vat

[otiz]

Hello, vat query?

Can you tell me the correct vat for childrens clothing? is it exempt or zero rated as when i download orders it does not charge vat on postage? just wondered if it made a difference putting exempt or zero.

As always thanks for any help given.

Paul
www.islandentertainmentsonline.com

[Ben]

Hi Paul

I'm willing to be corrected on this, but to my knowledge a product can be zero-rated and a customer/entity can be exempt. The tax for the shipping is calculated pro rata against the tax for the products ordered so long as the product and shipping are part of the same customer experience. If the tax on the order is totally exempt/zero-rated, the tax on the shipping will be the same.

Ben

[chrisbrown]

The best place to find out is the HM Customs & Excise website (http://www.hmce.gov.uk/business/vat/vat.htm). They make the rules ;)

[otiz]

Yes Ben thats what i need to know

Childrens Clothing has no vat, but the postage has?
How can i make it charge vat for postage on an order that has no vat on the item???

I thought it be be something to do with choosing either exempt-custom or zero rated?

Paul

[chrisbrown]

I have been looking into this further and have found what appears to be the relevant rule (http://www.hmce.gov.uk/forms/notices/700-a5.htm#P678_50902) paragraph 8.3. This also points to other, more detailed, documents.

It would appear that Actinic applies the rules correctly: i.e. total invoice including delivery charge is zero-rated when the goods are zero-rated.

I don't know what Actinic would do if there were both standard-rated and zero-rated items. :confused:

[otiz]

HIChris

My dilema is that even though the goods are zero rated i dont want the postage to be!!

When i recieve an order on childrens clothing it comes through not charging vat on postage, but i have to pay vat on postage.

That is what i need to sort out.

Thanks
Paul

[chrisbrown]

Hi Otiz,

I'm beginning to sound like I work for the VATman :( But he says...
This means that you make a single supply of delivered goods and, if the supply of the goods is zero-rated, then the zero-rating also covers the delivery or postage. This applies to most mail order transactions, but not if a delivery service is available at an extra charge for customers who request it. So you should not charge VAT on the postage.

The good news is that you will still be able to claim back all the VAT that you have paid (including that on the postage). It doesn't matter to you in the long run ;)

[Ben]

I don't know what Actinic would do if there were both standard-rated and zero-rated items. Actinic would calculate the tax on the shipping on a pro-rata basis according to the proportion of items that have a standard rate tax and those that are zero-rated. My dilema is that even though the goods are zero rated i dont want the postage to be!! This can't be achieved in Actinic, but I'm not sure it's legal! If you're VAT registered, you can claim the postage VAT back.

[otiz]

Sorted.
Thanks For That Oh Knowledge Man!!

Paul

[oldhasbeen]

Hi all

I was of the understanding that you can't claim VAT back on postage (paid to the Post Office that is - couriers are totally different and you can claim the VAT) - one of those infuriating VAT anomolies. At least this was the case a couple of years ago when I was doing the VAT returns for my husband's business.

I've recently gone VAT registered in my own business so if this has changed I'd like to know. As my Post Office costs are around 10% of my turnover, that's a lot of VAT I'm not claiming back if the regulations have now changed.

So far as I knew, although the Post Office is VAT registered and charges you VAT, you cannot claim this back (but you still have to pay the VAT on your postage costs as part of the total sale to your customer).

Will have to investigate further - the P.O seems to be a law unto itself - how do you lose millions every day and still stay in business? The rest of us would be branded crooks and banged up..... and no multimillion pound parachute to reward us for our failure and aid our "rehabilitation into society" either!

Shucks!

Helen

[otiz]

Still dont really know if i have had aanswer to this?

I want to charge my clients postage for childrens costumes.
I cant charge vat on childrens costumes
From talking to the tax office vat is chargable and payable on all postage transactions.

So again i say, how can i make the checkout put vat on the postage and not the item.
At present zero exempt items seem to give vat free postage at checkout, vat office say no!

How can i change this option within my actinic software

Paul

[ackerman]

Postage stamps are exempt from vat, therefore there is nothing to claim back.
I don't know why you are keen to charge vat on postage. As far as I am aware, postage will follow the same vat rate as the goods. This has already been pointed out.

Brian

[otiz]

Yeah i know you can't claim it back but you have to pay it.
The thing was that actinic does not charge vat (pro rata) on postage on an item that is exempt, the vat office tells me that even though the item is vat free the potage is not.

So... Just wanted to know how to add vat to postage costs (not item), at present at checkout if the item is exempt that will show on the receipt.

Hope this is a bit clearer?

Paul

[Jan]

What setting have you selected for VAT on the shipping and handling page - if it is prorata maybe you could change it to 17.5 or whatever rate the VAT man told you to charge for postage to get what you want.

Seems odd though, shipping is the only place to have prorata tax and it seems to me that it would be there for a reason.

Regards,

[otiz]

Could you tell me the difference between pro rata and 17.5 please, and is it normal to have shipping rates at 17.5 or pro rata?

Thanks

Paul

[Jan]

If you set it to 17.5 VAT will be charged at 17.5% of (presumably) the shipping costs, if you set it to prorata it will be charged as a percentage of the order value.

I think that it is normal to set it to prorata but am definately not an expert on VAT so can't give any solid advice.

Regards,

[otiz]

I think i was missinformed by the vat office, reading my big fat vat book (first time) it says that items that are vat exempt are also postage exempt unless requested by customer?, this applies to most mail order deliveries. Mmmm.

This means on a pro rata scale actinic have got it right and hands up
I GOT IT WRONG !

(but tax office gave me duff info)

Thanks for help all

Paul

[chrisbrown]

That is exactly what it says on the HM Customs and Excise website. Whoever you spoke to at the VAT office was wrong.

[ackerman]

items that are vat exempt are also postage exempt unless requested by customer?, this applies to most mail order deliveries.

I doubt if they are exempt, just zero rate. You have to know the difference, as zero rate totals have to be declared on the vat returns.

Brian

[otiz]

Thats interesting Brian.
What catogory does childrens fancy dress costumes come under, exempt or zero rated?

Thanks
Paul

[ackerman]

Certainly not exempt. You will need to check with a vat office, as it is not quite childrens clothing.
A good guide will be - have you been charged vat by your supplier? If you have, then they are probably standard rate.

Brian