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VAT Question
Ive been sent a quote thats had VAT included on the carriage charge aswell as the goods charge. Can VAT be charged on carriage?
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43 Replies
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Hi Paul,
Yes – vat is chargeable on everything. -
quote John Gregson:Hi Paul,
Yes – vat is chargeable on everything.That’s technically incorrect 😕 but that’s as much as I know 😳
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Just for Warren "Vat is chargeable on everything"
unless its zero rated/vat exempt :lol1:
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I only ask because on all invoices ive had in the past they have been set out as:-
Price = £x
VAT = £x
Delivery = £xTherefore in the past (where ive noticed) the VAT has only been charged on the goods, not the carriage.
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it depends on the supplier, if they charge for post and packing, they must charge the vat (it is after all called a value added tax)
but they are quite within the vat laws just to pass the carriage on, including the vat.most firms charge more than the actual cost of delivery, (like the government stealth taxes)
so they have to add the vat on the charge.Hope that makes sense
Peter
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John, Vat isn’t charged on everything. As a general rule of thumb VAT is only charged on luxury items.
The VAT man stretches this at points as carriage isn’t a luxury but then the vat man would suggest doing it yourself not paying someone else to do it.
Tampons have VAT but feminists would disagree that they are a luxury, biscuits don’t have vat but put chocolate on them and they do. Jaffa cakes for a while were being targeted by the vat man as cakes did not have Vat on them they argued that were chocolate coated biscuits.
Most food does not have vat but get someone else to cook it for you in a restaurant and then Vat is applied as its a luxury.
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So delivery is a luxury?
I always thought that VAT was charged on goods, not services. But to be honest until I went self employed last year I never paid any real attention.
Im not going to lose any sleep over it, its only £1.50 but it was bugging me.
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quote Nigel Hindley:John, Vat isn’t charged on everything. As a general rule of thumb VAT is only charged on luxury items.
The VAT man stretches this at points as carriage isn’t a luxury but then the vat man would suggest doing it yourself not paying someone else to do it.
Tampons have VAT but feminists would disagree that they are a luxury, biscuits don’t have vat but put chocolate on them and they do. Jaffa cakes for a while were being targeted by the vat man as cakes did not have Vat on them they argued that were chocolate coated biscuits.
Most food does not have vat but get someone else to cook it for you in a restaurant and then Vat is applied as its a luxury.
Vat man very clever, it is charged on everything, not much is exempt
only some stuff, like food is zero rated, the vat man (read chancellor of the Exchequer) can them increase the vat if he feels necessary, without changing statutes,peter
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Hi Paul,
yeah the Vat man would probably argue that you could do it yourself – paying someone else is a luxury – the rules are archaic but are based on luxury goods and services. Services/labour all accrue VAT.
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Cheers for all the input guys.
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Peter,
Vat is applicable on food when its in a restaurant because its a luxury to eat out – not at home where its a necessity.
All I’m saying is that’s what its based on and that’s luxury/necessity you can turn it into an argument about wording ie its on everything but some items are zero rated the OK but the rule of thumb is its only applied on luxury items.
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nigel. I pay vat on vinyl, that’s hardly a luxury item is it?
vat =value added tax, its a way to tax the conversion of goods and services so the end user pays a tax for the ammount of changes that occur in the manufacturing process, it has absolutely nothing to do with luxury, its just that some goods deemed as un-essential are vatable, and
therefore the "luxury tax" came about, whereas in reality essential goods such as food were excempt or zero rated anywayPeter
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I would class delivery as essential, I can hardly travel 150 miles just to pick up a small piece of artwork that cannot be sourced locally.
Im genuinely interested to know other people views on this.
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quote Nigel Hindley:All I’m saying is that’s what its based on and that’s luxury/necessity you can turn it into an argument about wording ie its on everything but some items are zero rated the OK but the rule of thumb is its only applied on luxury items.Sorry Nigel. Can’t agree with your luxury theory.
There was a time when VAT attempted to penalise luxury goods by taxing them at a higher level, 25% when standard rate was 12.5% as I recall, but that soon sank into disrepute and we reverted a single standard rate.
Nowadays, VAT is chargeable on absolutely everything, except certain items (children’s clothes, food etc) where it would have been politically unwise to apply it.
Energy (heating oil, gas and electric) used to be zero rated too, but they soon found a way around that. Even then they daren’t make it full rate, and only taxed it at a lower 8% level.
Surely even the dimwits in government couldn’t think that adult clothing is a luxury when they accept that children’s is a necessity.
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quote Paul Humble:I would class delivery as essential, I can hardly travel 150 miles just to pick up a small piece of artwork that cannot be sourced locally.
Im genuinely interested to know other people views on this.
Paul, there are no alternatives, vat is payable on the carriage,
it makes no matter if charged at cost then you still pay, but it is included.
if your supplier charges more than its costing, then he has to add the difference in vat, thats the whole point of it, there is nothing wrong with charging more for the service though, its bought by the supplier, and he has to make a profit on it, he has to spend time to pack and contact the courier etc.
so unfortunately that’s life,Peter
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Its not that I mind paying it Peter, it just caught my eye today that some charge it and some dont on carriage.
On a semi related point, a local breakers yard charges VAT on his second hand parts, for years garages have complained about it but after reading this thread it appears he is doing no wrong.
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quote Paul Humble:Its not that I mind paying it Peter, it just caught my eye today that some charge it and some dont on carriage.
On a semi related point, a local breakers yard charges VAT on his second hand parts, for years garages have complained about it but after reading this thread it appears he is doing no wrong.
Paul you have to charge vat if your turnover exceeds (I stand to be corrected) £67k
that’s the law for the majority of business.
most couriers are national if not international so well exceed that limit.
VAT is chargeable.
Like I already said though, if a supplier pass it on without adding to the cost, then its included, but you are still paying the vat, its just not itemised.
If they add a mark up then they have to charge and itemise the vat as the government want a share of the mark up!I think that is the way it works
Peter
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quote Peter Normington:If they add a mark up then they have to charge and itemise the vat as the government want a share of the mark up!
Peter, the VATman wants his share, mark-up or no.
VAT is chargeable on carriage, and if the delivery company isn’t itemising it on their invoice, then they are doing it wrong. It is a requirement that VAT be shown on invoices for it to be re-claimable.
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OK – so if VAT isn’t a tax on luxury items or non essentials items why is there no vat on essential food items but in a restaurant it has vat on it?
Peter I pay VAT on Vinyl too – But I don’t need vinyl the world did exist before vinyl came along.
Why is there no VAT on biscuits but the very same biscuits chocolate coated does have VAT.
Non essential / luxury same thing really this was the basis but yes the government twist and manipulate but that’s the basis it comes from -remember I did say that it was a rule of thumb not ‘its the law and as you say John this was the original idea and its still there in principal.
Whilst there is VAT on adult clothing there are some work clothing that is VAT free. Print most print to promote has VAT Print that can be written on it.
I remember a feminist a friend of a friend who write to the government to complain about VAT on tampons and she was told there are alternatives that tampons were a luxury she could use a cloth? she just whinged on about a male driven society but this is what she was told by a government official.
The government will do anything to get more tax all I was saying was that was the rule of thumb it was based on?
As I mentioned the big Jaffa cake trial where Macvities were taken to court by the government for trying to avoid VAT as they classed them as choc covered biscuits not cakes (no Vat on cakes)
Any way its late but I’m still sticking with my ‘vats based on luxury items – as a rule of thumb’ –
I’m off to have a jaffa cake and screw the government for 15% (MacVities won)
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Nigel,
At a guess, it’s the value added by providing the surroundings to eat the food, plus the staff to serve it, etc etc. The fact that the food is cooked makes no difference, because takeaways are zero rated.
Chocolate coating is immaterial. The difference is between biscuit and cake.
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Ive got to ask, why tax a biscuit but not a cake?
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Biscuits and cakes – neither have vat but put chocolate on a biscuit and it has VAT (because its a luxury) (:)
The government argued that a jaffa cake was a chocolate coated biscuit and therefore should have VAT on it. MacVities proved it was a cake and won.
I know what your saying John id say though that paying someone else to cook your food (I’m not saying its the cooking process) food is food paying someone else to prepare it is a luxury (:)
you did say yourself that this was the basis some time ago I’m just saying that the principals are still there?
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We’ve been vat registered for 5 years now and the only things we don’t charge vat on are Flyers, leaflets, books and kids t’shirts under 14 years old. Charities are supposed to be exempt but if they can’t prove to me that they are exempt I charge them vat – they would have to make a claim for the vat back with HM customs and excise.
Edit: certain Charity events are exempt – please check with the charity or with vat/hm customs and excise
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Hi John,
There are more VAT exempt items (work boots and other work clothing for example) that you may buy or sell but what you are charged Vat on depends on the knowledge of the person writing the Invoice I suppose but being VAT registered it doesn’t bother me. I do run other business that are not VAT registered so study invoices a bit more.
The Vat man is quite happy for you to charge Vat on items that should be exempt even to folk that are not registered and don’t get their vat back.
At the end of the day its a lot of work working out what is and isn’t and if I’m invoicing a VAT registered company there is no harm in just putting VAT on everything as they will get it back. If they are not however i do a bit more research. Most of us must be invoicing business anyway that would I would think be be vat registered in most cases.
The VAT man does however produce a very interesting leaflet on what is and isn’t Vat-able) I just wish i could remember what it was called. I had a VAT man in our premises with one of these and he wouldn’t give it to me. I’m sure its on there website somewhere I will try and find it if i can and post a link here at some point over the weekend.
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Hi Nigel,
I agree that there are many different things that are vat exempt – but in my line of work the only things that i’ve come across in the past 5 years that are exempt are listed in my previous post.Cheers John
Edit: surely work clothing would be vatable. As soon as you personalise it, it would become a service – which you would charge vat for.
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I think you will find work wear vatable, unless its a safety item, like
boots, and protective wear etc that are zero rated, and to be zero rated they have to be to a certain BS standard,
And approved as such, Having steel toe cap is notsufficientt in itself to qualify for zero vat.Here is the list
http://www.hmrc.gov.uk/vat/rates-goods.htm#3
peter
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I just got a load of work boots in (no VAT) so had that in mind – I’m going to have a good look at other work wear /protective wear and see if there is any system or rule to it seems unlikely but it throws up interesting issues (Jaffa cake trials for one) I am just about to have a good look at Peters link too that may be just what the vat man had when I saw him!
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When I buy plain Hi viz or work wear they always have vat on. There isn’t much that is exempt in the sign / printing industry.
Good link Peter – its a minefield 😀
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I have to share this absurdity from when I still lived in the UK.
We had a VAT inspection, and, as we mainly did screen-printed T-shirts at that time, the Inspector asked how I determined whether to charge VAT on the various sizes. I told him that VAT was charged on Adults sizes but not on Childs. He then asked how we determined the deifference, and I told him we used a 32" chest measurement as a cut-off, since this is how our suppliers also calculated it.
He then posed a question: "What if a adult midget came to you to buy a shirt for himself, and chose a kids size?"
WTF? Well, as it was a kids size, we’d zero rate it.
"No" he says "since you knew it was for an adult, you should charge him VAT"
"Ok", I said, "so if a very obese kid buys an adults XL, can I zero rate it?"
"Oh no", he says, "you still have to collect the VAT"
That’s the trouble with it all, they always want it both ways. Think how much simpler the whole system would be if they gave you an incentive – allowed you to retain a percentage of the VAT collected as a thank you for being unpaid tax collectors!
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One thing I have found is that VAT inspectors don’t know everything. On a couple of occasions they have told me to do something that I didn’t think was right and asked them to prove what they are saying. Both times they had to back down.
I pay the fuel scale charge on motor fuel for personal use, as we all have to, but this inspector told me that it was due on every car and motorcycle available to me for private use. At the time that was about six cars and vans, plus three motorcycles. I told him he was wrong. The charge applied to me personally and whatever vehicle I chose to put the fuel in was down to me.
It was all very friendly but the arguments went back and forth, until I got fed up and told him to show me where, in his paperwork, it said tax was due on every vehicle. After half an hour of going through his stuff, and phone calls to his office, he couldn’t find it (because it isn’t there) and in the end he had to accept that he was wrong and back down.
gvp, in your case I think the inspector was wrong and that it is based on size. I know a couple of petite ladies who shop in the children’s department and never pay VAT. I wouldn’t have accepted his word and made him show me the relevant rule.
In any case, who’s to say the midget was buying for himself? For all you or the inspector know, it might have been for one of his children. I’d have told him to bugger off. 😀
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quote gvp:That’s the trouble with it all, they always want it both ways. Think how much simpler the whole system would be if they gave you an incentive – allowed you to retain a percentage of the VAT collected as a thank you for being unpaid tax collectors!Actually they want it more than both ways as we now have to put a stamp on our VAT 100 envelopes – to send them tax which we have collected for free! No more pre-paid return envelopes.
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quote Peter Dee:tax which we have collected for free!
That doesn’t have to be true Peter.
In fact you are collecting their tax for three months, plus the extra month to pay, which you are quite at liberty to put into a deposit account and earn interest on in the meantime. That’s your cut. 😀
Obviously it’s a rolling thing, but you always have at least three months worth of their money, less the tax you have paid on your own purchases, in your account. 😀
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If you look at it that way it all seems reasonable 🙄
However, the time taken doing accounts deserves far better reward than the threat of fines if I accidentally get it wrong.
Like your example, they get it wrong and all they’ve done is create worry and nuisance. We get it wrong and that’s it, we’re criminals.
I still think that they’ve got a bloomin’ cheek making us pay postage on the payment.
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I think we should all organise a campaign of civil disobedience whereby we all "forget" to put stamps on the pre-paid envelopes. After all we’ve never had to do it before so it would be an easy mistake to make. 😉
I can just see all those VAT officials trooping down to the sorting office every day having to pay the postage before the postie agrees to hand over their letters. :lol1:
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quote John Childs:quote Peter Dee:tax which we have collected for free!That doesn’t have to be true Peter.
In fact you are collecting their tax for three months, plus the extra month to pay, which you are quite at liberty to put into a deposit account and earn interest on in the meantime. That’s your cut. 😀
Obviously it’s a rolling thing, but you always have at least three months worth of their money, less the tax you have paid on your own purchases, in your account. 😀
Can you point me to an account that you can actually get any worthwhile interest on some V.A.T. money John? In my accounts it wouldn’t be worth the pennies you would make in interest. (less the tax on the interest) (less the extra tax on the already taxed interest!)
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Talking of ridiculous VAT stories – this one isn’t from the VAT man but from my previous accountant, a chartered accountant.
We printed up some fliers for the accountants father. They wanted them laminated so we did.
We wrote out the invoice and didn’t charge vat for the fliers – but we thought we would do it by the book and charged vat on the laminating and pouches.
Shortly after our accountant came back in and told us we hadn’t charged enough vat -I pointed out that fliers didn’t have vat and only charged on the laminating. She didn’t seem to know that fliers didn’t have vat and looked put out that someone pointed it out to her so she went away saying she didn’t think that was right.
She came back 30 mins later and said – re write the invoice with vat on everything, -saying that as i had changed the flier into a poster it should have vat on it.
She went on to say – if i had left the building with the fliers and then came back in you would be right but as you did it at one time you must charge us vat – – no skin of my nose but her poor father ended up paying vat so she could save face – I’m sure there is vat on posters either but found it ridiculous.
I told this story to her husband – ‘I have to live with that’ was his reply
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quote Brian Hays:Can you point me to an account that you can actually get any worthwhile interest on some V.A.T. money John? In my accounts it wouldn’t be worth the pennies you would make in interest. (less the tax on the interest) (less the extra tax on the already taxed interest!)
Yes, you’re right for the moment Brian, but 5% has been easily achievable for the last few years, and it will come back again when either politicians come to their senses or the system breaks down completely.
Some times will be better than others of course, but average post-war interest rates must be running somewhere about 4%.
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John Childs wrote
quote :Nigel,At a guess, it’s the value added by providing the surroundings to eat the food, plus the staff to serve it, etc etc. The fact that the food is cooked makes no difference, because takeaways are zero rated.
Chocolate coating is immaterial. The difference is between biscuit and cake.
John, as an owner of 2 takeaways (fish and chips) I can assure you the full vat amount is payable on hot takeaway food. Only cold takeaway food is zero rated and even not in every case. the big anomaly to this is supermarkets who can sell hot food zero rated if it is meant for home consumption. cheers Doug
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The whole VAT thing is a joke and drastically wants simplifying.
A friend of mine has a newsagents, he can sell you a cold pasty VAT free, the minute he heats it up for you (free of charge) in his microwave, technically he has to charge you VAT as he’s now selling hot food.
Our business premises are VAT exempt on the rent, however VAT is payable on the service charge for the estate (this is because our local authority were basically given the units as a new build with no costs to them, therefore there was no benefit to them electing to charge VAT).
Registered charities should not be charged VAT if they are advertising in someone else’s space, however, VAT is chargeable if they advertise in their own space (the charity needs to provide you with the relevant documentation).
Coming back to the charge on delivery, I thought it used to be that you could charge VAT on "postage and packaging" but not just delivery. Saying that, we always list delivery as delivery on our invoices and add VAT to it.
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quote Doug Edwards:John, as an owner of 2 takeaways (fish and chips) I can assure you the full vat amount is payable on hot takeaway food. Only cold takeaway food is zero rated and even not in every case. the big anomaly to this is supermarkets who can sell hot food zero rated if it is meant for home consumption. cheers Doug
I stand corrected.
Fish, chips and large peas please. 😀
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Couriers add vat so the supplier has to pass this on as well.
Also a VAT registered company has to add it to the total of ANY sales invoice.
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I’ve not seen anyone mention that VAT is chargeable on goods and services.
The services bit surely, in a lot of cases, answers the question. ie packaging the goods and heating the pasty.
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