VAT tax not currently supported and UK processors.

This forum is for questions and issues arising from the use of AbleCommerce 7.0 outside the United States. International purchases of AbleCommerce 7.0 are way up. Thank you!
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VAT tax not currently supported and UK processors.

Post by Shopping Cart Admin » Tue Feb 19, 2008 11:58 am

Hello Everyone,

In 7.0 VAT tax cannot be done without customization. I'd received a good email from Tony Leatham of Egghead Design Ltd and I'm posting here to breed discussion on this important topic we MUST address.


I’ve been playing with AbleCommerce 7.0 over the weekend and feel like a weight has been taken off my shoulders. The API is a thing of joy and so
well engineered and extensible it will make customization a breeze.

As it stands right now, AbleCommerce will be suffering in Europe (and in
particular the UK) because of a few features that are missing:

*VAT (Value Added Tax).*

This is nothing like the tax systems you operate in the US. Here’s a
brief explanation so you can see what I mean.

In Business to Consumer sales, it is a legal requirement that all prices
shown on the site include VAT at the rate set by the government of the
country in which the store is located. Here in the UK, that rate is
17.5%, in France its 18% for most products

In Business to Business sales, prices are quoted without VAT, but
invoiced with it

The rate is product category specific – food is 0%, books are 5% and
other products are 17.5%

To further complicate matters, if a business sells to another business
in a different EU country (say I in the UK sell into France), if I know
the VAT registration number of the customer, I neither quote nor charge VAT.

Each line of an invoice must show the VAT rate for that line item, and a
VAT total for the whole invoice

Here are some examples:

· A general product whose price is £100 would be shown for sale at
£117.50 on a Business to Consumer site, and £100 on a Business to
Business site. Total amount payable by either customer is £117.50

· A book product whose price is £100 would be shown for sale at £105.00
on a Business to Consumer site, and £100 on a Business to Business site.
Total amount payable by either customer is £105

· A general product whose price is £100 would be shown for sale at £100
on a Business to Business site (based in the UK), and the total amount
payable by customer is £117.50 if the customer is in the UK, and £100 if
the customer is a trade customer in another EU country

A very common requirement is that a site shows prices including VAT to
consumers, but logged in trade customers see them without VAT.

OK, as it stands, AbleCommerce can almost deal legally with Business to
Consumer sites (the only not quite right element is that the invoices do
not show the VAT rate for each item). But the trade situation is not
supported at all, and roughly half the sites we do need this functionality.

I’ve started working on modifying the code for this, but it will
probably be better for me to modify the API code so that adjustments can
be made in the objects themselves rather than just bodging the displayed
prices which is what I am doing right now.

*Switch*

Not a major thing and very low acceptance rates, but a necessary evil
from the point of view of takeup. I know it’s not hard to add, but needs
to be there

*Protx*

By a big majority, the most popular payment gateway in the UK. Not
necessarily the best, but by far the most popular. Lack of support for
this will hurt you in the UK
Thanks for your support

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Post by robmartin » Thu Mar 06, 2008 1:41 am

I think that breakdown you have been given is a little over complicated, we have been using Ablecommerce for a long time now in the UK and have not had any major problems with the system and VAT.

The Ablecommerce system is good enough to handle UK VAT, the problem comes with the law - as it is a legal requirement to show prices inclusive of VAT. The Tax functions built in to Able can be set to work fine if you are running a business to business site (where prices are shown ex VAT and then added when you checkout), we have a trade website running and have no problem.

The issue is with the B2C website, where prices have to be shown with the 17.5% added to them. Any country within the EU pays VAT if buying from the UK, this can be sorted by assigning VAT for each country in the EU - any countries outside of the EU will not be charged VAT. Where an item like a book, does not contain VAT simply un-checking the taxable checkbox in the product description sorts that out.

The only issue with Ablecommerce and UK VAT that I can see, is that the price shown on the site must already have the tax added if it is a business to customer website.

Switchcards are no longer used in the UK, these have now become Maestro. Without seeing the new software, I don't know how you have set this up but I know you have Maestro on there so I don't see that being an issue.

Any UK customers, correct me if I am wrong on this one but Protx is more than likely used widely in the UK because it is recommended by software companies have decided to use? I am surprised that it is widely used and I wouldn't have thought it would stop someone using Ablecommerce.

With regards to VAT, we had two bits of customisation done on 4.3 to solve this problem.

The first was fairly basic but still effective: we didn't setup a value for tax, simply used the taxable/untaxable option within the product description and then act the basket stage had some code which if the product was taxable -17.5% to show the amount of Tax the customer was paying.

The second: We ran an SQL query to remove 17.5% from all products which were taxable, we then had some code on the category.asp and products.asp pages which added 17.5% to the shown price - which then enabled us to use the Ablecommerce Tax system.

UK VAT is fairly simple - it is 17.5% there are not variants. So providing you are able to enable UK users to show prices inclusive of the tax, the Ablecommerce system can do the rest fine.

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Same applies for Australian and NZ GST also

Post by Bumbles » Fri Mar 07, 2008 3:19 pm

I can't comment on the specifics of VAT, but most of what has been written above also applies to Australian and New Zealand GST.

As robmartin posted, almost all of the issues would go away if AbleCommerce had an option to show prices with tax added on the website. With this option enabled, it should calculate tax based on the logged in user, or the tax that would apply to the "home" of the website if no user was logged in. (It's not too much different in concept to allowing users to view the prices in their own currency.)

I previously posted on the issues I was having trying to get the tax situation in AbleCommerce to work here. Unfortunately to date I haven't had the time to figure out the necessary customizations required and I wasn't 100% happy with the solutions proposed as they seem like a bit of a hack to me... so my plans of switching to AbleCommerce have largely halted at this stage. :(

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Post by Shopping Cart Admin » Fri Mar 07, 2008 3:22 pm

Hello,

The reason I'd posted this thread was to get the details together to put out an official AbleCommerce solution. Please keep the feedback coming and we'll get it handled just a soon as we are able!
Thanks for your support

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Shipping products to International customers outside the USA

Post by gio50000 » Wed Mar 26, 2008 1:13 pm

I am launching my first AC website next week so pardon my ignorance if the this questions doesn't makes sense. Any clarification on this topic is welcomed.

My client is currently experiencing issues shipping products with UPS to countries outside of the US. They must fill out tax ID forms on behalf of customers purchasing products from their existing site.

Is this the case for all shipping carriers? Can anyone comment on a easy method using AC and shipping carries for shipping goods to other countries? Or am I totally off track and missing something?

Thanks,
Gio

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Post by jmestep » Wed Mar 26, 2008 1:29 pm

When we have shipped UPS to other countries, we have printed out the commercial invoice and necessary papers from USP Worldship. I think this would be outside of Able's scope because the laws differ so much between countries and are constantly changing.
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Post by eggheaddesign » Wed Mar 26, 2008 9:31 pm

Dear robmartin

I don't quite know what kind of work you do, but unfortunately, in dismissing my comments as being over complicated, I feel you are not fully aware of all facts.

What I was trying to do in my email to AC was establish the full requirements imposed by VAT that will enable AC to stand up to its competitors and allow it to be used in all situations - B2C and B2B.

As you say, a trade only website with AC as it stands is perfectly acceptable. Every other application needs some modifications if you intend to be fully compliant with the law.

If you are willing to keep your fingers crossed and hope that some snotty individual doesn't report the site to trading standards, who will call you up and hound you if you're not doing it correctly, then again, AC is OK.

However, I feel that it is my responsibility to my clients to deliver a solution that will be fully compliant with the legal requirements in place in the country in which they do business. I find that in taking this approach, my clients don't get troubled by issues that they shouldn't be, and I get a stress free life. In order to do this, I spend my time ensuring that the invoices produced match HMRC requirements (show the VAT rate for each item on the invoice and the total VAT payable as a bare minimum).

Also, simply applying a rate of 17.5% is again a misunderstanding of VAT - the rate is set at the PRODUCT level, not globally. This is why you are required to display the rate for each line item, not just an invoice total.

I have to deduce from your comments about Protx that you are just not really that aware of the payment gateway industry in the UK. It is not popular because software companies recommend it (software companies have not widely recommended Protx because their SDK was until recently very poor - they only managed to get round to providing ASP.NET examples of 3D secure months after it was introduced and mandatory for maestro). The reason they are popular is that they are a) cheap and b) owned by Sage.

all the Best

Tony

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Re: VAT tax not currently supported and UK processors.

Post by tim.stokes » Tue Apr 08, 2008 7:16 am

Hi all,

Any progress on this? We are considering purchasing but are waiting to hear about integration with Protx and better support for the UK VAT model without customisation.

Cheers!
Tim

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Re: VAT tax not currently supported and UK processors.

Post by Odettes » Tue May 06, 2008 5:10 pm

Any news regarding this subject?

Best regards, Thomas
Sincerely,
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Re: VAT tax not currently supported and UK processors.

Post by skodge » Mon May 19, 2008 6:07 am

my developer recently purchased ac for me but I see that it is unable to handle GST (goods and services tax) for australia. The gst tax component is an included tax on each product including shipping. has ac solved this problem?
thanx
skodge

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Re: VAT tax not currently supported and UK processors.

Post by tim.stokes » Tue Jun 03, 2008 2:18 am

Ditto - we cannot purchase until this is solved!

In Feb 08 you said that it was an important topic that "we MUST address". So when will it be addressed?! Please at least reply to the post.

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Re: VAT tax not currently supported and UK processors.

Post by Jeremy Esland » Thu Jun 05, 2008 1:45 pm

OK, so having got over my initial fury at discovering AbleCommerce doesn't know anything about VAT - I'm still drawn back to Able, 'cos ASPDNSF is such a kludge. Seems that for B2C it shouldn't be too difficult to customize the basket display and receipts, etc. Still trying to get my head around the whole issue, but has anyone else done this successfully?

Basic requirement (for me) is:

- show price in store both with and without tax e.g.
Price: 1,200.00€ incl. VAT @20%
(1,000€ excl VAT)

Modify cart/checkout pages so first question is: "delivery country?" and (if in European Union) second question is "Are you VAT registered?"

Then:

1. for customers in European Union: add VAT (20% here in Portugal) to base price in cart per line item

2. for customers in European Union who are VAT registered businesses (on basis of valid entered VAT number): add 0% VAT to base price in cart per line item (i.e. invoice must show that VAT was charged at 0% and quote customer's VAT number)

3. for customers outside European Union (on basis of delivery address): don't add any tax to base price - note on invoice to indicate that the transaction is "VAT exempt".

"Situation 1" is easy - if(delivery_address_country) is in list_EC_taxable_countries then... just need to redesign the cart and invoice a bit

"Situation 2" - technically I should check the entered VAT number for match/validity before allowing the transaction. So: if(delivery_address_country) is in list_EC_taxable_countries and isValid(VAT_number) then... Same cart/invoice requirements as above, but showing tax rate of 0%. The isValid() would theoretically need a call to the central EU database to test match with business name, but basic checksum test would be enough to start with.

"Situation 3" - pretty simple: if(delivery_address_country) is not in list_EC_taxable_countries then...

I could get away with this because the goods I sell are all "standard rated" (20% in Portugal). Books, foodstuffs and children's clothing carry lower rates, but I don't sell those. Technically, tax rate should be entered "per product".

What I'm not sure of yet is whether the store will be able to show me correct tax reports. The lack of documentation means it's slow work to poke around and figure stuff out.

Question: using VS 2005 or 2008, can I create a "solution" and therefore be able to see the XML documentation from the DLLs? Really difficult working "blind"! At least give us some basic NDoc output, please! [Edit: OK, I found the .chm file]

Other VAT users: have I missed anything important?

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Re: VAT tax not currently supported and UK processors.

Post by Logan Rhodehamel » Thu Aug 07, 2008 2:08 pm

To those of you posting in this thread who are interested in providing more input, I am working on VAT. I wanted to see if it could be put in place without any customization of the core API.

So far I have been largely successful by using the tax provider interface. I have created a VAT provider in conjuction with our existing taxcode/taxrule system. However, there are some challenges.

I wanted the merchant to specify whether prices in the admin either include or exclude VAT. Like when you edit a product, how are you going to enter prices?

But entering prices INCLUSIVE of VAT seems strange to me. Do you have to charge different rates on products depending on the destination country? We could accomodate this (for both display and checkout) but only if prices are entered into admin EXCLUSIVE of VAT.

If AbleCommerce was able to handle display of prices, display of line item vat rates, and exclusions for properly registered groups, how crucial would it be if we said prices had to be entered exclusive of VAT?
Cheers,
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Re: VAT tax not currently supported and UK processors.

Post by Logan Rhodehamel » Thu Aug 07, 2008 3:15 pm

Is this too granular for display? Woudl it be better if there was not a tax line item for each product, and instead some indicator of rate on a per-product basis with a VAT total at the end of the list?
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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Fri Aug 08, 2008 3:26 am

Hi Logan

Thanks for your postings. I appreciate your efforts with VAT.

In answer to your questions about entering prices exclusive of VAT, the reason I feel that a choice should be given is that how products are priced is dependent on the nature of the business of the store owner. If they normally sell business to consumer, then their prices will be set according to what is sensible for a consumer e.g. £13.99 inc vat. In order to get this correctly rounded, the store owner would have to enter an ex-VAT amount of £11.906382978 or whatever, and experience dictates that this always causes people to grumble.

If the business is B2C, then products are priced ex-VAT e.g. £100 and the invoice is then for £117.50 (in the UK - remember VAT is both country AND product specific).

In answer to your question about using separate lines to show the tax element, this is not going to work at all. It is a LEGAL requirement that the tax element be shown for each line on the invoice. We would get into serious trouble if we did it the way you suggest.

All the Best

Tony

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Re: VAT tax not currently supported and UK processors.

Post by Logan Rhodehamel » Fri Aug 08, 2008 10:16 am

Thanks for the note about inclusive / exclusive prices. That makes a bit more sense now.
eggheaddesign wrote:In answer to your question about using separate lines to show the tax element, this is not going to work at all. It is a LEGAL requirement that the tax element be shown for each line on the invoice. We would get into serious trouble if we did it the way you suggest.
I didn't follow this part. The last image I posted above, is it good or bad? It shows the tax element for each item in the order.

If it is bad, can you describe how the VAT needs to show for each line?
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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Fri Aug 08, 2008 12:39 pm

Hi Logan

Here's what you need to do for an invoice. The numeric values shown are correct. You can see that it is intended to show the VAT rate for each item in the basket, as well as a VAT total, an ex-VAT total and the total to be paid.

Hope this helps

cheers

tony
p.s. I've included the spreadsheet I used to knock this up - you can use it as a reference for the maths if you need to

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Re: VAT tax not currently supported and UK processors.

Post by Logan Rhodehamel » Fri Aug 08, 2008 4:32 pm

eggheaddesign wrote:If they normally sell business to consumer, then their prices will be set according to what is sensible for a consumer e.g. £13.99 inc vat. In order to get this correctly rounded, the store owner would have to enter an ex-VAT amount of £11.906382978 or whatever, and experience dictates that this always causes people to grumble.
I almost have this right. If we go on the assumption that products "include VAT", there are some additional concerns.

Suppose you have a product that includes your 17.5% VAT, but you have to sell the product to someone in another country and you need to charge a 15% VAT instead. Does this situation ever occur?
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Re: VAT tax not currently supported and UK processors.

Post by Logan Rhodehamel » Fri Aug 08, 2008 6:42 pm

With one minor change to the 7.0 source code (which could be classified as a bug fix) I have implemented a draft of a VAT tax provider. This is not nearly production ready!

Normally I wouldn't give out so much detail about work in progress, but I am not an authority on VAT yet. The fastest way to get something implemented is to get the details from the customers who want it.

In the zip are eight numbered screens.

1) this shows a new menu item for VAT - this is likely to change to something more generic.

2) when vat menu selected, this is the not-very-fancy screen. You can enable/disable the vat provider and also indicate how prices are entered into the admin.

3) The vat provider I created uses the same tables as the built-in tax calculator. To prevent the built in tax calculator from activating, I have chosen to make my provider only respond to rules that have VAT set in the postal code.

Side note: As a result, The vat provider cannot respond to postal code filters. All other criteria in the tax rule operate as they would for the original built in tax calculator. If I were not trying to work within the restriction of 7.0 compatibility this would not be required, and I would have done this differently.

4) This is just to show the sample product having a price of 19.99 in the admin, as noted in screen 2 I indicated my prices do not include VAT.

5) The home page - notice the price circled in orange which includes the 17.5% VAT I defined.

6) A basket page showing the VAT column, which seems to follow the format given in the XLS spreadsheet provided earlier today.

7) The checkout page - this one I need pointers on. In purple I have circled the order summary which shows breakdowns without the VAT. In red I have the shipping method to show that if shipping is taxable we can also modify this value to reflect VAT. In orange I have circled the basket breakdown, again showing the VAT column. Any feedback on this page would be helpful.

8) On the order invoice, another page where feedback would be appreciated on the circled areas.

****

In working on this I have made some decision about how to further refine the design. I would like to add some additional options on screen #2. I can make the displays more configurable so it will apply to almost any situation, not just an EU style VAT. In fact, based on where I am now, this work will replace the current built-in tax calculator in a future release.

I also need to invest time testing all the various scenarios (B2C vs. B2B, VAT for multiple countries, various product classes, etc.). So again, don't think this will be available for download tomorrow. Just keep giving the feedback and I can make sure that when it IS available it will be right.
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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Sat Aug 09, 2008 12:42 am

Logan_AbleCommerce wrote:Suppose you have a product that includes your 17.5% VAT, but you have to sell the product to someone in another country and you need to charge a 15% VAT instead. Does this situation ever occur?
No, this will never occur. VAT on overseas sales works like this:

If I in the UK sell to a French consumer who is not registered for VAT in their home country (the normal way to tell this is to ask them for their VAT number which is a number provided by the government when a company wishes to register for VAT), then I charge VAT at the UK rate.

If the French customer is a business and can provide me with their VAT number, then they are not charged any VAT at all.

Hope this helps

Tony

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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Sat Aug 09, 2008 1:10 am

Hi Logan

I've had a look through the screens and I just want to check something with you.

VAT is PRODUCT specific. In the UK, most product classes are 17.5%, but books are 5% and food and childrens clothing are 0%. I didn't see in the screen grabs you provided where you assign the correct VAT rate to a product? I am assuming that this is the case, but I thought it worth checking.

With regard to shipping, sorry to say that people will want to be able to say whether or not their shipping includes or excludes VAT. This is because, for example, in the UK, postage is exempt from VAT, but courier shipping isn't. Therefore, for each shipping type, we need to be able to select the VAT rate.

Going back to the overseas sales aspect, some storefronts allow customers to enter a VAT registration number at check out stage if the destination country is different to the home country, and the destination country is in the European Union.

This can be dangerous unless you use a web service such as the strikeiron one or the free VIES one (example here: http://simon.butcher.name/archives/2007 ... ynamics-AX) to verify the VAT number. If you don't check, and somebody enters nonsense, you don't charge VAT, then you could end up having to pay the VAT yourself when you make your VAT return/report to the government.

The other way of doing it is by use of the Trade customer role. If you have an overseas customer in the European Union (i.e. somebody in a different country to the home country of the store) who is in the Trade role, then VAT shouldn't be charged.

Confusing, eh?

Many thanks

Tony
Last edited by eggheaddesign on Sat Aug 09, 2008 5:39 am, edited 1 time in total.

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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Sat Aug 09, 2008 1:15 am

Logan_AbleCommerce wrote:7) The checkout page - this one I need pointers on. In purple I have circled the order summary which shows breakdowns without the VAT. In red I have the shipping method to show that if shipping is taxable we can also modify this value to reflect VAT. In orange I have circled the basket breakdown, again showing the VAT column. Any feedback on this page would be helpful.

8) On the order invoice, another page where feedback would be appreciated on the circled areas.
I have to say they look pretty good to me. I've checked the maths and all seems OK, the information seems well presented.

This is great - thank you so much. Maybe at last I can ditch ASPDNSF!

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Re: VAT tax not currently supported and UK processors.

Post by Logan Rhodehamel » Sat Aug 09, 2008 12:32 pm

eggheaddesign wrote:VAT is PRODUCT specific. In the UK, most product classes are 17.5%, but books are 5% and food and childrens clothing are 0%. I didn't see in the screen grabs you provided where you assign the correct VAT rate to a product? I am assuming that this is the case, but I thought it worth checking.
Yeah, we can handle that. Every product can be assigned a "tax code", and in the tax rules section you specify what tax code(s) the rule applies to. So you would have at least three or four tax codes (General, Books,Food,Childrens Clothes?). Then in the tax rules, you could make one rule for the 17.5 to apply to General, one rule for 5% to apply to books, and so on. I suppose if you sell something that is never taxed (e.g. food), you don't need to assign it to any tax code or tax rule at all.
eggheaddesign wrote:With regard to shipping, sorry to say that people will want to be able to say whether or not their shipping includes or excludes VAT. This is because, for example, in the UK, postage is exempt from VAT, but courier shipping isn't. Therefore, for each shipping type, we need to be able to select the VAT rate.
Again, tax codes. You specify the tax code on a per shipping method basis. So the tax calculator treats it just like any other product you sell. In light of this, do people need to specify that shipping includes or excludes VAT as an option that is separate from product prices?
eggheaddesign wrote:Going back to the overseas sales aspect, some storefronts allow customers to enter a VAT registration number at check out stage if the destination country is different to the home country, and the destination country is in the European Union.
This is one part I haven't delved into. We have a very simple tax exempt flag on the user group. I believe I can cobble something together that would allow for collection and display of your registration number. I understand about the verification of this data, someone else mentioned this also.

I will tackle the exemption part last, once I am happy with the rest of the work.
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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 5:56 am

I suggest that if you're now intending to address VAT properly, you need to take some professional advice rather than seeking lay opinions here. VAT is a massively complex and ever-changing subject. There are professionals who make it their business to understand it all, keep abreast of changes and assist clients in navigating the minefield. This one came up on a simple Google search: http://www.lenos-vat.com

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eggheaddesign
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Re: VAT tax not currently supported and UK processors.

Post by eggheaddesign » Sun Aug 10, 2008 1:02 pm

Jeremy Esland wrote:I suggest that if you're now intending to address VAT properly, you need to take some professional advice rather than seeking lay opinions here. VAT is a massively complex and ever-changing subject. There are professionals who make it their business to understand it all, keep abreast of changes and assist clients in navigating the minefield. This one came up on a simple Google search: http://www.lenos-vat.com
I wouldn't argue that VAT is massively complicated. However, as AbleCommerce is a general purpose storefront and their design goals are to cover the vast majority, then I think the kind of recommendations made here are more than adequate - they allow sufficient flexibility to cover the vast majority of cases.

If you know of something specific that we have overlooked, then please state it now

Cheers

Tony

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