Paying VAT on winning item!

ormus

just to clarify the 62k T/O rule re VAT.
above 62k T/O you must register. its the law.

under 62k T/O you may register if you wish. there are various reasons why you may want to or not.
and if you register then you must charge vat to customers. either by including the vat in the selling price or by adding it. when selling to joe public the normal practice is to include it in the retail price.

the standard rate for vat in the uk is 17.5% for most goods and services.
there are exeptions though. ie books, childrens clothing, most foods, are all zero rated.

it is a serious offence to charge vat without being registered. as it is not to make the proper returns to the vat office when due.
the vatman has huge powers. more than a policeman. you mess with the vatman at your peril.

geordie_joe

ormus wrote: »

it is a serious offence to charge vat without being registered. as it is not to make the proper returns to the vat office when due.
the vatman has huge powers. more than a policeman. you mess with the vatman at your peril.

exactly, and I think this person/company is charging VAt when they should not be. It may only be a few pennies, but that could be enough for the Vatman to investigate them. Then who knows what he may turn up.

Apologies to the "VAT Ladies" vatman is just a turn of phrase. Have to say this as I once had a supervisor that never stopped reminding me she used to work for the VAT Office and the phrase vatman annoyed her.

meester

geordie_joe wrote: »

Unfortunately you didn't read far enough.

No, I read all of it, but I didn't really want to confuse things by getting onto the next paragraph which is ONLY relevant to the supply of zero-rated goods, and is not relevant to this thread, which is about computer equipment, which attracts VAT at 17.5%.

highlighted below:

However,
If…
the terms of your agreement with your customer for the supply of the goods require you to deliver or post them to the customer

and

Then
there is no separate supply of delivery or postage. This applies even if you show a separate charge.

This means that you make a single supply of delivered goods and, if the supply of the goods is zero-rated, then the zero-rating also covers the delivery or postage. This applies to most mail order transactions, but not if a delivery service is available at an extra charge for customers who request it.

The zero rating only covers the delivery if the item itself is zero rated. The conditional IF is quite clear there, I am not sure why you have not noticed it.

In other words, if you are selling cakes on ebay (zero-rated), for £5.99 plus £5 postage, then there is no VAT to pay on either the cake or the delivery.

This is just logical tax practice because if the delivery were VATable but the cake not, the seller would just charge £10.99 with free postage, and be able to cut VAT off the price.

The opposite of course applies with VATable items - it's not sensible to allow the direct billing on of zero-rated input costs to the end consumer, otherwise suppliers would be able to bill on numerous other costs without VAT, not just postage.

geordie_joe wrote:

In other words if you have a shop and a customer rings up and asks you to post the item to them you have to charge VAT on the postage. But if your business is mail order and you do not state that the customer can collect the item then you can not charge VAT for PO delivery.

Provided it's a zero-rated item, which most items sold on ebay are not.

geordie_joe

meester wrote: »

No, I read all of it, but I didn't really want to confuse things by getting onto the next paragraph which is ONLY relevant to the supply of zero-rated goods, and is not relevant to this thread, which is about computer equipment, which attracts VAT at 17.5%.

You made a mistake "if the supply of the goods is zero-rated" refers to the manner in which you supply the goods, not if the goods themselves are zero rated. If the supply of the good is via the Po then it is zero rated.

In other words, if you supply good via the PO then the delivery is zero rated, if you supply goods by a private carrier then then you charge VAT.

To mean what you are implying the wording would have to be "if the good supplied is zero rated"

Face it, if your normal business method is for people to come to you and take away the goods you can charge VAT, if you provide and extra service by posting the items. If your normal business method is to post items and you don't state a buyer can collect and not pay a delivery charge then you can't charge VAT.

You can not charge VAT if you delivery the goods you sell via the PO and the majority of your customers don't have the option of collecting in person.

You can only charge VAT, when sending via the Po if this is not your normal business method or an added extra that most customers would not use.

meester

geordie_joe wrote: »

You made a mistake "if the supply of the goods is zero-rated" refers to the manner in which you supply the goods, not if the goods themselves are zero rated. If the supply of the good is via the Po then it is zero rated.

Your lack of knowledge of taxation law is not helpful.

"The supply" is a basic term in tax and economics, and is the object of the verb 'to supply' in the context of goods or services being supplied, in other words the thing being sold - it has got nothing to do with shipping!

Here's an example of usage of this phrase, from HMRC's site:

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_001750&propertyType=document

"A typical example of this is a taxable supply of tuition that includes the provision of books which, on their own, would be zero-rated. "

It is used as a noun, and just means "that which is being sold under the contract".

Food is a zero-rated supply.
IT equipment is not.

geordie_joe

meester wrote: »

Your lack of knowledge of taxation law is not helpful.

Damn, I was just about to say the same thing,

Now you have said it first you will claim right by virtue of getting there first.

So I will just have to retaliate be saying chocolate biscuits

.

RFW

To clarify (hopefully)

The only companies who don't have to charge VAT on postage are Royal Mail and Parcelforce (as government bodies), companies below the VAT threshold and companies posting zero rated items. Any other companies using any kind of postal service provided by ANY company (including Royal Mail and Parcelforce) have to charge or include VAT in their postage charges.

It is irrelevant that Royal Mail and Parcelforce don't charge VAT, if you use their services and sell Vatable goods, you must add or include VAT to those postal charges.

For example if you pay Parcelforce £8.50 for a parcel to be delivered and you are a Vat registered company, that parcel is subject to £1.49 VAT when you supply it to the customer and should subsequently be repaid to HMRC.

Geordie-Joe you are giving out incorrect info

if you supply good via the PO then the delivery is zero rated

That statement is incorrect.

custardy

okay and i know i shouldnt but i will muddy the waters a bit
remember just because an item is delivered via RM it doesnt mean the original customer paid RM
a great example it amazon & TNT.TNT take the item from amazon and then pass it to RM for delivery

meester

geordie_joe wrote: »

Damn, I was just about to say the same thing,

Now you have said it first you will claim right by virtue of getting there first.

No, I claim it because I actually understand what basic terms such as supply mean.

deanos

Oh dear the thread has gone a bit pete tong, Geordie Joe you really dont get it do you