VAT Process & Vies Validation
VAT is levied on most goods and services provided by registered businesses in the UK
Overview#
Purpose: VAT is levied on most goods and services provided by registered businesses in the UK and some goods and services imported from outside the UK. Bragan 4x4 is Irish registered business and Bragan Trading is UK registered Business. Irish/European VAT 23%; UK VAT 20%
Scope: This SOP cover Bragan Sales Flow and VAT/tax conditions. This procedure applies to Operations, developer (who will do Magento Backend and Xero), Sales and Accounts
Responsibility: It is the responsibility of each Accounts department, Accountant and management to ensure the process set out in this procedure is followed.
Objective: 1. To be expose to UK VAT and IRL VAT for Bragan and E-commerce sellers
- To be aware of sales flow and idetifiers for B2B and B2C transactions
UK VAT return Process#
You usually submit a VAT Return to HM Revenue and Customs (HMRC) every 3 months. This period of time is known as your ‘accounting period.’
The VAT Return records things for the accounting period like:
your total sales and purchases the amount of VAT you owe the amount of VAT you can reclaim what your VAT refund from HMRC is
You must submit a VAT Return even if you have no VAT to pay or reclaim.
BRAGAN TRADING UK VAT RETURN @ 20% to HMRC
VAT No. GB972944183
Quarter End Due (File + Pay)
March 03 7th May
June 06 7th July
September 09 7th November
December 12 7th February
Includes
Ebay 0 (Remember Exports. International/rest of world 0%)
Amazon
Magento - all sales to UK (incl NI)
Direct sales to UK & NI (should be sub-source 2)
Convert all currencies to GBP Adjust for refunds –
Stripe
PayPal 1 refunds during quarter
Bank
Purchases include
Express Freight
Ebay Fees (VAT at 20%)
File using Excel Online and VitalTax Add-in for Making Tax Digital.
Changes Occurring with UK VAT#
With the end of the Brexit transition period finally upon us, many ecommerce merchants are scrambling to make sure they can still serve customers in the UK. Here are the high-level details of the new VAT scheme that the UK government put into effect on January 1, 2021.
For goods imported into the UK in consignments not exceeding £135 in value, VAT is now charged at the point-of-sale (i.e. during checkout) instead of at the point of importation.
For the purposes of this policy, a consignment is a group of goods delivered to a person, in this case your customer. Additionally, the Low-Value Consignment Relief went away.
This rule previously exempted goods valued at £15 or less. The seller may pay the import VAT (and duties) on clearance and reclaim if they have a UK VAT number. Alternatively, the seller may opt to have their customer pay at customs. Only the owner of goods at the time of the import can reclaim the VAT.
Expanding Internationally#
As a small or medium business, you may be looking to expand into other European markets to grow your business. Here’s what you need to consider:
Exporting can require expertise and some good strategic planning, so consider using a fulfillment center or a third party to fulfill your shipping needs. Amazon can provide you with direct access in their pan-European program, but you will need to be VAT registered in seven countries straight away. Choose a marketplace best suited to your business. Enlist the services of a translation company.
Getting experts in the field to help will not only ensure you are compliant but that every penny is used in the right way. Look to use an international consultancy that can help to ease the pain of growing globally.
- European VAT Rules
When Selling as a European Business to European Consumers
Distance Sales#
Online traders based in the EU and selling goods online to European consumers must consider distance selling rules. Distance sales occur when goods are dispatched or transported to a private consumer (not VAT registered) in another European Union (EU) Member State, and the supplier is responsible for the delivery of the goods.
It includes:
mail order sales phone or telesales physical goods ordered over the internet
EBAY FOR BUSINESS (VAT CHANGES)#
Important changes to VAT registration requirements in Europe From 1 July 2021, new VAT regulations will affect all sellers who trade to or within the European Union. Take these actions now:
1.Provide VAT rates:
When listing on any European or UK site, always provide the gross price and the VAT rate you used to calculate the gross price. Where eBay has to collect VAT (on imported goods up to a consignment value of EUR 150, or on goods which are fulfilled within the EU), eBay will use the rate to determine your net price, and add VAT at the appropriate rate to your listing price to ensure that the correct VAT- inclusive price is being displayed to buyers. Where eBay has to collect VAT and the VAT field is empty, we will add this on top of your listing price. Update VAT rates on your listings here.
- Contact your carrier to understand how to share eBay’s IOSS number for imports into Europe:
After 1 July, where eBay has collected VAT on your shipment into the EU (up to a consignment value of EUR 150), always electronically provide to your carrier the Import One-Stop Shop (IOSS) number provided by eBay. Otherwise, your buyers may have to pay VAT again on delivery. eBay’s IOSS number will be available on orders placed after 1 July and should not be shared for shipments where eBay has not collected VAT (consignment value above EUR 150). You can identify transactions where eBay has collected VAT in your order details, in APIs as well as in the Orders
Download Report. More information about API changes will follow. Contact your carrier now to understand what changes you will need to make to prepare your carrier operations.
If you’re using the eBay label platform, eBay’s IOSS number will be automatically shared with carriers.
If you’re using eBay’s Global Shipping Programme (GSP), eBay’s IOSS number and all customs declarations will be automatically shared with carriers.
If you are using a third party listing tool, please contact them now to understand how they will be identifying transactions where eBay’s IOSS number will be required and what changes are needed.
Alternatively, you can also manually apply eBay’s IOSS number to your eBay shipments up to a value of EUR 150 when preparing the electronic declaration to your carrier. If you are unable to make the required changes by 1 July, please consider using eBay’s GSP to ensure a seamless buyer experience whilst you update your systems and prepare your business operations.
Bragan Transport - Sales Flow For LW – Xero#
Implementation#
(Please note below screen is for reference and
applied pre- magento customer group
implementation.)
Confirming Valid VAT Numbers#
IF the process outlined below does or does not validate the VAT number you should ask the customer to email a current copy of their VAT certificate, prior to zero-rating the invoice- Please Tag and notify accounts of certificate for their records.
Here is an example email where you would be required to check out the VAT number,
A customer from Portugal looking to provide a VAT number & order without VAT
Video reference DropBox link:
PROCESS
IMPORTANT - After VAT number has been Validated - customer should be added to Magento customer Group 1.4 / 1.5 or id B2B 2.3 or 2.5 - Please confirm with management.
Video & Media#
Notes#
This section is important so Adhoc points and issues can be logged. Also, Q&A can be logged for suggestions for potential issues encountered. Also, log important notes needed for this system. Additional Notes:
VAT Changes 2021: Understanding E-Commerce VAT in Europe VAT Changes 2021 | New Rules E-Commerce VAT in Europe | PKF-FPM (pkffpm.com)
Potential Issues:
1 - ISSUE ENCOUNTERED: Stuck on Loading RESOLUTION: Refresh Browser
2 - ISSUE ENCOUNTERED: Broken Links RESOLUTION: Get the external link as this will allow other people to access the
SOP without the need for login credentials and avoid broken links.
3 - ISSUE ENCOUNTERED: "Type Text Here" RESOLUTION: "Type Text Here"