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UK Tax Issues


Marc_J

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I'm developing a store based in the UK, which aims to sell to the rest of the UK and also Europe and Worldwide - to both individuals and companies.

 

As far as I know, here's how the tax works: -

 

UK Private Customers : Pay V.A.T. added at checkout

UK Business Customers : Pay V.A.T. added at checkout, then up to them to claim V.A.T. back.

 

That means UK customers are easy - VAT is always charged.

 

Non-EC customers are easy, too - no tax is charged at all.

 

The problem lies with other (non UK) EC countries. Private customers are to be charged VAT, but Business customers don't - they must provide their VAT number, which must be shown on the invoice.

 

So basically, I need an optional entry in the customers account - V.A.T. Number - which only applies to Non UK EC Companies. If this is filled in, VAT is not charged, and the VAT number is printed on the invoice.

 

There MUST be UK stores using osCommerce in the same situation but I can't find any relevant contribs!

 

Any help would be greatly appreciated!

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I have the same problem, but this time from Belgium. We are also selling both to VAT numbered customers or private customers and the legislation for Belgium is identical to the UK.(and I suppose in all the other european community countries)

Any advice is more than welcome!

 

 

I'm developing a store based in the UK, which aims to sell to the rest of the UK and also Europe and Worldwide - to both individuals and companies.

 

As far as I know, here's how the tax works: -

 

UK Private Customers : Pay V.A.T. added at checkout

UK Business Customers : Pay V.A.T. added at checkout, then up to them to claim V.A.T. back.

 

That means UK customers are easy - VAT is always charged.

 

Non-EC customers are easy, too - no tax is charged at all.

 

The problem lies with other (non UK) EC countries. Private customers are to be charged VAT, but Business customers don't - they must provide their VAT number, which must be shown on the invoice.

 

So basically, I need an optional entry in the customers account - V.A.T. Number - which only applies to Non UK EC Companies. If this is filled in, VAT is not charged, and the VAT number is printed on the invoice.

 

There MUST be UK stores using osCommerce in the same situation but I can't find any relevant contribs!

 

Any help would be greatly appreciated!

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I have the same problem, but this time from Belgium. We are also selling both to VAT numbered customers or private customers and the legislation for Belgium is identical to the UK.(and I suppose in all the other european community countries)

Any advice is more than welcome!

 

 

I can not find a contribution for this and I do not have the skills to write one.

I have adopted the same approach as Amazon which is to refund VAT charged by the system - Amazon have not yet solvd this probelm either!

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My accountant advises to charge VAT for all EU customers regardless of business or private...

 

Perhaps you should seek more advice?

 

Thanks Burt, I'll do that.

 

Hopefully, it's the easy solution - maybe EC Business Customers can claim VAT back the same way UK Business Customers can?

 

Refunding isn't really an option, seems to me to be a very clumsy way of doing things. Maybe with a ?5 book from Amazon no-one will really bother but some of my products are ?1000+ and the VAT will make a big difference!

 

The EU should really have thought about this before coming up with their crazy tax rules!

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My accountant advises to charge VAT for all EU customers regardless of business or private...

 

Perhaps you should seek more advice?

 

That is not acceptable. Sales to EU businesses who provide a valid VAT registration number must be zero rated. You must declare the total value of such sales to each VAT number on the special EC Sales list which customs and excise will send you each quarter.

 

The customer must declare the purchase as being an aquisition from an EEC member country and add the value of the purchase to the relevant boxes on their VAT declaration. The effect is to declare a liability to pay the VAT and then claim it back on the same form ! Sounds silly but it has to be done that way to keep the countries accounts in order.

 

Details on the rules can be found at www.hmce.gov.uk and there is a helpline you can call - they are usualy very helpful.

 

Search the contributions section for Intracom to find a module. I haven't tested it yet but will do shortly.

 

Regards

 

Dave Peters

DP Software

Dave Peters

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All this depends upon whether YOU are registeresd for VAT, and not if your customer is registered. If you are not registered for VAT then you pay VAT on whatever you buy in, but you don't charge VAT on what you sell (unless you factor the VAT you paid into your final price).

 

This does create a problem if you are selling to businesses who want to be able to reclaim their VAT, but can't do so because you can't provide them with an invoice with YOUR vat number on it.

 

Provided you have made some sales you can voluntarily register for VAT, even if way below the threshold. This can cost you money though, especially if you're buying in items/services from VAT countries with a higher rate than the UK, because when you sell you only charge the UK vat rate (can cost you 2 to 2 1/2%) e.g Germany=20% UK=17.5%. But you can argue that if you buy in from Germany you have to pay their VAT rate anyway.

 

Vger

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All this depends upon whether YOU are registeresd for VAT, and not if your customer is registered.? If you are not registered for VAT then you pay VAT on whatever you buy in, but you don't charge VAT on what you sell (unless you factor the VAT you paid into your final price).

 

This does create a problem if you are selling to businesses who want to be able to reclaim their VAT, but can't do so because you can't provide them with an invoice with YOUR vat number on it.

 

Provided you have made some sales you can voluntarily register for VAT, even if way below the threshold.? This can cost you money though, especially if you're buying in items/services from VAT countries with a higher rate than the UK, because when you sell you only charge the UK vat rate (can cost you 2 to 2 1/2%) e.g Germany=20% UK=17.5%.? But you can argue that if you buy in from Germany you have to pay their VAT rate anyway.

 

Vger

 

I'm VAT Registered - I'd have thought that was obvious, as I'm charging V.A.T.!

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This does create a problem if you are selling to businesses who want to be able to reclaim their VAT, but can't do so because you can't provide them with an invoice with YOUR vat number on it.

 

Why?

If you're not registered for vat then they're not paying vat... If you were, then your prices would be 17.5% higher, and then they could reclaim that portion.

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If you're not registered for vat then they're not paying vat

Businesses who pay vat expect to be able to reclaim vat on anything they buy, unless its zero rated

I think vger's post, while trying to be helpful, should be struck from the record

Just because you disagree doesn't mean that you're right!

I'm VAT Registered - I'd have thought that was obvious, as I'm charging V.A.T.!

Not so. Many businesses which aren't vat registered say that their prices include vat on their websites. Your comment "I'm developing a store based in the UK" didn't exactly sound as though you were an up and running established business.

 

However, I am quite willing to butt out now, and let you all talk amongst yourselves.

 

Vger

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Your comment "I'm developing a store based in the UK" didn't exactly sound as though you were an up and running established business.

 

However, I am quite willing to butt out now, and let you all talk amongst yourselves.

Vger

 

Sorry vger, I was only kidding!

 

Yes, I'm developing a store, but on behalf of an established client. Hope that clears it up - I didn't wanna go into the whole background when it's irrelevant to the problem.

 

On the subject - surely business which state their prices include V.A.T. when they aren't are clearly breaking some rules somewhere?

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On the subject - surely business which state their prices include V.A.T. when they aren't are clearly breaking some rules somewhere?

 

Yes, you can't say prices include VAT if you are not charging it. It is misleading to businesses who would expect to be able to claim back the VAT.

 

It is correct to say it shouldn't matter if you are not registered because your prices should be lower (no VAT) and you haven't charged VAT so companies have nothing to claim back. However it often doesn't work that way and some businesses do not trade with you unless you are registered. If you don't have that problem you shouldn't register until you have to - or unless you are making a loss.

 

It DOES matter if your customer is registered or not if you are trading between countries in the EU. Sales from one registered company to another registered company in a different EU country and made without VAT. The registration number must be supplied at time of order to prove you are entitled to zero VAT. There is then no problem if the countries have differing VAT rates because you have declared both liability to VAT and entitlement to VAT refund (input tax) in the same country - your country.

 

Regards

 

Dave Peters

Dave Peters

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With regard to sites which say their prices include vat when they aren't registered - I don't know. But I think if the Inland Revenue saw that they'd want their VAT!

 

Technically you were correct, about not charging vat on sales, and so a customer couldn't claim it back. But psychologically it doesn't work like that. Here's a case with a customer of mine.

 

Customer imports top quality ceramics from europe and pays 20% vat, because my customer not registered for vat in uk. Let's say gross markup is 50%, but if my customer doesn't pass on the vat cost to the customer (they can't reclaim because they're not registered) then gross margin is down to 30%. Out of that, warehousig,insurance, postage (high cost because of ceramics) plus more insurance etc. etc. etc.

 

My customer could sell this product to Restaurants and Hotels, but they (Restaurants/Hotels) couldn't reclaim vat on the products. The Restaurants/Hotels know that the initial cost of vat has been factored into the sales price, so they'll go to some other supplier who is vat registered where they can reclaim the vat (or at least that part of it they can claim for using this product to provide a service).

 

Basically, if you've paid vat then unless your markup is very very good you'll have to pass that on to your customers - and if those customers are other businesses they will know that.

 

That's the point I was trying to make. Hope I've explained it now.

 

Vger

Sorry vger, I was only kidding!

 

Yes, I'm developing a store, but on behalf of an established client. Hope that clears it up - I didn't wanna go into the whole background when it's irrelevant to the problem.

 

On the subject - surely business which state their prices include V.A.T. when they aren't are clearly breaking some rules somewhere?

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  • 1 month later...

May be I misunderstood your topic but these pbs have been discussed in this topic and there is a contribution which solve it:

E.U. VAT Intracom Number

In option, the last version explains also how to manage VAT using those conditions:

if the below conditions are OK, VAT is NOT added:

the billing company field is not NULL

AND

the billing tva_intracom field is not NULL

AND

the billing country is different than the STORE_COUNTRY

AND

the delivery country is different than the STORE_COUNTRY

 

Regards

JeanLuc

OsC: MS2

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Thanks JeanLuc - the store this was for ended up selling to the UK only for now so wasn't a problem :)

 

I've got another one coming up that will need something like this, though, and I'll take a look at it then - so when the time comes expect some questions :o

 

May be I misunderstood your topic but these pbs have been discussed in this topic and there is a contribution which solve it:

E.U. VAT Intracom Number

 

[sNIP]

 

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