Shipping and VAT

[jayne]

Does anyone else sell zero-rated and standard-rated products retail?
(prices are shown gross of VAT).

If so, how do you charge the correct VAT on shipping?

Ideally I want to charge specific shipping to the zero-rated items and a flat rate standard rated charge to everything else but it seems that I can't do this with Actinic.
With the Royal Mail changing the weight bands on packets from 30th April any help is welcome!

I am using version 11 if this makes any difference!

[leehack]

There is a pro-rata setting on shipping, think that does it all for you. Settings > business settings.

[jayne]

Pro-rata only works when prices are net of VAT. I sell retail so my prices have to be gross.

[leehack]

How your prices have to be displayed is irrelevant to how you input them, you just choose your price layout accordingly. If you need pro-rata shipping and Actinic needs you to input prices nett of VAT, then you need to convert your prices and change your price layout, have a look in site options, lots of options on price.

[jayne]

Thanks I understand the difference between the input and display of the prices now.

Is this the only solution when selling zero-rated and standard rated products? If zero-rated items have their own shipping and standard rated items have a flat rate (or visa versa) pro-rating doesn't give the correct VAT.

[Mike Hughes]

I guess what you're looking for is two different shipping types. One specifically for zero rated items at zero VAT and another for regular items at standard rate VAT.

AFAIK actinic can't do this. I think there's just the one Vat rate for all shipping methods.

I think the most common method is to charge Vat pro-rata with the order value. Is there something about this that you don't like?

Mike

[jayne]

I can't use pro-rata because it doesn't calculate the VAT correctly.
My zero-rated products are heavier than most of the standard rated ones so I charge an individual shipping charge for each one. Under UK VAT legislation the shipping charge for this is also zero-rated in full as it is directly attributable to the zero-rated item.
If I now charge a shipping charge for the standard rated items this is standard rated for VAT. If I pro-rate the charge for VAT it won't give the correct VAT.
As an example say a customer bought a £10 zero-rated item with £2 shipping and standard rated items of £30 with a flat rate £2 shipping. The correct answer should be £2 shipping charged to VAT, £2 zero-rated. However if you pro-rate only £1 is zero-rated.

Pro-rating does work if shipping is calculated as a single amount for everything in the basket.
So I am a bit stuck as Actinic can't do this. I was thinking that I could set up the shipping of the zero-rated items as a compulsory component - if this didn't confuse customers too much!

[leehack]

If pro rata works on what % the zero rated product was in relation to the cart total, why don't you try separate shipping for zero rated items, probably via category based shipping. Or go even simpler and include shipping in the cost of product and have them on free shipping. You also have shipping options on the product itself. I can't believe your situation cannot be catered for with a little lateral thinking.

[jayne]

The problem is that Tax is applied to all shipping. I want to charge shipping separately for the zero-rated items but I can't zero-rate their shipping and keep the rest standard rated. I can't see how any of the shipping options will change this.
Unless anyone else can think of anything better I think I will have to go with components on the products. This will allow for different shipping rates to UK, Europe etc. It isn't ideal as I am sure it will lead to buyer confusion but it doesn't look like I have any choice.

[chickenhouseman]

i think if you read the info on VAT from HMRC the vat charge on the whole of the shipping is prorata to the vat due on the items. Actinic is working it out correctly.

We sell a mixture of zero and vatable and don't have a problem.

[cbarling]

I think Simon is correct. The fact that the actual cost of the shipping for the VATable and non VATable items is significantly different is irrelevant as far as HMRC is concerned, I believe. You can pro-rate the shipping VAT based on the relative value of the items.

Chris