VAT and VAT exemption.

[Mole End]

I have just go my VAT number and have added VAT onto my websites, the shopping software that I use has a built in feature to allow VAT exemption. I presume that this is for companies that are based outside of the EU.

The first person to place an order ticked the VAT exemption box because they didn't quite know what it was for but they are based in Leicester and so are not VAT exempt.

I think that I am likely to have lots of cases where this happens, so I does anyone know if I have to offer this exemption facility or if putting a comment on the site asking people that are VAT exempt to contact me for a VAT refund would be OK.

Many thanks,

Jan Strassen
www.integratedlabels.co.uk

[Alpha]

Jan

I'm not 100% certain about the reason for your vat exempt button but there is no requirement to charge vat on sales to non EU countries neither would you charge vat to EU countries where the client/customer has provided you with their vat registration number.

Some government departments occassionally claim that they should not be charged vat. I have had an argument with the DTI recently on behalf of a client because they believed that the project they had been invoiced for should have been exempt on the behalf of the supplier.

there are a number of other examples where the supply may be vat exempt but I cannot forsee any in your business.

[gary]

I think if you leave a checkbox for VAT exempt you're asking for people to tick it! Everyone pays VAT except for EU (i.e. non-UK) companies with a VAT number. Outside the EU they will still pay VAT, so the only time you would need someone to tick on it is if they were ordering from France (for example) and were an EU VAT registered company,. How likely is that?

Gary

[Mole End]

Hi Gary,

I have some American customers, I don't think that they have to pay VAT do they?

I have taken it off my paper site now because I only supply to the EU but don't know what to do on my software site, non of my software sales have had the box ticked, but then I tend sell to online merchants who know whats what. The exempt market is quite small in my customer base and so I might well take it off and then just refund customers were necessary.

The chap that ticked the box, said that he ticked it because he didn't know what it was for so he ticked it, he has paid the VAT now.

Regards,

Jan

[gary]

As far as I am aware, the only people who won't pay VAT are EU customers with an EU VAT number. US customers should still pay the VAT.

It may be worthwhile giving Customs & Excise a call on 0845 010 9000 just to make sure though, as I'm not exactly a VAT expert! :)

Gary

[Mole End]

Brilliant help line, thanks for pointing it out to me.

They said that I US customers do not have to pay VAT and also pointed me to a special paper detailing VAT requirements for electronically distributed goods ( http://www.hmce.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_Home&propertyType=document&columns=1&id=HMCE_PROD_009220 )

Thanks again, very useful indeed.

Regards,

Jan

[gary]

No problem! I've just been on the line to them as well about import duties and they were very helpful. Sorry I gave you wrong info to start with though! :(

Gary

[Alpha]

I didnt give you the wrong info but you can ignore me if you like!!! :roll:

[Mole End]

:-( Sorry Alan, I should have thanked you because it was you reply that lead me down the path of zapping the button.

Thank you.

Regards,

Jan

[gj]

My understanding is as follows:

Sales to UK are Vatable

Sales outside EU are not Vatable (effectively to encourage exports) but the recipient may need to pay import duty and Vat equivalent in their country.

Sales to EU are Vatable, unless you obtain the customers VAT registration number.

This is for goods - services are more complicated and of course you have already seen the difficulty with establishing whether electronically distributed goods and how you know whether you are exporting them to EU country or outside EU.

Your software really needs to idebtify the country to which you are shipping and then determine the VAT treatment.



Graham