VAT Problem on V9 Site

[MattParker]

Hi All,

I am experiencing a few issues with VAT exempt products via our site.

Setting the products up to be VAT exempt is not a problem at all. However, when we receive orders for these items the carriage charge is also coming through on the order exempt of VAT.

Does anybody know how to fix this please?

Many Thanks

Matt

[leehack]

On the shipping tab in business settings, what method of charging do you have for the vat (top left). I think ProRata is the one you want.

[MattParker]

Sorted!!

Thanks for the advise Lee. Needed to amend the VAT details in shipping from Pro-Rata to VAT. This way VAT is being applied to all delivery charges regardless of whether the product is VAT exempt.

Matt

[saucysal]

VAT on Shipping

Hello Matt. From my understanding of VAT, which I have been handling for many years, and have checked on their website, if the goods ordered are all exempt of VAT, then the carriage charge can then be exempt too. Likewise, with items zero rated - if all the items are zero rated, then the carriage charge can also be zero rated.

The products that we sell are a mixture of standard rated and zero rated, and some orders are exempt as they are going overseas. We adjust the VAT on the carriage accordingly, but keep the totals the same. For example, if the courier charge is £6.80, we charge everybody £6.80 in total. If the goods are standard rated, it breaks down as £5.91 plus 89p VAT, so we receive less.

Actinic cannot handle this, so we adjust the VAT on the carriage manually when processing the order imported into Sage.

Sarah

[leehack]

As i understand it the pro-rata tax setting on shipping is supposed to pro-rata the shipping according to the vat applied to each product.

They dig themselves a hole as i see it though, first of all we are told you must charge vat on shipping costs as it is a service you are providing to your customer, ok that makes sense - sort of. Delivery is generally a one off total cost though, so when someone orders a non-vat product or a product with a reduced vat amount, suddenly the service we provide is not so clear cut and we only charge pro-rata vat then. Surely the common sense way to clear it all up is to say that whether you are charged vat or not on any products, there will be full vat to pay on shipping charges.

Matt, you might have found a bug here, there was huge work done on vat in V9, perhaps this slipped under the radar. What you've done is technically wrong, although easier to administer and ensures that it does actually work.

[TraceyHand]

I've tried to make sense of the posts in this thread but, as I see it, this does work correctly in Actinic as long as your understanding of the way the VAT is charged/works is correct.

Firstly, Sarah is correct. If a VAT exempt item is sold, then there should be no VAT charged on shipping either (which is odd logic, IMO)

Of course, if you're selling exempt/zero rated goods as well as standard rate goods, this could be a recipe for disaster/confusion.
Luckily, Actinic's "Pro rata" VAT setting on shipping is cut out for just this scenario.

It calculates/charges the VAT content of the shipping charge based on the VAT status of the goods being sold. So, if the order contains both zero/exempt products and vatable ones, the vat content of the shipping is calculated pro rata based on the totals of each VAT category (IYSWIM!)

If an order consists of only exempt/zero rated items, there is no VAT on the shipping cost. If it contains only standard rate items, then vat is calculated on the full shipping cost.

Does that make sense? Clear as mud, eh?

I can clarify, if you need further help!

I can confirm that it works fine and as it should in Actinic though.

[JimboS]

THis could save me a few pence.

I sell some optical products which are partially exempt, so my carriage charges should be at the same partial rate?

James

[grantglendinnin]

THis could save me a few pence.

I sell some optical products which are partially exempt, so my carriage charges should be at the same partial rate?

James

If you are selling VAT-exempt products to customers in the UK, the carriage costs are not exempt from VAT.

[TraceyHand]

If you are selling VAT-exempt products to customers in the UK, the carriage costs are not exempt from VAT.

actually, I didn't help with that confusion (9pm my brain is fried on a school holiday day!)

There's a difference between the VAT handling of exempt goods and zero rated goods.
I should have thought, however, that Actinic itself should treat these differently in it's "Pro Rata" setup of the shipping (for records purposes) provided the products are specified as zero OR exempt correctly.

However, I haven't tested this (as we only sell standard and zero rate, not exempt) so I can't confirm this works as it should.

Editted to add
THIS LINK goes some way to explaining that the rate your goods are charged at affects the VAT on your shipping.

[grantglendinnin]

However, I haven't tested this (as we only sell standard and zero rate, not exempt) so I can't confirm this works as it should.

In my experience we only have one VAT Exempt product, but as we offer free UK delivery, we don't have to worry about getting the Actinic VAT settings right