UK - VAT Registered and how to apply different shipping rates

linzal
Excursionist
42 0 8

Hi, we have had out eShop now for 3ish months and from the 1st August we will be registered for VAT (limited company) BUT we are running into a problem with this and really need someones help.

The main products we sell are zero rated for VAT purposes (therefore meaning we do not need to charge VAT to the customer). We have two products that are VAT chargeable and we will need to add VAT to these from 1st August, I know how to charge taxes on individual products, so I have that covered... but... we need to distinguish shipping rates, A zero rated one and then a 20% one depending on what the customer is purchasing - can we do this?

 

Example:

Transaction 1 - Kids Rompersuit £8.50 (zero rated VAT) + £3.00 (no VAT) shipping

Transaction 2 - Kids Rompersuit £8.50 (0%) and Kids Backpack £5.00 (+20% VAT) + £3.60 (3.00+20% VAT) shipping

We only need VAT added to a shipping rate where a customer has selected a product that is VAT chargeable. HELP!

Replies 4 (4)
iamarobot
Tourist
5 0 2

For my shop, shopify charges zero vat on delivery if the order only contains zero-rated products, and 20% if it only contains 20% rated products.

So that's correct. 

The problem for me is when i sell zero-rated and 20% rated products in the same order - then the vat on delivery should be apportioned. Shopify just charges 20%, so i'm over-paying VAT to HMRC on dleivery on all mixed orders.

But i'm guessing that's going to be a very small nubmer for you, so i wouldn't worry about it until you're doing lots of mixed orders!

 

linzal
Excursionist
42 0 8

Hey, thanks for your reply. I missed the notification - this is the exact issue we have and we do have a lot of mixed orders so we have to have a shipping override of 20% set otherwise we are undercollecting our VAT.

 

Have you had any solution at all to this because I am straight up frustrated af and its a huge profit leakage for us. Any third party apps? I can't even get a Shopify Expert on board!

@Victor any help at all? I can't post in the main thread for the UK for some reason.

linzal
Excursionist
42 0 8

Would you mind sharing your VAT config? Overpaying on mixed orders is better than us overpaying on every order!

Victor
Shopify Staff
Shopify Staff
1441 138 324

Hi @linzal,

 

My suspicion is that our tax system does not proportionally charge tax on shipping based on how many of the products in the customer's cart are taxable, hence why you are seeing what you are seeing. I will attempt to touch base with our taxes team next week to see if I can confirm this and will be back in touch when I've heard more information.

 

With regards to the UK-specific threads, you should be able to post in the UK Taxes thread found here.

Victor | Social Care @ Shopify 
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