VAT on Shipping from Auction House, PLUS a Delivery Charge!

jujo100

I have bought several times from a certain auction house. I don't really understand why VAT is charged on the shipping/postage price, but have been OK about paying it, as their shipping prices are/were reasonable. 

However, on my most recent invoice, I have also been charged a further, VAT-free amount, itemised as 'Packing'.  I had previously requested a shipping cost and was told £12.84 Incl. VAT.  The amount for packing was then added to this on their invoice.

Is this acceptable?  I have always believed that shipping covered the cost of packing.  

RFW

jujo100 said:

I have bought several times from a certain auction house. I don't really understand why VAT is charged on the shipping/postage price, but have been OK about paying it, as their shipping prices are/were reasonable. 

However, on my most recent invoice, I have also been charged a further, VAT-free amount, itemised as 'Packing'.  I had previously requested a shipping cost and was told £12.84 Incl. VAT.  The amount for packing was then added to this on their invoice.

Is this acceptable?  I have always believed that shipping covered the cost of packing.  

It depends on their terms. There's nothing within the law that suggests shipping costs include packing.
I'm intrigued that they wouldn't have charged VAT on it but that's a different matter.

VAT is applicable on all business shipping charges, unless the product itself is zero rated, but even then you could still get charged for it, depending on the service/courier. That's a short sentence for something that can be more complicated.

jujo100

RFW:  Thanks for your reply.  I buy items that are classed as antiques, over 100 years old.  My understanding is that, when buying antiques at auction, VAT is paid on the commission/buyer's premiun, not on the item. I buy through one of the auction platforms, where I can request a shipping cost.  Seems odd to receive a quote for this, then find an additional, VAT-free amount for packing has been added to the invoice.  Not exactly 'transparent'.  I realise I have a choice about buying from this auction house and am currently pondering this.

DullGreyGuy

RFW said:

jujo100 said:

I have bought several times from a certain auction house. I don't really understand why VAT is charged on the shipping/postage price, but have been OK about paying it, as their shipping prices are/were reasonable. 

However, on my most recent invoice, I have also been charged a further, VAT-free amount, itemised as 'Packing'.  I had previously requested a shipping cost and was told £12.84 Incl. VAT.  The amount for packing was then added to this on their invoice.

Is this acceptable?  I have always believed that shipping covered the cost of packing.  

It depends on their terms. There's nothing within the law that suggests shipping costs include packing.
I'm intrigued that they wouldn't have charged VAT on it but that's a different matter.

VAT is applicable on all business shipping charges, unless the product itself is zero rated, but even then you could still get charged for it, depending on the service/courier. That's a short sentence for something that can be more complicated.

This probably falls within the auction marginal scheme so the item itself is exempt (I think, rather than zero rated) but standard VAT applies to the Buyer's Premium which would count as a service rather than goods. As VAT on the delivery is driven by the goods rather than the service that should mean the auction house doesn't add VAT themselves but the courier themselves would so it would be a straight passthrough of the cost inc VAT

What's peculiar about the auction marginal scheme is that the VAT charged, even if bought by a VAT registered business, is non-recoverable. Its these types of things which show tax is taxing and why experts can demand the fees they do and why so much ends infront of a judge

RFW

jujo100 said:

RFW:  Thanks for your reply.  I buy items that are classed as antiques, over 100 years old.  My understanding is that, when buying antiques at auction, VAT is paid on the commission/buyer's premiun, not on the item. I buy through one of the auction platforms, where I can request a shipping cost.  Seems odd to receive a quote for this, then find an additional, VAT-free amount for packing has been added to the invoice.  Not exactly 'transparent'.  I realise I have a choice about buying from this auction house and am currently pondering this.

I'd guess it was somewhere within the catalogue terms. I now understand why there was no VAT on the packaging at least. If the item(s) are zero rated then the packaging would be zero rated. The VAT on shipping would likely be charged by the courier. I can't honestly remember the law on that, you could always check with HMRC. It may be that the auction house should charge that at zero and claim the VAT back.
I used to be in the auction trade and it's not uncommon for them to have a hidden charge or two. It is possible this was more straightforward and they were making sure the item was packed well and that incurred fees beyond their shipping quote. £10ish plus VAT for shipping is not a huge amount if the item was valuable so it doesn't sound like they're profiteering on shipping. Obviously you haven't said how much the packing fee was but I'm assuming it was less than the shipping cost.

DullGreyGuy

RFW said:

jujo100 said:

RFW:  Thanks for your reply.  I buy items that are classed as antiques, over 100 years old.  My understanding is that, when buying antiques at auction, VAT is paid on the commission/buyer's premiun, not on the item. I buy through one of the auction platforms, where I can request a shipping cost.  Seems odd to receive a quote for this, then find an additional, VAT-free amount for packing has been added to the invoice.  Not exactly 'transparent'.  I realise I have a choice about buying from this auction house and am currently pondering this.

I'd guess it was somewhere within the catalogue terms. I now understand why there was no VAT on the packaging at least. If the item(s) are zero rated then the packaging would be zero rated. The VAT on shipping would likely be charged by the courier. I can't honestly remember the law on that, you could always check with HMRC. It may be that the auction house should charge that at zero and claim the VAT back.
I used to be in the auction trade and it's not uncommon for them to have a hidden charge or two. It is possible this was more straightforward and they were making sure the item was packed well and that incurred fees beyond their shipping quote. £10ish plus VAT for shipping is not a huge amount if the item was valuable so it doesn't sound like they're profiteering on shipping. Obviously you haven't said how much the packing fee was but I'm assuming it was less than the shipping cost.

If its exempt, rather than zero rated, as I think then they cannot claim the VAT back so would be a straight pass through

jujo100

RFW.  The courier is Royal Mail, (Special Delivery before 1pm). Two items weighing under 500g and with a combined value of £153.12.  Total charged for shipping, including the packing fee is just under £15.00.  The auction house has increased this charge by approximately £5.00 over the past year. I tend to buy from auctions where I can collect, because of increasingly high shipping charges. 

Thanks for your comments, all!