VAT tax not currently supported and UK processors.

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Jeremy Esland
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Re: VAT tax not currently supported and UK processors.

Post by Jeremy Esland » Sun Aug 10, 2008 1:44 pm

If you look only at the VAT regulations and requirements for a single country, you might judge it to be relatively simple to cover "the majority of cases". But add in all the European Union members, each of whom exercises their own variations and additions, and then it does become "massively" complicated.

It's a well-known fact that Customs & Excise (the authority for VAT in the UK ) has more "power" than the police in terms of right of entry to your premises, the ability to force immediate cessation of trade, etc. Here in Portugal it's even worse for businesses: we live in fear of the VAT authorities here, who will levy an instant (and heavy) fine for even the smallest "transgression" - with no right of appeal until after the fine is paid. In theory any software used for conducting tax-related transactions needs to be approved by them - in practice, I will get away with using an "unapproved" storefront so long as the calculations, procedures and record-keeping therein are faultless in their opinion.

As one small example, here in Portugal the standard VAT rate changed recently from 21% to 20%. The official document explaining the changes was itself long and complex - with countless variations possible for "orders placed before the change date, but delivered after it", "orders placed before the change date for delivery after it", "split shipments which span the change date", etc. And no - simply changing the rate in the storefront at midnight on the change date would not have allowed you to comply with the regulations.

So whilst you may have designed and engineered a system that suits regular B2C transactions within the UK (for example), you can't assume that the same solution would suit any EU country. If Able Commerce wants to stand up and say "this application complies with all current VAT regulations for the European Union", then they really need to seek professional advice to make sure that is so.

[EDIT]
Reading back over this thread - there is a VERY important omission:

If you sell goods to consumers in another EU country, each EU country has a threshold value of annualised sales, above which it is necessary to register for VAT in that country and thereafter charge that country's rate of VAT on transactions, not your own. This would affect not only the rate charged on each transaction, but also the record-keeping within the application: you would need to keep separate totals of VAT charged by country.
[/EDIT]

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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Mon Aug 11, 2008 1:18 am

Jeremy Esland wrote:[EDIT]
Reading back over this thread - there is a VERY important omission:

If you sell goods to consumers in another EU country, each EU country has a threshold value of annualised sales, above which it is necessary to register for VAT in that country and thereafter charge that country's rate of VAT on transactions, not your own. This would affect not only the rate charged on each transaction, but also the record-keeping within the application: you would need to keep separate totals of VAT charged by country.
[/EDIT]
Your point about registering for VAT in other countries if your sales to consumers (this doesn't apply to trade sales) exceed the VAT registration threshold of that country is well made.

However, the way AbleCommerce works, this is covered. You set up a Tax Code, and then define tax rules within that code. You would have one tax rule for each country you supply to. If your sales in Italy are below the Italian registration threshold of 35,000 Euros, then set the Italian rule to be your own domestic VAT rate. If they are greater and you are VAT registered in Itay, then set it to the Italian rate. Perhaps Logan could confirm this for you?

In my opinion you are blurring the line between what a storefront should do and what accounting software should do. I get the feeling that you are trying to use storefront software in place of accounting software. It is not the job of storefront software to deal with the vagaries in the alterations to rates, or to deal with returns, which is central to your last point. In no way should the storefront software be used in place of standard accounting software that *IS* intended for this purpose.

The job of a storefront is to correctly calculate the prices that should be charged to customers. What you describe are the requirements of accounting software. I suggest that you buy Sage or whatever the Portugese equivalient is to handle this aspect of your business - then you wouldn't need to be afraid of their VAT department. In the UK, we refer to the business of keeping the government happy as "compliance" and it is a legal requirement for businesses to use accounting software that is approved by Her Majesty's Revenue & Customs (HMRC), much as the Portugese authorities do.

This is not unreasonable - and companies running ecommerce sites use separate, HMRC approved accounting software to do this. Either they re-enter sales transactions into their accounting solution, or they pay a systems integrator/software developer like us to build an interface between the ecommerce site and their accounting system to eliminate this task. There are a few off-the-shelf integrated solutions such as Interprise (which doesn't fully understand VAT yet so isn't quite a solution) or microsoft's commerce server/dynamics solutions, but you will need pretty deep pockets for this.

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Re: VAT tax not currently supported and UK processors.

Post by Odettes » Tue Aug 12, 2008 11:16 am

Logan,

I think it starts to look really good, when do you think there can be a version ready for us to test?

Best regards, Thomas
Sincerely,
Thomas Berglund

https://traileronline.se
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Re: VAT tax not currently supported and UK processors.

Post by Shopping Cart Admin » Tue Aug 12, 2008 11:19 am

Hello,

This feature is in development for our 7.1 International release, we currently don't have an ETA. We still have to work on international shipping and payment processors.
Thanks for your support

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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Tue Aug 12, 2008 11:51 am

Shopping Cart Admin wrote:Hello,

This feature is in development for our 7.1 International release, we currently don't have an ETA. We still have to work on international shipping and payment processors.
Great to know you're on the case - if you want any help (including code) with protx, just let me know

Many thanks

Tony

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Re: VAT tax not currently supported and UK processors.

Post by tim.stokes » Fri Dec 05, 2008 8:31 am

Hi,

When will we be able to purchase Version 7.1 (i.e. support for UK B2C/B2B VAT without customisation, and Protx gateway)?

Cheers,
Tim

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Re: VAT tax not currently supported and UK processors.

Post by niall08 » Tue Mar 24, 2009 6:01 am

VAT is still not properly supported.

A trade accounts/user profiles VAT number has to be stored in the "Comment" field (i.e. a field that isn't used by AC). Alternatively, a new table could be built with additional fields, associated with the ac_Users table.

Whichever method is employed (the Comment field or new table) the VAT Number cannot be exported using DataPort - so account-based reporting requires bespoke querying of the database.

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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Tue Mar 24, 2009 6:09 am

niall08 wrote:VAT is still not properly supported.

A trade accounts/user profiles VAT number has to be stored in the "Comment" field (i.e. a field that isn't used by AC). Alternatively, a new table could be built with additional fields, associated with the ac_Users table.

Whichever method is employed (the Comment field or new table) the VAT Number cannot be exported using DataPort - so account-based reporting requires bespoke querying of the database.
Not quite certain it's fair to say VAT isn't supported. This comes back to the division between the ecommerce site software and accounting system software. VAT reporting is the realm of accounting software, not ecommerce. The ecommerce framework permits the correct charging of VAT to trade and non-trade customers. Sales figures then have to be imported into the accounting software which would then be used to provide VAT returns etc.

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Re: VAT tax not currently supported and UK processors.

Post by niall08 » Tue Mar 24, 2009 7:49 am

No, I think it is fair..

An ecommerce site has to be able to store and export basic financial data - what the customer/SAGE does with it after that is purely accounting - and that's the division..

If that were not the case, why enable order export at all? Is this data "accounting"? No, it's CLEARLY a basic requirement of an ecommerce system - it enables the work of the accounting software by providing raw data - without providing that basic functionality, it cannot be claimed that VAT is supported.

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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Tue Mar 24, 2009 7:55 am

niall08 wrote:No, I think it is fair..

An ecommerce site has to be able to store and export basic financial data - what the customer/SAGE does with it after that is purely accounting - and that's the division..

If that were not the case, why enable order export at all? Is this data "accounting"? No, it's CLEARLY a basic requirement of an ecommerce system - it enables the work of the accounting software by providing raw data - without providing that basic functionality, it cannot be claimed that VAT is supported.
Sorry - don't agree. The reason to export orders is precisely so that you can import it into Sage for accounting and VAT returns. VAT analysis etc. The order export is more than adequate to work with.

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Re: VAT tax not currently supported and UK processors.

Post by niall08 » Tue Mar 24, 2009 8:02 am

I'll wholeheartedly disagree with that..

How can you create user/company profiles on the site, without storing VAT numbers (whether they are eligible for VAT exemption or not)? Surely the whole purpose of the user profile is to model exactly that - the defining characteristics of a user?

Without this data, you can't effectively charge VAT on your site, as there is no way of knowing if a user should be exempt or not.

And if that is the case, to export orders independent of this data is pointless - as is the basic remit of an e-commerce site - to charge and receive payment.

And that's the point - without adding VAT data to the core tables for storing data, and without exporting this information, an export is pointless - it doesn't achieve what it is obviously designed for - processing in software that can make use of the data for accounting purposes.

There is absolutely no muddying of the waters - to store and export VAT data is a simple, basic, e-commerce process - to generate reports and compile VAT returns is an accounting process - one that relies on full and complete reporting of payment received.

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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Tue Mar 24, 2009 8:29 am

niall08 wrote:I'll wholeheartedly disagree with that..

How can you create user/company profiles on the site, without storing VAT numbers (whether they are eligible for VAT exemption or not)? Surely the whole purpose of the user profile is to model exactly that - the defining characteristics of a user?

Without this data, you can't effectively charge VAT on your site, as there is no way of knowing if a user should be exempt or not.

And if that is the case, to export orders independent of this data is pointless - as is the basic remit of an e-commerce site - to charge and receive payment.

And that's the point - without adding VAT data to the core tables for storing data, and without exporting this information, an export is pointless - it doesn't achieve what it is obviously designed for - processing in software that can make use of the data for accounting purposes.

There is absolutely no muddying of the waters - to store and export VAT data is a simple, basic, e-commerce process - to generate reports and compile VAT returns is an accounting process - one that relies on full and complete reporting of payment received.
I don't think you fully know how to implement VAT in Able, which is probably the source of your confusion. There is a trade customer role that determines whether or not the customer sees VAT or not. The tax rules permit you to set up whether customers pay VAT depending on where they are and whether or not the store is vat registered in that region. It fully supports the ability for the store to have multiple VAT registrations and to charge differing rates depending on where the customer is.

This is a good implementation - you know in advance who your trade customers are, you need to create Able accounts for them, add them to the trade role, and you're done. You do the financial analysis in your accounting software and relate transactions on customer name, not their VAT number.

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Re: VAT tax not currently supported and UK processors.

Post by niall08 » Tue Mar 24, 2009 9:11 am

Thanks, but I'm not confused - I have implemented a "Trade" user group.

I think you're confused about how to charge VAT - you don't have different rates dependent upon where the customer is - unless the e-store has a registered, physical warehouse/service provision in that area. For instance, if the business is in the UK, the UK rate is charged. EU companies with registered VAT numbers are exempt, as are US and CI customers.
You are required to take "reasonable steps" to verify VAT numbers are legitimate.

There are two different models here - in mine, the VAT number is required as part of fully modelling the user and generating VAT returns in SAGE after the fact is an end product - I don't know whether you have generated these reports from your model - regardless of that fact, the AC solution should store the VAT number for the user.

VAT numbers must also appear on invoices, as well as being pivotal to these financial reports - without storing the VAT number in AC, you can't satisfy this requirement.

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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Tue Mar 24, 2009 9:36 am

Actually, not quite correct.

If you're based in the UK, but your sales into Italy are greater than the Italian VAT threshold, then you have to register in Italy as well and charge the Italian VAT rate, unless you know the customer's VAT number.

In my world, the client's VAT number is held in the accounting system, unless you choose to allow people to enter a VAT number at checkout stage (i.e. you don't know in advance that they are trade customers) in which case you would have to customise the store to use a web service to verify the VAT number to comply with the "reasonable steps" you mention. If you are doing this, then clearly, you would have to hold the VAT number in the store's database and import it into the accounting system.

Otherwise, if you know a customer's VAT number, and it is recorded in your accounting system, why do you need to duplicate it in Able?

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Re: VAT tax not currently supported and UK processors.

Post by surfscience » Tue Sep 08, 2009 3:55 am

Is there any update on this from Able, such as when these much deliberated over changes to the tax system in Able will be implemented? I'm sure many European customers or more specifically potential customers have followed this thread with interest since the VAT issue is a deal maker/breaker in a swith to Able. I have developed a large number of BV stores, all of which were slightly customised to handle VAT in just the way described above (not much needs to be done to BV to handle in this way), I'd love to consider Able as well but I'd rather not engage until VAT is handled in this way OOTB. PROTX also is essential for UK merchants. All UK sites I'm connected to use PROTX.

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Re: VAT tax not currently supported and UK processors.

Post by Logan Rhodehamel » Tue Sep 08, 2009 12:21 pm

You may need to expand on your question - this thread is a bit dated. For example, Protx, now called SagePay, has been supported OOTB for some time. We also have continued to make improvements to features in support of VAT.

EDIT: It might help if you post a new topic and detail how you need it to work. Then someone could address your questions directly. This particular thread is long so it is difficult to judge which things you are interested in.
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