VAT charges - HMCE compliance

[Lisa Carey]

We are in the UK and take orders from all over the world and ship all over the world.

We want to apply VAT as follows:
If the customer's Invoice Address OR Delivery Address is in the UK, charge VAT.
If the customer's Invoice Address OR Delivery Address is in the EU, charge VAT (unless a valid VAT registration number is provided).
If the customer's Invoice Address AND Delivery Address are outside the EU, they are exempt from VAT.
If the customer's Invoice Address AND Delivery Address are in the Channel Islands, they are exempt from VAT.

This is in accordance with advice given by HMCE.

How can we apply this in Actinic? There doesn't seem to be any way at the moment.
If we tax by Invoice Address then a customer can order from Jersey for goods to be delivered in the UK and they are not charged VAT when they should be.
If we tax by Delivery Address then a customer can order from the UK for goods delivered to the USA and they are not charged VAT when they should be.
If we chose Always Apply Taxes, if a customer orders from the USA for delivery in the USA, they are charged VAT when they should not be.

How can we set up the VAT rules in Actinic to comply with HMCE requirements?

We need to be able to set up Actinic to do this:
Invoice Address in UK - Always Apply Taxes
Invoice Address in EU - Always Apply Taxes but allow exemption
Invoice Address in Rest of World - Tax by Delivery Address

[Bruce]

Hi Lisa,

We need to be able to set up Actinic to do this:
Invoice Address in UK - Always Apply Taxes
Invoice Address in EU - Always Apply Taxes but allow exemption
Invoice Address in Rest of World - Tax by Delivery Address

This is at present one for the wish-list. I will add in a vote for you.

Kind regards,

[Bruce]

This point has sparked some debate and to be sure development called the HMRC helpline and got a few points cleared about how your local body would like you to comply with VAT regulations.

The basis on which you need to charge VAT is all about the movement of the goods not who is paying for it. A movement within the EC is classed as a 'supply' and is vatable. A movement outside of the EC (which includes those to the channel Islands) is classed as an 'export' and VAT is not chargeable.

Here's a quote from VAT Notice 703 which confirms the point
"2.2 Why does zero-rating apply to exports?
VAT is a tax levied on goods and services consumed in the EC. When goods
are exported they are "consumed" outside the EC and to impose VAT on such goods would be contrary to the purpose of the tax. Therefore, the supply of exported goods is zero-rated provided certain conditions are met."

Kind regards,

[jxm28788]

A movement within the EC is classed as a 'supply' and is vatable.

except that if they have a valid vat number they are exempted...? what if the goods are going to a VATable place (eg. Northern Ireland) but the invoice address is in a VATable but exemptable place (eg. republic of ireland)?

[Mike Hughes]

I think the key bit is this one:

The basis on which you need to charge VAT is all about the movement of the goods not who is paying for it.

i.e. VAT exemption for businesses can only apply if the goods are exported out of the UK. If they aren't exported from the UK then there's no VAT exemption.

(in terms of your question. It's the delivery address that counts)

Mike

[Paul Bulpit]

Concur - otherwise would be tantamount to avoidance.

I have Actinic set to 'Tax by Delivery Address' and proof of shipping/POD is your evidence for the VAT Inspector.




.

[saucysal]

Yes, only delivery address matters

Hi! I also confirm that it is the delivery address only that matters for VAT.

When you sell from the EU to a VAT registered business in another country in the EU, you can exchange VAT numbers and not charge VAT, but you will need to complete the EU Sales form for Revenue & Customs (HMCE) with details of each sale.

Sarah