EU VAT exemption support

[mlx]

Hi there,

 

We need to charge 19% VAT on all services supplied to customers within the EU - except the customer purchasing these services provides an EU VAT ID.

 

As WHMCS is an UK-based company you should know what I'm talking about. So I was a bit surprised that there was no support for that in the last version I tested (which has been some early v3.6.x I guess).

 

Is there any "native" EU VAT exemption support by now? Or anything planned?

 

Thanks a lot

[penguin]

VAT has been discussed at length in a few other htreads on here. You need to be careful as you shouldbe charging them VAT unless they provide a valid VAT number, therefore just allowing someone to enter a number and you not charge them VAT can leave you liable to have to pay this yourself in the event of this not being correct. If they provide you with a VAT number and you verify this as being correct, just mark them as Tax exempt then and they are no longer charged.

[Garani]

Ah! That's a pain...

 

Here I get a customer, who happily puts his VAT number, expecting not to pay VAT and I charge for it. I get a angry email (or maybe I just loose the new customer) at that point I have to mark him as tax exempt, refund the customer, void the old invoice and make a new one... and let's not get into already provisioned services...

 

Nope, it doesn't work, and there are ways to check live via the net: http://ec.europa.eu/taxation_customs/vies/faqvies.do#item16

 

So, yes, this check can be done automatically, and yes it should be done nowadays with sales done at all time, night and day.

[penguin]

I agree that an API can be used to see if it's valid number, but again, based on the risk and liability that it can pose to yourself, this only checks that the number exists. We perform manual verification of EU customers VAT numbers to ensure that they are actually assigned to them, as recommended by HMRC here in the UK. If your customer is VAT registered then they can still claim back any initial charges anyway. You've got to decide how much custom is worth over the risk of potential 'fraud'. Also, if they de-register you are also liable for any VAT not charged for, therefore I'd personally prefer to keep an eye on just who is marked as exempt

[othellotech]

Certianly in the UK you are *obliged* to perform all "reasonable checks" to determine teh validity of an EU VAT number - HMCR will acept a fax from the purchaser clearly showing their customer and vat details, or a copy of their VAT statement, but not that you "looked it up on a website" or took the clients word for it.

[Garani]

Certianly in the UK you are *obliged* to perform all "reasonable checks" to determine teh validity of an EU VAT number

 

And that's the current extent of the law.

 

HMCR will acept a fax from the purchaser clearly showing their customer and vat details, or a copy of their VAT statement, but not that you "looked it up on a website" or took the clients word for it.

 

Rob, you are talking about a "fax". How easily can you forge a fax? Shall we ask for stuff printed on letterhead? Fine, let's go back to the 19th century and do it: £0+shipping will get you letterheads from a known printing site.

 

This is ridicululus! Stop being paranoid and use the tools that you have been provided with. The European Commission and the Member States provided you with a tool to check if a VAT number is either valid or not. If the member state decided that you should not know the details, you are stuck. By the way, go and check you VAT number and you'll notice that HMCR will not provide you with your business details!

 

This is what mine says:

 

Yes, valid VAT number

 

VAT number GB 912993307

Member State GB

Name ---

Address ---

Date when request received 24/09/2008 (dd/mm/yyyy)

 

 

Oh, wait, VAT is a french invention dated back to the 1950s... Heck, in the 19th century things were actually easier!

[scurrell]

Yes, valid VAT number

 

VAT number GB 912993307

Member State GB

Name ---

Address ---

Date when request received 24/09/2008 (dd/mm/yyyy) [/indent]

 

OK, so we can use online tools to validate a VAT number.

 

However, I could now sign up for hosting using your VAT number and not pay any VAT. Where's the check that that VAT number belongs to me? In this respect, the online check is worthless.

[Garani]

However, I could now sign up for hosting using your VAT number and not pay any VAT.

 

So what? My VAT number is right at the frontpage page of my business. Rob has got his on his front page too. In other countries in EU there are laws where you must show your VAT number for all to see.

 

Where's the check that that VAT number belongs to me? In this respect, the online check is worthless.

 

HMCR does not want you to know the name of the business that the VAT number belongs to. So I must accept that HMCR is fine with just a ACK/NACK.

 

I used an Official Tool, where the data is piped in by the Inland Revenue offices of all the EC Member States. I cannot use a fax to check, because it is easily forged. I cannot use a letterhead because I have no way to make sure if that paper is valid or not, and there is no law imposing on company stamps. Finally the member state does not want me to know the name of the company that is using that VAT number, shall I just do business within the UK and forget about the rest of Europe?

 

Another thing is making sure that you have process in place to regularly audit your accounts, and checking that VAT numbers are valid. I strongly suggest that everyone must do internal audits, and you don't need expensive consultants to do that. But making this VAT check for 100% of your customers it means that your products have a strong possibility of being used for VAT carouselle fraud. But I am not selling watches, nor mobiles or chips.

[othellotech]

HMCR does not want you to know the name of the business that the VAT number belongs to. So I must accept that HMCR is fine with just a ACK/NACK.

HMCR do spot-checks on the submited EC Sales lists and will ask you for confirmation of the details, and when you dont supply them, you get a nice fat fine, and have to pay the vat you never charged the client who gave you someone elses VAT number

 

Good luck with your business, having had several VAT audits over the years with various companies, we're not prepared to not take all the necessary steps for everyone who wants to be processed as VAT exempt.

[Garani]

Good luck with your business, having had several VAT audits over the years with various companies, we're not prepared to not take all the necessary steps for everyone who wants to be processed as VAT exempt.

 

What can I say, then my accountant, who works with a number of companies that sell in Europe, is wrong and you are right. I am not going to swear about the authenticity of a fax or some letterhead.

[othellotech]

then my accountant, who works with a number of companies that sell in Europe, is wrong and you are right

 

Its 18 years since I qualified as an accountant, but I do keep up with legislative changes, and have the benefit of 15+ years experience running VAT registered companies that trade worldwide

 

Just ask your accountant if he's going to be the one that pays the fines raised by your VAT inspection then decide ...