VAT on delivery/shipping charges.

[FrazerPart]

We have just gone VAT registered and are fiddling around with the site to get it working correctly. We have a couple of books on our site that are VAT exempt - we have set up the Actinic to deal with these. The rest of our stuff is elidgible for VAT.

When it comes to shipping tax settings (in Business settings), what are the differences between "Normal", "15%" and "Pro Rata" settings and when would we have a need to use each of them?

thanks
Max

[TraceyHand]

You'll probably need Pro Rata.
Set up this way, your VAT element of the shipping is calculated based on the %age of vatable items that make up the order.
So, if it's 50% vatable items and 50% exempt, it'll only charge/calculate VAT on half of the order.
I believe it works this way regardless of whether you have VAT inclusive or exclusive shipping prices and, as you do sell both vatable AND exempt goods (as do we. Well, we have some zero rated items) you will need to use this setting for your shipping VAT.