VAT Accounting in UK When Selling A Mixture 0% & 20% Rated Goods

[ovhrd2732]

Hi all, having some difficulty with our VAT accounting as we sell a mixture of zero rated and standard rated goods. Any help appreciated!

Currently we track this all on a spreadsheet which calculates the VAT on each order, and then I need to manually go into QuickBooks and add the VAT payable on each days payout which is very time consuming. Then there is the additional issue that VAT on shipping cost needs to be weighted too.

Does anyone have any experience sellinga mixture of 0% & 20% rated goods in the UK? How do you deal with your VAT accounting ? Any help would be appreciated. We only sell to the UK, so that makes things a little more simple...

[magdalena_fsf]

Hi there

We have a very similar situation but our VAT is calculated correctly on products (both zero and standard rated) however VAT on shipping is always incorrect in Shopify, unless you only have vatable products in your basket. In any other instance, VAT on shipping is proportional to VAT on products in that order. We use QuickBooks Online Global connector which works fine when either only vatable or mixture of products is in an order. QuickBooks is autocorrecting VAT on shipping to 20% in those cases. The only issue is when there is only zero rated products on the order, therefore Shopify applies 0% VAT on the whole shipping which makes QuickBooks "think" the VAT on shipping is also 0%. We manually scoop those sales once in QuickBooks and corrrects VAT on shipping to 20%. We have been in contact with Shopify asking to give us an option to fix  the shipping to standard rate regardless of what rate are the products purchased, but with no luck.

Lat me know if you manage to find a solution!

[ovhrd2732]

Hey! Thanks for your reply.

May I ask why you are wanting to add a VAT rate of 20% to the shipping of
only zero rated goods? I believe the VAT rate of shipping should be 0%? If
the order only contains zero rated goods.

Does Quickbooks essentially just pull all the info from Shopify?

Knd regards,

[magdalena_fsf]

Hi

Our shipping isn't included in product price, it's a separate service that our customers can choose if they wish so (as we also offer collection from our shop). Therefore it is subject to 20% VAT. We don't use Shopify for VAT reporting purpose, it is done via our accounting system and without splitting shipping charge into two separate parts (one with and another without vat) it is impossible to correctly report VAT as the value of tax on mixed orders would never be correct for either a 20% or 0% rate.

Yes, all sales and payment details are sent via connector directly to QuickBooks.