A friend has asked me to look at their business, they sell band mechandise, T-shirts, posters etc. and are VAT registered. Sales in shopify include a separate shipping cost that the customer pays. They charge VAT on the goods (UK and EU sales) but not on the shipping.
So £20 goods + £4 VAT plus £5 shipping = £29
Is that correct? I though shipping costs were subject to VAT:
£20 goods + £5 shipping = £25 plus £5 VAT = £30
Also, is income from shipping counted as revenue? I seems to me like it's inflating the sales totals.
hi Laura So hows about an intro before we start. We always ask newbies!
Usual stuff - what prof body do you belong to, do you work for yourself or in a practice/ firm, are you a bookkeeper or accountant, what qualifications, who is your mlr with, how long in role, where up to in your studies-what exams passed/with what body/in midst of doing, where based, what you did before this role? That sort of thing. Helps get to know you but also how best to pitch answers.
Also can you add your first name so that it appears under the signature bar on your posts? Saves everyone looking it up each time!! (Edit profile --->signatures).
Also - I do hope you have PII - friends soem become frenemies when you fuch it up.
-- Edited by Cheshire on Tuesday 23rd of July 2019 07:47:39 PM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I'm self employed, 8 years, small portfolio of clients. Supervised my HMRC for MLC, insured and currently working on Level 3 with IBC. I'm Glasgow based and worked in Investment Banking operations prior to kids (and bookkeeping) coming along.
Ive been away for a couple of days - did you sort it as youve not been back on?
Not want to ramble on with an answer if you have.
I guess with the end of the month coming up everyones too busy! Lol
Too many VAT registered businesses incorrectly do not charge VAT on the delivery costs. They think that just because the Post office doesn't charge they don't have to either! If the item sold has vat charged then so does the shipping. If the item does not have vat charged then the shipping is also vat free.
Too many VAT registered businesses incorrectly do not charge VAT on the delivery costs. They think that just because the Post office doesn't charge they don't have to either! If the item sold has vat charged then so does the shipping. If the item does not have vat charged then the shipping is also vat free.
It's not always the little guys either. Seem a couple of big companies do this as well.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Too many VAT registered businesses incorrectly do not charge VAT on the delivery costs. They think that just because the Post office doesn't charge they don't have to either! If the item sold has vat charged then so does the shipping. If the item does not have vat charged then the shipping is also vat free.
It's not always the little guys either. Seem a couple of big companies do this as well.
Quite. Shopify seem to be one of them from what ive seen.
OP - get client to set up shopify correctly, they can do it via their login in. May need to raise a ticket.
-- Edited by Cheshire on Monday 29th of July 2019 10:24:29 AM
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Thank you for your responses, they confirm my understanding of the situation and have helped to clarify it for me. Unfortunately it is not the advice the accountant gave the business owner when she set up Shopify, or the advice I got when I called him to discuss it last week!
Best thing to do Laura is show them the legislation, or at the very least a copy of the relevant vat guide that shows the position, then see what they say.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
