Pre-VAT pricing

[CliffTaylor]

VAT ROUNDING PROBLEMS . . .

I've tried using the custom tax method and fell foul of the displayed Non-Standard vat rates in the invoices.

I've also found that custom tax seems to cause problems in Order Manager - e.g a tax rate of 175% instead of 17.5% if someone orders 10 of an item! Actinic Support suggest I get my client to import a recent snapshot as this might solve the problem - thats a job for tomorrow.

ANYWAY - this would all be solved for many of us if Actinic could accept the displayed prices being input and back-calculating the VAT. In my experience most retailers price their goods according to what they want their customers to see, e.g. £2.99 not £2.98 or £3.00. Or maybe if we could just enter net prices to 4 decimal places.

The more of us who request this important development the better . . .


Cliff Taylor
AnnWebCom

[Snooze_Shop]

... which all leads to some very simple questions which do not seem to have been covered in the many VAT threads ...

Are the invoices issued by Actinic "legal" for VAT puposes (apart from having to add your company Registered Office details, etc)?

Are the rounding / calculation errors produced within acceptable limits as far as HM Customs and Excise are concerned?

Has anyone else taken advice on this matter?

Comments please.

[Snooze_Shop]

Clearly, there can't be any Actinic users who bother with minor issues like VAT as the Actinic world seems to be silent on the matter of legality.

[Jenny]

If you calculate VAT on a calculator and work it out to 2 decimal places, surely sometimes you would in theory not be the full 17.5%, with the rounding?
Jenny

[edwardk]

The main problem with VAT calulations is the consistency of calculation.

Most businesses use some form of accounting package that compiles VAT reports and returns. If the VAT being calculated by Actinic is to be taken as being acurate, then it needs to employ the same calculation methods as the accounting packages.

I for one find the results of Actinics VAT calculations a serious problem as I have to recalulate the VAT on all sales before entering the transactions into our accounting package. Even a small deviation (to three decimal places) returns an unbalanced VAT report. I don't know what HM Customs and Excise are like, but the Revenue guys here will and have subjected businesses like mine to a full VAT audit because of such discrepencies.

Lets hope for a speedy resolution.

ed

[Snooze_Shop]

Would Actinic like to comment on the Validity or otherwise of the VAT invoices produced by their system?

What would be really nice is, instead of repeatedly saying that these issues will be addressed in a future release, to now simply provide some clear advice on this issue which would be of benefit to all VAT registered Actinic businesses. So what is the current advice?

Alternatively, I see little alternative other than to ask HM Customs and Excise to undertake a full review of our use of Actinic as the basis for VAT invoicing / accounting purposes.

[cbarling]

We believe that the VAT invoices produced by Actinic are valid. We met earlier this year with Customs and Excise at their request. They had said that they had increasingly come across Actinic. We asked for any input that they might wish to make, but haven't heard anything since.

My understanding of the rules is that the rounding method for VAT calculations is not specified by them. Also, Customs and Excise understand that rounding can never be "right" as you will always have a potential inconsistency at either line or order level.

We have many customers who use our links into third party accounting packages such as Sage Line 50. We have a partner who concentrates on this business, and they are experts in Sage. I'm not aware of them saying that there is a problem with Actinic invoices.

We do have an issue with getting the exact VAT inclusive prices, and the work-around that we provide, as outlined earlier in this thread, is unfortunately clunky. We do plan to address this in the future.

My final point is that I'm not the Actinic expert on VAT - unfortunately he is on holiday at the moment. I will ask him to post here when he returns next week.

Chris
Actinic

[edwardk]

Chris

First, thanks for your response. If I could make a point however that doesn't seem to be comming through to clearly. VAT (or sales tax) calculations shouldn't necessarilly be country spefici- I don't think it would be possible to do this. I think what needs to be implment is a consistent method of rendering eith VAT inclusive and/or VAT exclusive prices with an accurate VAT amount being extracted. Other applications (not eCommerce apps) that I have used approach this quite squarley by using the following methods...
Inclusive of VAT sales

[edwardk]

[edwardk]

Chris

First, thanks for your response. If I could make a point however that doesn't seem to be comming through to clearly. VAT (or sales tax) calculations shouldn't necessarilly be country specific - I don't think it would be possible to do this. I think what needs to be implment is a consistent method of rendering eith VAT inclusive and/or VAT exclusive prices with an accurate VAT amount being extracted. Other applications (not eCommerce apps) that I have used approach this quite squarley by using the following methods...
Inclusive of VAT sales
Enter the End retail price and calculate back to the ex VAT price
Exclusive of VAT sales
Enter the Ex VAT sale price and calculate the VAT amount (if necessary) with an option to do so on either the total sale value or on a per item sale value.

Doing it this way makes the methods and result consistent without any discrepency on the end sale price. It would also suit the tax calculation requirements for most countries that use VAT, GST, Sales Tax etc.

Ed

[cbarling]

Thanks for your comments.

The big difference between the US and the UK is that in the UK, for retail sales, it is normal to display prices VAT-inclusive, which gives rise to the problem that certain prices cannot be achieved (to the penny) with Actinic.

When selling from the US (we have many US customers), this isn't an issue. Prices are never displayed as inclusive of sales tax. On the Internet, this would be even more the case as out-of-state buyers don't have to pay sales tax to the merchant (unless the merchant has an operation of any sort in their state).

I think that the best solution is to allow two modes of working, depending on who the primary market is. In mode one the prices are VAT inclusive and tax is subtracted to get a VAT exclusive price. Hence the VAT inclusive price can be specified exactly as desired. In mode two (the current mode), the tax exclusive price can be exactly specified and the tax inclusive price is calculated.

There are other big issues. For instance, if you sell into an EU country and exceed the VAT sales threshold into that country, you should charge VAT at their country rate. In the US and Canada, there can be multiple tax bands applied to a sale. We actually handle these cases, and any change that we make has got to continue to work with these. It's not easy. As I said though, I'm not the real expert.

Chris
Actinic

[edwardk]

Hi Chris

I think your approach (mode1, mode2) is good. It allows the seller to pick the most suitable method for them.

Look forward to the implementation.

ed

[rkwinternet]

I have a few points...

I have a very disgruntled customer and the potential for lots more over the VAT calculation problem.

Another issue not previously mentioned relating to custom VAT settings and the problems these cause in their own right.

Trading Standards.

Although previously mentioned, I would like to add weight to the assertion that the VAT problems should not be treated as a feature enhancement to be dealt with at some time in the future, but an A1 top priority matter to be resolved ASAP.

Regarding custom VAT settings, I have discovered, thanks to Ben Popplestone, that EU regulations say that the VAT on shipping must be at the same rate as the product being shipped.

Therefore, if you have set your VAT to 'custom' and it then happens to be 17.75% then Actinic calculates the VAT on the shipping cost at 17.75%.

So you may achieve the desired VAT figure for your items, but now you will have discrepancies in the shipping VAT figure.

So, now you have 'cured' the product item VAT issue, but have a shipping VAT figure 'issue' (I love the way tech support teams the world over refer to problems/bugs as 'issues'!).

Finally, and potentially the biggest problem.

If prices are quoted at one figure in the catalogue, but customers are charged a higher figure at the checkout what is going to happen when a disgruntled customer approaches Trading Standards with a complaint.

I wouldn't mind betting Trading Standards have the power to demand the problem to be resolved or the catalogue removed from the website.

Personally, I'm not brave enough to point out this Actinic VAT problem to them... but it would only take one dissatisfied customer.

From there Trading Standards may want to speak to other site owners or Actinic themselves.

What are your views... do you think I'm talking rubbish... we'll see.

P.S. Just so you don't get the wrong idea, I've been extremely impressed, as an Actinic Developer novice, with the level of support I have received from Actinic's tech support staff. I really appreciate you guys!

[cbarling]

I sympathise with your dilemma.

Actinic doesn't allow a VAT inclusive price to be specified. This is an issue as people want to be exact to the penny in their VAT inclusive price. However, if they allow a handful of prices to be rounded up/down, there is no issue, bug or whatever we want to label it.

If setting the VAT-inclusive price to the penny is absolutely required (which I acknowledge it is in many cases), then there is a clunky work-around available. Unfortunately this work-round does have problems, as have been pointed out. However, many people are successfully using it, and penny roundings don't seem to cause problems in practise. I suspect that Trading Standards etc have bigger and more crooked fish to fry than someone who rounds up or down neither to their advantage nor disadvantage.

Incidentally, VAT should be charged on shipping at the average rate charged in the cart. So if you have a £100 item VATabale and a £100 non-VATable then VAT should be at 17.5%/2. Most ecommerce packages don't do this whereas Actinic does. If all of your goods have VAT at 17.5% you can specifically set shipping to charge at this rate.

I think that it's worth bearing in mind that there are around 10,000 live Actinic stores. Some are turning over more than a £1m a year. As far as I'm aware, there have never been any problems with either Trading Standards or Customs and Excise . I suspect that we would have heard if there had been.

Unfortunately, the choices today with Actinic are to adjust prices by a penny in some cases or to use the work-around.

Chris
Actinic

[stuff-uk.net]

VAT Problem

Chris et al,

I dont know if this helps, but thinking slightly horizontally, would it be possible to add minus vat on the final sales figures?

i.e. set the whole catalog to with VAT pricing and then for all the calculations add -17.5%

Surely this would be an easier way to alter the exisiting coding without having to change too much, that way all the non VAT prices would calculate correctly and people can pick any with VAT price they like.

Alan