computing vat before (ie excluding) shipping, how?

[lazyeye]

Hello,

Some clients have complained about the fact that the VAT calculation includes the shipping charge. There's the first subtotal which is the sum of products' prices, to this is added the shipping charge, and then the VAT, which is based on the sum of the first two figures. I never thought of that but it don't seem quite right. Nevertheless, it seems to be the default behavior of the cart. But what about changing it to this: sum of prices + VAT on said sum and then shipping. Can that be changed in some settings or do I have to hack the script?

Thanks

[leehack]

You legally have to charge VAT on shipping costs. Period.

[HowardW]

Hi Henri
I think this has been posted before.
Although Royal Mail do not charge VAT, the VAT rules do say that you have to charge VAT on postage
Regards
Howard

[Kultya]

Yes, the two answers are correct. I fell foul of this for a month or two on ebay, I was charging only about 30p above my actual postage costs to cover the jiffy bag and I was then horrified when my book keeper told me I have to pay VAT out of that which meant I was selling my shipping charges at below cost. I just figured as there was no VAT on stamps, postage or franking machine filling then it would be a non vatable item.

Nowadays on ebay I put at least a pound on top and several people get outraged by this and don't believe me when I tell them I have to pay VAT. Tell them to see Mr Brown at No.10 with their problems!

Malc

[leehack]

Tell them to see Mr Brown at No.10 with their problems!

They could try No.11 also, probably get the proper bloke instead.

[Paul Bulpit]

You legally have to charge VAT on shipping costs. Period.

Concur.

Anyone, anybody, any software, that does it differently, falls foul. If this is discovered after the event, at a VAT Inspection, it could cost you dear - as the undeclared tax will be claimed.

The e8ay reference goes to show that e8ay is not meant for traders/businesses - it is for the general punting public to play about. They can charge postage at cost and are unlikely to be required to show the sales of household bric-abrac on a tax return.

When I sell, as an individual e8ayer, items from my business, I account for VAT on the total received, the buyer doesn't need to know about it as long as I have done it properly.

[Kultya]

Concur.

The e8ay reference goes to show that e8ay is not meant for traders/businesses - it is for the general punting public to play about. They can charge postage at cost and are unlikely to be required to show the sales of household bric-abrac on a tax return.

And add to that the fact that everybody wants everything and anything for 99bloodyP and thats why I'm getting outa there and concentrating on my own site.

Ebay is only any good to clear out unwanted crap these days IMHO!

[lazyeye]

well thank you all for your input. I won't worry about it no more. I guess what applies to the uk applies to frogland as well. The rules are basically the same.

[Darren B]

You legally have to charge VAT on shipping costs. Period.

Ermmm not totally true, if you use royamail then this is VAT excempt not sure how you would calculate this though. You cant charge VAT on NON-VATable items

D

[Mike Hughes]

Sorry Darren, but your wrong. You need to go and read up on the VAT regulations where this is specifically discussed.

Mike

Edit: OK I decided to be more helpful. Here's the specific quote from the VAT 700 guide:

IF YOU: Send goods by post.

THEN THE: charge made to you by the Post Office is exempt, but your charge to your customer is taxable even if it is exactly equal to the charge made to you by the Post Office.

[Darren B]

Ooooh thanks Mike

See im so out of date its unreal, maybe i need to take some time off and spend a year reading up, mind you it would probably all change by the time i got to the end.

You can tell this shows the goverment used to be involved in the post office cant you, dont tax yourselves but tax everyone else

D

[leehack]

Ermmm not totally true, if you use royamail then this is VAT excempt not sure how you would calculate this though. You cant charge VAT on NON-VATable items

D

I would never write something so black and white if it were not true. It is basically built on the fact that even though delivery is not vatted to you, the service you are providing (ie sorting out delivery) is chargeable.

This part is a grey area for a lot of people and there should be something out there a bit more clear to explain, you can get proper stuffed (vat bill you have never charged for) in this area, especially if you have high volume of post.

[Darren B]

Cheers Lee, point taken

I hate VAT can you tell, so basically all deliveries charges are subject to VAT simple i can get my head around that, needs to be simple for me

D

[TraceyHand]

I'm glad you guys mentioned this actually because I was wondering exactly the same thing a couple of days ago (Jesters will be VAT reg from 1st March and I need to change the prices etc)
As we use both RM and Parcelforce, neither of which charge VAT, I had wondered how the VAT worked on sales...and now I know..it rips us off

Might be time to shop around for a new courier at roughly the same price but including VAT so at least we can claim some back!

Anyway, thanks for answering my question before I asked it!
Gold stars all round (except for Darren coz he was wrong )

[leehack]

Tracey, there is a specific lower vat rate you can start on to get you into the swing of things, i haven't looked at it lately so can't be exact, but it goes something like you charge the customer 17.5% but you only have to pay the vatman 5% to start off with. I think it lasts for quite some time. If you have this avenue open to you, make sure you look into it, it's helpful at the start during the transition.

Vat on delivery will not cost you any more, you just charge the customer and then pass it on to the vatman. Unless of course you now reduce your delivery charges by the vat rate so they are cheaper on your site as they are nett of vat.