VAT Calculations

VAT appears to be calculated on the net price of a product rather than the price charged to the customer therefore understating the amount of VAT? Are there any plans to correct this?

Hi @SaraR,

We certainly want VAT to work as you need it to. So let’s put in a little work to be clear about what that looks like.

1) There should be an option to include VAT on shipping methods, enterprise fees and payment methods.

  • You can update Enterprise fees to include VAT. I see that Tamar have not done this. If you go to Edit Enterprise - > Edit Enterprise Fees you can make these changes.

  • You cannot currently include VAT on payment method fees. Is this something that you need?

  • There is an option to include VAT on delivery methods. It looks like you are including these. Is this something that is not currently working? I have not tested this personally.

2) The correct VAT should appear in reports.

  • It would be great to understand how you need VAT to be reported from OFN. What is working? What is not? Then we can design the improvements.

Thank you @OFN.UK for pointing out that I had to add VAT to Enterprise fees, that’s now working as it should and calculating the VAT on the price charged to the customer. The VAT on invoices though looks a bit weird. Although the total is correct the amount next to the product is only on the net cost. I think this means that the invoices aren’t VAT compliant?

We don’t currently have any payment method fees as I don’t think you can charge extra for taking payment by card anymore?

VAT on delivery is also working fine. Although where the shopping basket contains VATable and non-VATable items the additional charge for delivery will follow the liability of the goods. I currently have a work around for this through the Tax Reports as trying to change this in OFN is understandably a low priority!

Thanks @SaraR.

So we need to create an issue to ensure that enterprise fee VAT is also included in the Invoice for product VAT. I’ll get this added to the issue queue asap.

Thanks again!

However, VAT seems to be calculated on all Enterprise fees not just those related to a VATable product?

Hi @SaraR, yes I think you are right.
I opened up a bug card for this a few weeks ago with our technical/development team in terms of reconfiguring the invoices so they are VAT compliant.
Does the Enterprise fee count as a service though? ie not a product and so would it therefore be correct to add 20% VAT on all products?
Let me know your thoughts.

Our Enterprise fee is a Mark up not a service so, like a shop, VAT would be charged on the price paid by the customer if the product has VAT but not if the product does not. Hope that makes sense?!

Hi Sara,

Most people get around this by making VAT-able and non-VATable enterprise fees.
This works in the case that all products from a specific producer are VATable or nonVATable. However this is not always the case.

As Louise says the Enterprise Fees do not inherit from the product because they are treated as a service fee. So there are two ways to go about this:

  1. We make fees applicable per product so that they can be added with and without VAT. This is more flexible allowing this feature to be used more widely. We know this is a need that people need across OFN.

  2. We have enterprise fees that are able to inhereit their tax status from the product. Due to the current implementation of user fees this is probably more difficult, costly and less flexible.

I’d have to chat to the developers to better understand the best approach but I would lean toward 1.
Does the workaround described above cover most cases for you?

Best,
Lynne

I have a related issue with VAT and enterprise fees. On our invoices, the VAT for products shows up in the ‘VAT’ column, but it doesn’t for the enterprise fee (but it is included in the ‘VAT total’ figure). I’m not sure how to change this?