UK & EU VAT and Electronic services Deffinition Change

[ChrisGooding]

Hi,

 

I need to give a brief low-down on the situation.

 

We are UK based, and sell to customers inside and outside the European Union, and to both business' and individuals.

 

Right, to the point. We have just been notified By our accountant, that we are seriously in breach of the UK VAT laws with regards to who we are & aren't charging VAT.

 

Up to now, we charged to all people (at the uk rate) as to our knowledge electronic services were deemed to be VAT charged at the rate of where the service was delivered. The place of which was determined by where the servers were, i.e for us in the UK.

 

We have now found out that the law was changed, and an electronic service is now deemed to be located at the place at which the service is used. And to make it worse, the law splits the way in which personal and business accounts may be charged vat.

 

So, we now have to obey the following....

 

Customers in the UK (personal & Business) - Charge VAT

Customers Outside the UK, but in the EU (personal) - Charge VAT

Customers Outside the UK, but in the EU (business) - Do not charge VAT

Customers Outside the EU (personal & Business) - Do Not Charge VAT

 

The problem is (apart from having to create loads of new tax ruls ) that there is no way in WHMCS to specify whether an account is personal or business (other than the text box), and as such we cant set the tax rules to be applicable to either personal or business accounts.

 

I appreciate that we can manually set accounts to be exempt from tax, but that not only adds more manual intervention, but worse still, at that point it is too late as customers have already be invoiced/billed inclusive of tax.

 

I suppose this post is to....

 

a) Inform others which may be in the situation we were and not know of the changes.

 

b) See if anyone has an idea of how to deal with this (if there is a way)

 

Obviously if the answer to b is a no, then I suppose it may have to be a feature request/s.

 

 

p.s Sorry for the long post

[penguin]

This isn't a recent change - this is how UK VAT has been handled for the past few years. Your criteria you've quoted is correct apart from the following:

 

Customers Outside the UK, but in the EU (business) - Do not charge VAT

 

This is only correct if the provide you with a valid EU VAT number.

 

Do also bear in mind that you will not be peanalised for charging VAT where you do not need to. You are quite within your rights to charge VAT to all customers and then it is their responsibiluty to claim the VAT back if elegible (which they can do and have also been able to do for many years).

 

Obviously it's not quite so good for business if customers will be put off by being charged VAT, however if a customer provides you with a valid EU VAT number then you can mark them as tax exempt so they are not charged in the future, or alternatively you can just set up rules for countries outside the EU that you deal with that are 0% rated for TAX.

[ChrisGooding]

I know it's not a recent change, with regards to how VAT has been handled, but it was news to us that the deffinition of WHERE the service was deemed as being delivered.

 

It used to be that the place of use was defined as where the servers were (i.e UK), where as now it's where the person is using it.

 

I'm actually amazed or accountants took this long to notice / tell us. After all, we pay them to keep us up to date on this stuff!!

 

I know we can use the tax exempt tick box as said, but was hoping there was an automated way of dealing with it using the tax rules.

 

If not, maybe it could be implemented. And I suppose until then we'll make do with ticking boxes.

 

Thanks for the input though, appreciated.

[Matt]

You need to setup your tax rules for all EU countries in Config > Tax Setup. Then in cases where it's a company in the EU and they themselves are VAT registered, you need to get their VAT Number from them, verify and record it (usually in a custom field) and then set them as Tax Exempt. It won't be possible to automate it.

 

Matt

[ChrisGooding]

OK Cheers Matt.

 

I already have all the tax groups set up, it was just the business / none business issue.

 

Although, We use HSPC as well as WHMCS and the functionality to check validity of EU VAT numbers is in there, its just a flakier product.

 

Is it a case of WHMCS cant do it, or cant do it yet?

 

Cheers

[cyberstrider]

You need to setup your tax rules for all EU countries in Config > Tax Setup. Then in cases where it's a company in the EU and they themselves are VAT registered, you need to get their VAT Number from them, verify and record it (usually in a custom field) and then set them as Tax Exempt. It won't be possible to automate it.

Matt

 

Would the tax rules not simply be 'charge everyone UK VAT' and a EU VAT registered company is then something that only needs to be recorded in a custom field?

 

Or are you saying that the tax rules only apply to businesses via Config > Tax Setup?

 

I am not sure I follow.

 

Also, how would one show the Customer EU VAT number on the invoices - the tpl and the pdf?

 

This discussion has come at an opportune time - we have charged vat to everyone, but have only just received our first request from a customer who is VAT registered in IE.. so any pointers/step-by-step on what we need to do in whmcs would be good.

 

-DB

[othellotech]

Would the tax rules not simply be 'charge everyone UK VAT'

You can do that , the VAT office love it as a solution

Gives EU VAT registered business a paperwork job though ...

 

Also, how would one show the Customer EU VAT number on the invoices - the tpl and the pdf?

Simple - display the custom-field

For the pdf its as simple as find the value in tblcustomfieldsvalues and

$pdf->Cell(0,4,"VAT/Tax Code:".$VATNumber,0,1,'J');

$sql='SELECT value FROM tblcustomfieldsvalues WHERE
                       fieldid IN (select id from tblcustomfields where fieldname like "VAT Number" AND type="client")
                       AND relid='.$myclientid;
               $result = mysql_query($sql) or die('Invalid query: ' . mysql_error());
               if(mysql_num_rows($result)>0)
               {
                       $row = mysql_fetch_array($result);
                       $VATNumber = $row['value'];
               }

will help

 

Customers Outside the UK, but in the EU (business) - Do not charge VAT

Has nothing to do with business or personal - it is *entirely* to do with them supplying you with a verified and valid EU VAT Number for the entity concerned, and you reporting all sales to that entity to HMCR on an EU Sales return.

 

ergo you also need a quick report to list all invoices where you didnt charge VAT, and a total by VAT number for your reporting

 

I appreciate that we can manually set accounts to be exempt from tax,

You ought be anyway for EU countries as it's you that will be fined if you dont chargeVAT and should have ...

[cyberstrider]

Simple - display the custom-field

For the pdf its as simple as find the value in tblcustomfieldsvalues and

$sql='SELECT value FROM tblcustomfieldsvalues WHERE
                       fieldid IN (select id from tblcustomfields where fieldname like "VAT Number" AND type="client")
                       AND relid='.$myclientid;
               $result = mysql_query($sql) or die('Invalid query: ' . mysql_error());
               if(mysql_num_rows($result)>0)
               {
                       $row = mysql_fetch_array($result);
                       $VATNumber = $row['value'];
               }

will help

 

This brings up errors.. and I am now stuck. Any further help forthcoming?

 

I placed the code as is into pdfconfig.php and got a mysql error.. hmm.. not sure where I am going wrong - especially as I am not a coder. ;-)

 

-DB

[othellotech]

if you get an error, you typed it wrong

 

if it doesnt return the details you wanted, you *do* have a custom client field called "VAT Number" dont you ???