Adding VAT after confirming purchase...

Time2Go_25

They don't need to show a VAT number, as far as I can make out all that needs to be done is to put a line someone in the listing to say that VAT at 17.5% will be added at the end.

RFW

Altarf wrote: »

As I said before, legally a VAT registered seller only has to provide a VAT invoice if the buyer is also a VAT registered business. If the buyer is not VAT registered then the seller can tell them to get lost.

Maybe for VAT purposes, there are other laws obliging a seller to breakdown costs on a clear invoice if requested, it certainly isn't good advice to tell someone who isn't VAT registered who asks for such an invoice to 'get lost', apart from the fact that it would imply the seller was up to no good!

JasonLVC

RFW wrote: »

Invoicing depends on the service/goods. If you are selling something that cannot be used for business, ie a domestic telephone service, then a VAT invoice would not be provided. Anything that could be used for business, a VAT invoice/receipt should be supplied if asked for.

If VAT is charged then some form of document MUST be produced by law whether the customer is a business or not. Go buy something from Tescos and you'll see they'll break the VAT down on the receipt and show the VAT No, Date and address of the store - this is a VAT invoice/receipt. For values under £250 the business only needs a 'simplified' invoice, hence most businesses issue receipts (again, fill up at BP or Shell and check out the receipt)

Anyone who charges VAT and does not provide a VAT receipt or invoice upon request is doing it wrong. Even if the business pays VAT over to HMRC, without the evidence of an invoice/receipt it is illegal.

Altarfs link states this :-

Retailers' invoices
16.—(1) Subject to paragraph (2) below, a registered person who is a retailer shall not be required to provide a VAT invoice, except that he shall provide such an invoice at the request of a customer who is a taxable person in respect of any supply to him; but, in that event, if, but only if, the consideration for the supply does not exceed £100 and the supply is other than to a person in another member State, the VAT invoice need contain only the following particulars—

• (a) the name, address and registration number of the retailer,

• (b) the time of the supply,

• (c) a description sufficient to identify the goods or services supplied,

• (d) the total amount payable including VAT, and

• (e) for each rate of VAT chargeable, the gross amount payable including VAT, and the VAT rate applicable.

This is what I refer to earlier, a simplified VAT receipt...but it MUST still show VAT No, name of retailer, address of retailer, values of purchases and analysed out IF the purchase is made up of mixed supplies (ie, zero rated books and standard rated DVD/Computer games for example).

Any ebayer who charges VAT on their sales must provide you with this in receipt form/email form/hard copy when you get the goods delivered. Without that evidence, the liklihood is the ebayer has charged you VAT and kept it for themselves rather than pay over to HMRC.

Boradband and mobile companies often issue what are known as pro-forma invoices, invoices with "This is not a VAT invoice" on it and you usually have to request a valid VAT invoice from the supplier, but they cannot refuse this request as is against VAT law.

JasonLVC

Sorry about my other post but just needed to clear up all the confusion and conjecture about VAT.

Looking at the OP, the ebay seller is clearly a business (as is a power seller, selling expensive goods so likely to be VAT registered).

It is common practice for business selling to other businesses to quote a VAT exclusive price and then add VAT afterwards on the basis that the customer is a business and can therefore recover the VAT charged from HMRC.

Where a business trades mainly with the public (as I'd expect on ebay) then the common approach is to quote a VAT inclusive figure so that the customer pays a single price with no add ons.

If the price the seller wants is £10.00, then the VAT on that is £10 * 7 / 47 = £1.48 so the seller would actuall collect £10 off the customer, pay £1.48 over to HMRC and keep the rest, £8.52 for himself.

If the seller wants £10 for himself (and not £8.52 after VAT is paid over) then the seller charges the customer £11.75 (£10.00 + 17.5% = £1.75), pays the VAT of £1.75 over to HMRC and keep the £10.00 - The ebay listing should therefore have been for £11.75 so at the paypal screen the VAT is shown as an element of the total cost, not added on top of the total cost.

I've probably lost you all now, but basically, the ebay trader in this post is a little underhand in his pricing by adding the VAT later but provided he sends an invoice he's not done anything illegal. If no invoice, then he's likely defrauding the government.

JasonLVC

Altarf wrote: »

And could you quote what law "obliges a seller to breakdown costs on a clear invoice if requested".

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_InfoGuides&propertyType=document&id=HMCE_CL_000099#P43_3734

Go to 3.1 and 3.3 for business to business transactions.

Go to 3.4 which explains that you don't always get a VAT invoice (like the broadband suppliers don;t send them out), but that upon request they must comply and provide a less detailed invoice (as per my earlier posts).

Froggitt

JasonLVC wrote: »

It is common practice for business selling to other businesses to quote a VAT exclusive price and then add VAT afterwards on the basis that the customer is a business and can therefore recover the VAT charged from HMRC.

Where a business trades mainly with the public (as I'd expect on ebay) then the common approach is to quote a VAT inclusive figure so that the customer pays a single price with no add ons.

This is correct.....when selling to the public, a retailer must show a VAT inclusive price.

bingo_bango

Froggitt wrote: »

This is correct.....when selling to the public, a retailer must show a VAT inclusive price.

Just to add to that definition, a retailer is classed as someone who is 'not an ordinary consumer'. In other words...they should really be a business. If they are pretending to be, and charging VAT, then there is an issue of fraud (don't see anyone doing that though).

Also, It is against current tax regulations to charge VAT on RM postage services. These services already include an element of VAT, so the seller has committed a tax offence by trying to add VAT to the RM postage cost here.
You could let him know you'll report him to HMRC for that alone if he doesn't play ball here.

Time2Go_25

bingo_bango wrote: »

Also, It is against current tax regulations to charge VAT on RM postage services. These services already include an element of VAT, so the seller has committed a tax offence by trying to add VAT to the RM postage cost here.
You could let him know you'll report him to HMRC for that alone if he doesn't play ball here.

But it is not against the regulations to charge VAT on P&P as it is a service.

RFW

Altarf wrote: »

No it's not.

Firstly there is no VAT on Royal Mail postage, as it is exempt from VAT.

However, when you buy something from a VAT registered person and asked them to deliver it (i.e. a normal mail order or internet purchase), then the delivery charge just forms part of the charge for single supply of a delivered item. The delivery charge is then subject to the same rate of VAT as the goods you have received. So if you ordered a book, the whole supply (including delivery charge is zero rated), if you ordered a DVD, the whole supply (including delivery charge is standard rated).

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000114&propertyType=document#P36_2660

So the seller is perfectly correct in charging VAT on the delivery charge, even though they may be using Royal Mail to deliver.

That applies if delivery is included in the selling price,

I.e. Sell a book for £10 including postage, assuming VAT registered seller, then there is no VAT anywhere in the transaction, however sell a book for £10 plus £2 postage & packing, the £2 is subject to (or inclusive of) VAT.

To clear up the postage issue....

Both Royal Mail and Parcelforce are not subject to VAT as they are government bodies (this is the only reason they are exempt, all other delivery/courier companies charge VAT), however anyone VAT registered using their services must either add VAT or supply inclusive of VAT (unless as described above!).

Complicated innit?

RFW

One more thing......


The laws regarding selling/advertising goods with or without the VAT were tightened a few years ago. At the time lots of the big electrical retailers were advertising goods without the VAT price and mentioning it in small print at the bottom of the ad.

The law change stated that that shouldn't apply to consumers and that even when business advertising the price inclusive of VAT should be shown and either that price or the amount of VAT to be added should appear in the advert at the same size as the exclusive price. This is why I believe that on Ebay (which is essentially an advert) they should not be allowed to let sellers have it in small print, you can't really do it with postage.