Google Checkout VAT calculation for discounts

markmclaren · Jun 6, 2008

Google Checkout allows you to set up 'coupon codes' which entitle customers to a discount. But Google uses the full value to calculate the VAT. For example, if I have a product for sale for £117.50 (inc vat) and I offer a 50% discount, the customer will be charged £58.75 including £17.50 VAT.

Is this correct?

Jenni384 · Jun 6, 2008

markmclaren said:
Is this correct?

No.

:|

Why would they calculate the discounted price correctly at £58.75 but say the VAT element is £17.50? That doesn't make any sense.

elaine@cheapaccounting · Jun 6, 2008

See this on vat:

http://www.hmrc.gov.uk/vat/charge-discounts.htm

and this on coupons:

http://www.hmrc.gov.uk/vat/charge-discounts.htm#4

jholden · Jun 6, 2008

Elaine's posting with link is correct, but maybe heavy going.

The below link is the relevant guidance but to help I have also below posted the section which gives the answer:

Link: http://customs.hmrc.gov.uk/channels...HMCE_CL_000091&propertyType=document#P48_2790

Section:
2.2 Free discounts on goods or services

If you give a discount freely on goods or services you need only to charge VAT on the discounted amount.

This whole area of VAT was changed in the 2003 Spring Budget.

For more on vouchers there is the following from the Voucher Association

http://www.the-va.co.uk/downloads/factsheets/fs_vat.pdf

Jason

markmclaren · Jun 6, 2008

Thanks guys - I thought it was wrong!

Nobody else seems to be complaining to Google, so maybe I've set up my account incorrectly. I will investigate...

markmclaren · Jun 18, 2008

Well Google are saying that's the way their coupons are supposed to function! Here's their response:

http://groups.google.com/group/goog...hooting/browse_thread/thread/c2a807cd65e63258

I'm quite surprised that a big name like Google could get it so wrong!

Mark

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Google Checkout VAT calculation for discounts

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