn't get any further than the helpdesk, and not make it to the design team! Maybe I'm wrong, but have had zero feedback since reporting. I wonder how much testing goes on in the field. Working with snapshots in the Actinic offices is not the same as actually spending a day out in the field, observing actual work practices. How end users use the system, is probably not the same as how the design/test team do in their office.

Our own suppliers (a large scale American book distributor), did this a few years ago - sent senior staff into the field, to work in some of the shops that they supply, for a day. As a result, they instigated a raft of new measures based on what they found by actually getting their hands dirty, and seeing what we actually have to do day-to-day. For example, receiving a damages report, when your sat in an office, takes a few minutes to deal with. Receiving a box with damaged goods, having to type up a report, deal with returns procedure, and contact customers who ordered said product, and explain you can't ship their order, as the goods came in damaged, is something else, and needs to be experienced, before better packing at the supply end, is instigated, to sort out the problem (one of the things that came about as a result of a head office visit). Dealing with a reported issue at the office, by issuing a credit note - easy. Doing all the work caused by the issue at the business end of things - not so easy. Has to be experienced first hand. Anyone who has wasted a day and night wrestling with a bug will sympathise.

**Duncan Rounding** · 07-Jun-2011, 02:04 PM

I might be wrong but I seem to remember reading that if a delivery contained vat-able and vat free items then the postage was all vat-able, just as per an all vat-able item delivery. If the delivery contained only vat free items then the postage was vat free. I also thought that this was on a delivery by delivery basis and not necessarily on an order by order basis - so splitting an order may affect the vat on the postage on the total order, as may back orders.

I can't believe that most other merchants bother apportioning the vat on the postage and that they perhaps just charge vat if any portion of the order has vat-able items or no vat if all vat free items. It's too complicated.

**fleetwood** · 07-Jun-2011, 02:35 PM

Duncan - it IS too complicated!

The situation probably does not arise for most, as most products are vatable.
Bookshops sell primarily zero rated items, but also sell vatable products too.

I did post the VAT rulings on another thread (http://community.actinic.com/showthread.php?t=50460, but basically, VAT is chargeable on postage, at the same rate as the goods supplied. If you supply a mix, then it should be apportioned in a ratio to the value of the goods, and only charged on the VATable portion.

Charging VAT on the entire postage charge, if only part of the order is vat rated would be pretty unacceptable to the customer.

If you order �10 worth of books, and the postage charge is �5, you pay �15.

If you order �10 worth of books, plus a �1 pack of bags (which are vatable), postage hikes to �6 (�5 plus VAT, if you don't pro-rata), so the �1 bags now effectively cost you �2.

Would you go for that?

The situation is so complicated, that I doubt that some retailers actually realise what is going on, as the changes to the order total are 'hidden' (ie not easy to calculate in your head) between the goods showing at net price at the checkout (when they should display as vat inclusive if that is what you opt to show), plus a total VAT price (without a breakdown of how this figure is arrived at). All the VAT apportioning etc should take place 'under the hood' - unless you need to show it for a full VAT invoice - the customer should not be exposed to all this mess.

If you are going to show VAT on the invoice (and checkout and store), it needs to be of a consistent layout, and easy to understand, like this (Sorry for the poor layout - hope you can see what is going on):

---------------------------excl vat----vat-----incl vat
zero rated Item------------ 2.00 0.00 2.00
vatable Item----------------5.00 1.00 6.00
postage on zero items-------1.00 0.00 1.00
postage on vatable items----2.00 0.40 2.40

total-----------------------10.00 , 1.40 11.40

what we current have is:

store shows
zero rated item is �2
vatable item is �6 (inc VAT)

checkout shows:
zero rated Item 2.00
vatable Item 5.00
postage 3.00
net 10.00
VAT 1.40

total 11.40

When your selling mixed goods, as customers add and remove items from cart, the VAT and postage bounce around without direct relation to the price of goods shown on the site (as demonstrated in my earlier examples). You add something for say �2, and the total goes up by �2.15. The customer can't see why, without a proper breakdown.

**saucysal** · 07-Jun-2011, 02:52 PM

What we do

We sell about 50:50 zero rated products and standard rated products, and sell to the end consumer. Our prices alongside the goods are VAT inclusive, and the VAT rate is given there with the price, eg "�7.95 including VAT at 20%" if standard rated, and just "�7.95" if zero rated. The prices in the basket/Checkout break down into ex-VAT and a separate line for the VAT at the bottom. The carriage in the basket is ex-VAT but we state the total carriage prices in our Info/Terms & Conditions. Our total prices to everyone worldwide are the same, regardless of country. We export the orders into Sage, and manually adjust the VAT on the carriage depending on the VAT rates of the goods ordered when processing in Sage - goods all standard then carriage is all standard, goods all zero then carriage is zero, and pro-rata for a mix, as stated by Revenue & Customs. We manually adjust the prices and VAT for orders going outside the EU, in Sage. In all cases keeping the grand total the same as that paid by the customer. Carriage charges depend on option chosen by customer, country and the packed weight of the goods ordered - we have a packed weight figure for each product on Actinic so this calculates automatically. We have been operating this system for 8 years with no problem.
Sarah

**fleetwood** · 07-Jun-2011, 03:07 PM

Sarah - it works for you, but you are not the end customer, so you have no idea what the customer thinks (that is not mean't to sound as patronising as it does - hope you get what I mean)

Imagine going to the supermarket.
You see your taste the difference choccie cake is priced at �6.
You get home, and your receipt says
Choccie cake �5
and at the end of the bill, after all the other goods (some vatable, some not), its add on the VAT.
As a retailer, you probably get what is going on.

As Joe Public, you probably don't look at your receipt!

BUT, assuming you do, you might think it a bit odd that your cake is listed at �5, when you paid �6. The VAT total at the end won't help you see what is what, unless you get out your calculator and micro analyse the bill.

The prices in the basket/Checkout break down into ex-VAT and a separate line for the VAT at the bottom. The carriage in the basket is ex-VAT but we state the total carriage prices in our Info/Terms & Conditions.

Yes, we do the same, but we shouldn't have to.

The fact is B2C invoicing (including the checkout display), should show VAT INCLUSIVE pricing. (your supermarket bill most certainly does)

The checkout shows a different postage calculation to your t&c. The total may be the same, but it sure isn't easy to understand.

**fleetwood** · 07-Jun-2011, 05:31 PM

1) Since starting this thread, I have been doing a lot of searching, and this, or similar issues have been raised since 2003, and we still seem to be at the same annoying place. In fact Sarah (saucysal), you said

All this I have found very annoying.

on exactly the same issue back then.

2) I have taken a look at quite a few 'major' stores (John Lewis for example), and they show VAT inclusive pricing on the product page (without it having to say 'inclusive of VAT') and in the shopping basket (again, the goods shown at full retail including VAT, without the need for a VAT breakdown or it even saying 'inclusive of VAT').

So why does Actinic insist that we need to display goods in the checkout, in this way? I thought it must have been a tax/vat requirement, but if the majors are doing it like this, I'm sure it can't be necessary.

What I'm working with:

Website display: Product �12 inclusive of VAT at 20%

Checkout display:
Product �10
VAT �2

What I want (just like John Lewis

):

Website display: Product �12

Checkout display:
Product �12

That can't be so hard, can it?

**leehack** · 07-Jun-2011, 05:56 PM

If you have vat inclusive pricing on your store and go into the design tab on the cart, you can choose which fields to show/hide on the cart. I did something similar recently where customer wanted the gross amount to show in the cart only and we labelled the vat field something like 'which includes vat of'. You could of course choose to not show the vat at all in the checkout by hiding the respective fields.

This seems pretty common nowadays as vat is confusing for many people, i think it only becomes a legal requirement to show the breakdown on invoices etc.

**fleetwood** · 07-Jun-2011, 06:37 PM

Thanks Lee - I'm sure that is something I could work on.
Why I am finding all this so frustrating, is that it should be fairly simple, but each time I try one thing, there is another hurdle.

Yes, prices could be shown inclusive, by selecting buisness option - VAT inclusive pricing.
But I can't use VAT inclusive pricing, because if this is selected, then you can't have pro-rata shipping, which is necessary for reasons I have outlined earlier.

The shopping cart layout is currently the big issue.
Unless I have VAT inclusive shipping (which I can't), I can't get it to display prices VAT inclusive, even though I can on the product page, by selecting an appropriate layout. There just dosen't seem to be the same option of selecting a display VAT inclusive layout, for the shopping cart!

VAT and pro-rata shipping is complicated, but its VAT rules. Fair enough.
Its just not something a retail customer should have to be bothered with.
I'm now not so sure that retail customers even need to be shown VAT breakdowns, so long as prices are shown fully inclusive, you just need to show the price. Is it not that you only need VAT breakdowns if someone requests a VAT invoice?

The start of the thread was the problem of VAT and pro-rata shipping. Attempts to develop a workaround have lead me to this issue with the shopping cart. Aaaaaargh!

**leehack** · 07-Jun-2011, 07:21 PM

I think i may have confused things in saying 'choose fields'. What i actually mean by that is going into the nuts and bolts of the design, particularly some of the blockifs that decide whether a certain field will show or not (tax settings are the switches). From memory I reversed these, so that net totals were not shown even when the actinic default settings were saying they should. I also renamed a field as mentioned earlier.

The result was on product pages a product that is �2.99 inclusive of vat, showed as Price: �2.99 no vat was mentioned in the layout. When added to cart, the price against the product also showed as �2.99, the subtotal also showed as �2.99 and the total showed as �2.99. I renamed the vat field to something like 'which includes vat of'.

This meant that when you went through to the cart or checkout, the products showed as �2.99 in the cart and the breakdown was then:

Product - �2.99
Subtotal - �2.99
Delivery - �1.40
Total - �4.39
Which includes vat of - �x.xx

The which includes vat line could also be removed.

I hasten to add though, it's not a layout option, you're into the design and coding and switches to do it. In lehman terms, when you choose to charge tax or not in business settings, that sets flags and those flags activate certain settings. But most if not all of those flags can be cancelled or reversed to do the exact opposite to what they are set as standard.

A simple non vat intrusive checkout for a retail customer is actually very much like what a checkout process on a non-vat charging site will be, slick, empty and non or very limited mentioning of vat.

Actinic have taken a rigid stance on either no-vat details for non-vat companies or vat breakdowns for those that do charge vat, along with the options on vat charging sites to decide how prices show. I agree with you from a 'retail' perspective, they need to introduce more ways to adjust this area like they do with normal areas, so things like i had to do not have to happen.

I guess we need a 'lite vat' layout for the retail customer, it's somewhat business centric as is and a bit too uncontrollable unless you grab your balls and jump in.

**fleetwood** · 07-Jun-2011, 08:33 PM

Thanks for the details Lee - I'm going to bookmark this and visit at a later date. Playing around with VAt flags and the like sounds like something I should be looking at further down my already large to-do list.

I am grateful for the vote that I am not completely out on a limb here, as raising issues that can't be readily resolved, you can often think "am I the only person who thinks this is a dogs dinner?"

For all my bitching, I do think Actinic is a good bit of kit, albeit, it is probably not the best bit of kit for my type of business (large product database, and stock that changes weekly). I've just been using it for so long now, that I'm loathed to change. You have hit the nail right on the head, when you say its too "business-centric". I'd love to know what percentage of final users are B2B and what percentage B2C, as its certainly smacks of being designed for the B2B community, whereas I would guess the majority of final users sell to consumers.

An issue like this (can't get a simple VAT incl display in the checkout) suggest that this is the norm, when in fact its actually unusual for big consumer sites to show VAT breakdowns (I didn't realise myself until I started looking more carefully - just took a look at Amazon, and again, no mention of VAT anywhere in the shopping cart, just the price, nice and simple) This is only really expected on a B2B site. One could go on about other design faults which are not that consumer friendly (*cough* checkout progress bar **), but as you know, I'm not one to stir things up

**saucysal** · 08-Jun-2011, 02:14 PM

Have to have breakdown

As we export orders from Actinic and import into Sage, processing the orders in Sage rather than Actinic, we have to have the breakdown of ex-VAT and VAT in the Checkout for the orders to come into Sage correctly accounting for the VAT. Ideally we would like total prices only on the website, as on other retail sites, with small print somewhere saying about the VAT, but I did a lot of investigation of this when we first started with Actinic in 2004, and since, and it cannot be done and still work with Sage.

Sarah

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