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Shipping Tax Question

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raineshoe View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote raineshoe Quote  Post ReplyReply Direct Link To This Post Posted: 21 February 2012 at 8:38am
Trouble is we all seem to have asked the VAT office and got different advice at different times. Do they really know what they are doing?

I'm phoning again this morning to clarify, but it really is a mess.
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raineshoe View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote raineshoe Quote  Post ReplyReply Direct Link To This Post Posted: 21 February 2012 at 9:24am
I've asked them again. I got somebody different this time and this is what said.

If you charge P&P and the majority of your parcel is VATable then you charge VAT on the whole P&P price. If your goods are zero rated then you don't charge VAT on the P&P price.

If you sell to EC you charge VAT as above or not as the case maybe.

If you ship to US or Oz or anywhere like that its zero rated regardless.

Gosh that was hard work to get there though..... blessed office thought they were supposed to know what they were talking about. Be interesting to see if anyone else phones and gets the same answer or yet again a different answer.



Edited by raineshoe - 21 February 2012 at 9:25am
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softap View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote softap Quote  Post ReplyReply Direct Link To This Post Posted: 24 February 2012 at 8:19am
Only an idiot could have made up a set of rules like that. "If the MAJORITY of your order is vatable" etc - how is anybody supposed to create a working system from a woolly statement like that.
We were always told, going back to 10 years ago, that in theory if all of your order contains vat-free items, then you should not charge vat on the shipping. But if there is at least one vatable item in the order, then shipping should have vat applied. RC can't do it this way (as far as I know), so in practice we charge vat on all shipping, regardless of what has been purchased (provided the customer is in the UK or EC).
An accountant once advised us that the main thing is to charge your shipping vat CONSISTENTLY, i.e. always apply the same rule. To us, that means always charging VAT.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Support Quote  Post ReplyReply Direct Link To This Post Posted: 24 February 2012 at 8:27am
Hi,

Please see 2.3 at http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000114&propertyType=document#P41_3217

It makes the rules clear in the following statement

Quote The position is not affected by whether the charge you make for delivery is separately itemised or invoiced to the customer. In either case there is a single supply for which the VAT liability is based on the liability of the goods being delivered. For example, any element of the price attributed to the doorstep delivery of milk and newspapers will also be zero rated. On the other hand any element attributed to the delivery of standard rated mail order goods will be standard rated.


In other words the Tax on the shipping has to be the same rate as the tax on the products being shipped.

In RomanCart on the shipping method you can select the option to 'Charge tax on shipping at the same rate as the goods being delivered' This uses apportionment to work out the tax amount based on the tax on the products.

There is another option at 'tools'/'options'/'shipping' which lets you specify whether you would like to apportion by quantity or value. We were suggested quantity on the phone by HMRC, but their website examples seem to use Value.

As per the previous post consistancy is important. But however consistant you are, if you have not paid enough VAT and you have a VAT inspection HMRC may demand the VAT is paid (even though you have not been paid it yourself) so it is important to get this right.

Many Thanks
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rscass View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rscass Quote  Post ReplyReply Direct Link To This Post Posted: 24 February 2012 at 8:29am
"If the MAJORITY of your order is vatable" etc -

Odd advice - the VAT element of shipping is supposed to be accounted for IN PROPORTION to the to the tax status of the goods.

RC does this already does it not?

DISCLAIMER: I worked in accounts years ago - the correct way to do this is get an opinion from HMRC - and press for a clear opinion, preferably in writing.

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rscass View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rscass Quote  Post ReplyReply Direct Link To This Post Posted: 24 February 2012 at 8:30am
D'oh - support got in there first!
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raineshoe View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote raineshoe Quote  Post ReplyReply Direct Link To This Post Posted: 24 February 2012 at 8:35am
Have to laugh at the statement the VAT office use there about milk and newspapers being zero rated for delivery. Its not a very good example I think as if these are delivered to your doorstep 1: newspapers don't need packaging and 2: milk comes in its own glass bottle so still doesn't need extra packaging and of course often delivered by your local milkman on foot or your paperboy on foot. Doesn't go through the postal system at all. If your sending from an online shop you do need packaging regardless as can't send through the post without it and you have to buy stamps regardless. Couldn't they have used a postal example which is zero rated maybe.

Or maybe I'm just going brain dead with it all and they are talking sense....
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