X-Cart forums

[Triple A Racing]

An item for some discussion...

This module is free: http://www.x-cart.com/extensions/addons/eu-and-uk-vat_gst.html

It now (...finally ) operates okay after several previous error inclusive releases. It's not good, it's not great, but it's okay. It's had a chequered history and the end result is still underwhelming in our opinion for such an important part of any E-Commerce package....

The plus point? It's 100% correct that it's a free module (certainly for Business Licences and above anyway) so thanks to X-Cart for that important attribute. However.....

1) It still, even now, does NOT actually comply with UK VAT (HMRC) regulations. We are not experienced or qualified or interested to be fair, in other countries because we only run UK Companies.

2) Invoices (within X-Cart or via e-mail) do not show the VAT % rate anywhere... (unless it's hidden somewhere )

3) Invoices (within X-Cart or via e-mail) do NOT show the NET value of any of the items ordered. They only show GROSS values (VAT inclusive). The shipping costs are exactly the same. The total VAT payable by the customer (Orders / Shipping etc) and the total order value etc etc are all shown correctly (GROSS) and all the maths are 100% correct. We had these simple levels of presentation way back in X-Cart 4.1.9 It should be far more efficient and accurate by now... but it isn't

But...Even worse, is that simple, very usable items that were present in old X-Cart 4 days have now vanished. Sorry... they are now only available via (yet another...) module which is chargeable

One case in point: Customers that are VAT Registered and resident within an EU country other than the UK. VAT applies of course, but is not actually chargeable in their case, subject to their VAT number being verified in advance manually by us . An example verification point is shown here: http://ec.europa.eu/taxation_customs/vies/vieshome.do?selectedLanguage=EN We have a link to this page on our own site so people may understand what's involved when in context.

Now in X-Cart 4, you simply (and freely) verified any applicable customers in advance (using say the method above or an alternative) and then configured their account so they would not be charged VAT when they ordered. These two pics illustrate how this is done this very clearly:

https://dl.dropboxusercontent.com/u/50440624/Z-Forum/TAX-One.png

https://dl.dropboxusercontent.com/u/50440624/Z-Forum/TAX-Two.png

Simple, easy, effective, accurate and worked perfectly every time

Now go back to the module that this message is all about. You can't do this any more. What you can do is add the VAT field to the address book and that in turn automatically validates the VAT number via a similar process to our manual predecessor. What's wrong with that? Just about everything!!

a) The VAT field must be displayed on all address book pages for all customers - Errr Why? Who thought this one out? The % of our customers who are bone-fide exempt from VAT payable at the time of purchase is maybe 5% maximum (for us) and I'm sure it's a very low percentage for most online stores. So we now have a sledge hammer to crack a nut as EVERY user is presented with a new VAT No field, which some customers will not understand and / or enter irrelevant details in it and thus receive a system error... This is just hopeless and very poorly planned out. It's a shame that whoever wrote the module doesn't appear to have interacted or beta tested this with people who actually live and work in the UK and thus do understand VAT and it's challenges (Channel Islands?)

b) It's explained thus (in poorly worded English) on the Module page: "..The module also supports VAT numbers. Once the customer enters the VAT ID, it's being validated online via the Vies web service"

That's super but other than the auto-validation... It doesn't do anything else (apart from repeatedly and annoyingly inform you that the VAT number is valid) and the VAT? Yes it is still charged!

b) We're sure that a stock response may be "...ahhh well just buy this then: http://www.x-cart.com/extensions/addons/tax-exemption.html but that's not acceptable we feel. A simple proven XC4 CORE item is now a chargeable extra to an already under performing XC5 free module.

We have thought up, run, tested and used in both our Dev and Live store's a workaround for the tax exempt challenge, but why are we re-inventing the wheel (again) in our own time and at our own expense, when it was perfectly round, working very well and completely free in XC4?

How does this fall into the category of XC5 being "The future"? Our opinion is that it doesn't and that the free module should be re-worked and re-issued (including the Tax Exemption options as per XC4) at 5.2.13 (or 5.2.14 if there are any final bugs) and then this carried over to XC5.3.* with all that 'normal' functionality built in.

The rather insulting Tax Exempt chargeable module should be scrapped, having been incorporated within the free module (shades of Simple CMS and Extended Simple CMS here perhaps...) as it should have been from day one. We think anything less than this, may be a big deterrent to continuing down the XC5 route for any people that are still undecided.

[xim]

thank you for your feedback!

Originally Posted by Triple A Racing

1) It still, even now, does NOT actually comply with UK VAT (HMRC) regulations. We are not experienced or qualified or interested to be fair, in other countries because we only run UK Companies.

Did you mean that the invoices need to use different view depending on the order amount?

We understand that we are not able to compliance all the taxes rules for EU, UK, US, Canada, Australia and other countries. In this case, we need to be Tax Automation company, but not e-commerce platform solution.

So if you need a more professional solution to handle with taxes, we would recommend signing up to Avalara. Yes, this is the paid service, but they know everything about taxes and can automate all the stuff.

Originally Posted by Triple A Racing

2) Invoices (within X-Cart or via e-mail) do not show the VAT % rate anywhere... (unless it's hidden somewhere )

X-Cart 5 allows setting up different tax classes. So, if the cart has products with different tax classes, there is no one rate for the cart. There are several rates. That's why we just do not show the rate at all.

You are the first merchant who asks us about it.

Originally Posted by Triple A Racing

3) Invoices (within X-Cart or via e-mail) do NOT show the NET value of any of the items ordered. They only show GROSS values (VAT inclusive). The shipping costs are the same. The total VAT payable by the customer (Orders / Shipping etc. ) and the total order value etc et. are all shown correctly (GROSS) and all the maths are 100% correct. We had these simple levels of presentation way back in X-Cart 4.1.9 It should be far more efficient and accurate by now... but it isn't

It is still about simplified and full invoices - https://www.gov.uk/vat-record-keeping/vat-invoices?

Originally Posted by Triple A Racing

One case in point: Customers that are VAT Registered and resident within an EU country other than the UK. VAT applies of course, but is not actually chargeable in their case, subject to their VAT number being verified in advance manually by us . An example verification point is shown here: http://ec.europa.eu/taxation_customs...tedLanguage=EN We have a link to this page on our own site so people may understand what's involved when in context.

We have two integrations with online services to validate VAT ID. You just need to enable VAT ID field under customer profile. Unfortunately, one of the services discontinued, and we already added to our roadmap to add more integration. The second service doesn't provide appropriate availability level.

About TAX exempt module. It costs only $99. We paid more for lunch for two people in the US. But with this addon you get more features to manage your taxes and exemptions. I am sure; it is an excellent investment.

[Triple A Racing]

Originally Posted by xim

Did you mean that the invoices need to use different view depending on the order amount?

No. We simply meant that the invoices produced, do not comply with the UK VAT (HMRC) regulations (see below for more detail) By now, this far along the development path, they should. Please remember that this module was originally released as a UK VAT module. It then became a EU and UK VAT / GST Module, but with no explanation or reasoning as to the new title / intention... and now after #BREXIT, you'll have already realised yourselves that this 'combo' type approach is going to fail anyway...

Originally Posted by xim

We understand that we are not able to compliance all the taxes rules for EU, UK, US, Canada, Australia and other countries. In this case, we need to be Tax Automation company, but not e-commerce platform solution. So if you need a more professional solution to handle with taxes, we would recommend signing up to Avalara. Yes, this is the paid service

We can't comment on X-Cart's own International Taxation abilities obviously, but this is a basic, simple requirement for ALL e-commerce solutions. Period! We don't think any supplier of said software products, can simply give this problem back to their end users whilst stating "...ahhh sorry, but this is out of scope. Why not buy this service / add-on / consultancy package instead?" that's never going to work surely? Meantime, what we can say, is that from our own UK experience, no sensible, switched on UK Business is ever going to pay a USA Company for advice on UK VAT That's like a UK based company proffering "excellent advice" on State Sales Tax Differences / IRS Implications between say Clark County Nevada and any County within Montana. Have a look. It's interesting

Originally Posted by xim

..but they know everything about taxes and can automate all the stuff

We maybe wrong of course, but we have yet to meet anybody or any company that "...know everything about taxes..." Many think they do (!) we agree but that's not the same! Any UK Business that's already had an in-person "...VAT Visit" and worked thorough prepared records will understand this pretty clearly

Originally Posted by xim

X-Cart 5 allows setting up different tax classes. So, if the cart has products with different tax classes, there is no one rate for the cart. There are several rates. That's why we just do not show the rate at all. You are the first merchant who asks us about it. It is still about simplified and full invoices - https://www.gov.uk/vat-record-keeping/vat-invoices?

Within the link that you have provided, you'll see exactly what we mean. Specifically these items: Price per item, excluding VAT and Rate of VAT charged per item - if an item is exempt or zero-rated make clear no VAT on these items and If items are charged at different VAT rates, then show this for each This is very cleary explained. The XC5 module (or rather it's default invoice output to be fair) does not comply - that's also very clear to see. Other end users have already pointed this out within this forum, so we're not alone in seeing this, although yes, we maybe the first to raise this within a specified message. To build on point 3) that we originally posted; we said that a simplified version was already present way back in X-Cart 4 (4.1.9 in our case). Again this was not compliant with UK VAT (HMRC) regulations, but it was 6 years ago, it was a little closer to compliance and it worked(-ish) better than this XC5 module. See this screen grab from an invoice way back in 2010 when UK VAT was still at 17.5% You can see the 17.5% VAT rate is shown where it is applicable to goods, but it's NOT shown where there is NO VAT applicable (in this case, these items were motorcycle sports performance magazines, which were zero rated for VAT). So two different rates are used and both rates are shown, but there was (and still is now in XC5) no Price per item, excluding VAT Hence in our opinion, this module is actually less efficient and usable than 6 years ago and for all the reasons we originally posted plus the kind but non-problem solving response above. The three following pics are: 1) 2010 XC4 (4.1.9) ScreenGrab: https://dl.dropboxusercontent.com/u/50440624/Z-Forum/2010%20XC4%20Invoice%20ScreenGrab.png 2) 2016 XC5 (5.2.15) ScreenGrab: https://dl.dropboxusercontent.com/u/50440624/Z-Forum/2016%20XC5%20Invoice%20ScreenGrab.png plus out of interest 3) One of our customers bought two iPhone SE's online recently. They kindly allow us to grab a screen grab of their Apple invoice FWIW: https://dl.dropboxusercontent.com/u/50440624/Z-Forum/2016%20Apple%20Invoice%20ScreenGrab.png this has no shipping charges (it was free shipping) but it's still easy to see that this is NOT rocket science, so to get this right isn't that challenging. All the information needed for the UK VAT XC5 module already exists within SQL. It's simply the output format / presentation that needs to be corrected and re-worked and it's not a re-invention of the wheel

Originally Posted by xim

We have two integrations with online services to validate VAT ID. You just need to enable VAT ID field under customer profile

We think there maybe a misunderstanding here? We already know all this and have pointed this out very clearly in our original message, plus... what our perceived bad points are about this approach and then asked... WHY? That's the big question that's not been answered....yet

Originally Posted by xim

About TAX exempt module. It costs only $99. We paid more for lunch for two people in the US

If the lunch reference is genuine and not a light hearted joke then perhaps it's X-Cart themselves that need to contact US based Avalara for tax and expenditure advice, not non-US end users! We've managed to visit 34 out of the 50 USA States and that's not something we needed to do anywhere. It sounds more like poor advance planning or a specific location only having a limited choice / availability to us

Originally Posted by xim

But with this addon you get more features to manage your taxes and exemptions. I am sure; it is an excellent investment.

No. In our opinion it's far from that. The last item in our original message (sorry it's so long) gives all the reasons why and in specific detail too. Now that XC5 development has already switched onto XC5.3.*.* let's forget any XC5.2.* upgrades as clearly they are not going to happen. There's no real, credible excuse or reason why this cannot be done in XC5.3.*.*, (that we can see anyway) bearing in mind that it was CORE inclusive in XC4 and a lot closer to being correct than the current XC5 version is and even with additional, purchased add-ons will ever be.

We are happy to help XC5 make this happen via beta testing etc, but we won't be working on XC5.3.*.* for a little while yet, as we still need to solve our final live store upgrade from 5.2.13 to 5.2.15 because that (again!) has upgrade issues for us. We'll do this first, via Tickets next week.

[xim]

Triple A Racing, thank you for the info.

I reviewed the official doc and it seems that UK, EU and Australia have the similar requirements for the invoicing:
https://www.gov.uk/vat-record-keeping/vat-invoices
http://ec.europa.eu/taxation_customs/taxation/vat/topics/invoicing_en.htm
https://www.ato.gov.au/Business/GST/Issuing-tax-invoices/

For 5.3 we will implement the new module/feature which allow our merchant to use Full invoice instead the simplified. Also, we will add VAT rate for every item for simplified invoice.

Triple A Racing, could you, please, explain how you handle with shipping? Do you set up shipping rates as VAT inclusive or exclusive? How online carriers return shipping rates in UK, with VAT or not?

[Triple A Racing]

Originally Posted by xim

I reviewed the official doc and it seems that UK, EU and Australia have the similar requirements for the invoicing: <SNIP>

Similar? Yes certainly. All VAT items exactly the same? No. We think what might be better (...for all concerned i.e. X-Cart & End Users) is if the VAT / GST Module was linked directly to the Country that is selected by the user within their Store Setup / Contact Information Page or the user selects their Country within the module itself (setup) and then the VAT treatment is delivered specific to their own 'host' country. That's a small difference, but would save lots of inaccuracies and any initial module errors in one country's VAT setup, would not result in all other countries operation of their module being affected too...

Originally Posted by xim

For 5.3 we will implement the new module/feature which allow our merchant to use Full invoice instead the simplified. Also, we will add VAT rate for every item for simplified invoice

Sound great! Happy to Beta test this with you as and when we finalise our 5.2.15 Live store shortly. Please don't forget the previous point about re-including the Tax Exemption (by user) into all these 5.3 changes too. That's very important (read previous again please and see next item too)

Originally Posted by xim

Triple A Racing, could you, please, explain how you handle with shipping? Do you set up shipping rates as VAT inclusive or exclusive? How online carriers return shipping rates in UK, with VAT or not?

The Shipping question first, which then leads into the others. This needs a little care and attention during setup but then it works fine (for us anyway). We found a good method for our own setup was this:

Setup the correct Countries, Counties (States) and Zones

Setup the VAT / GST main page (and any tax classes on the 2nd page) We use these values on the main page:

Address for VAT / GST calculation: Shipping Address
The VAT / GST inclusive prices as defined in the product details are intended for: UK ***
Display prices in catalog including VAT / GST: ✔️
Display 'inc/ex VAT' labels next to prices: On all Catalogue Pages

*** We actually use UK - Mainland - The Channel Islands are treated differently for VAT, so although they are within the UK, we set them up as a separate Country, which makes VAT / Shipping etc easier when dealing with the Channel Islands.

Setup the Rates / Conditions line(s) for each Country that is shown within the Live store (There's many default countries that we don't include by choice and many others that we have added / altered too)

Setup the Shipping rates by Country. The VAT / GST MUST be included (where applicable) in these rates, due to the previous setup choices and subsequent VAT calculations. Bizarrely, this isn't shown or mentioned within the otherwise helpful "How to define shipping rates" tab/link

Having finished this setup work, the operation runs pretty smoothly as follows:

Users not logged in or new visitors will see UK product prices including UK VAT

Users logged in, but who only have an e-mail address at this stage and have not yet completed a page within their address book, will also still see UK product prices including UK VAT (via default customer address setup choice....) as the 'Shipping Address' is the requirement for VAT / GST calculation

Users making a purchase (logged in or anonymous) but now at the actual checkout stage, will see prices specific to their own country (both product and shipping) and these will include (or exclude) UK VAT accordingly, as their 'Shipping Address' correctly determines this, prior to the order being submitted.

Finally, when we do use UK based online shipping suppliers, VAT is charged by them exactly as per UK (HMRC) VAT regulations e.g. No VAT is paid by us (or charged by us) on a shipment to Australia but UK VAT is paid (and charged) on a shipment to Italy because it's within the EU. There are many, many variables though e.g. VAT is still paid by us (but not charged by us) on a shipment to a customer in the Channel Islands (we sell products not services...) but then, VAT is not paid by our customer (but it is still paid by us) on a shipment to an EU Country, where the business at the shipping address has a Pre-Validated EU Country VAT Number, following on from a customer's advance request...The devil is in the detail with these type of orders.

It's not always simple and easy, but this alone is a good reason for our previous detail about CORE inclusion in the 5.3 module of 'Tax Exemption' by user. This is vital. We currently do this manually (long story with an explanation for another time) compared to the simple and very easy to use old XC 4 CORE method. Our view on needing a chargeable additional module to achieve this has been made clear already but to re-emphazise; it is a very big backward step!

Hopefully, that's all the questions from the last message answered. Other 5.2 end users may well add more or different data due to them selling different products / services in a different way.

[xim]

So, it seems that we have to show shipping service as part of the table with other products to show personal VAT rate.

Here is the draft how the full invoice will look


this is the simplified


Correct?

Tony, how you show prices for service? VAT inclusive or exclusive? What is the more general?

[ITVV]

Just my two cents: -

As you are going through all the trouble to get this right, I would personally add another column called 'VAT Amount Unit'. The columns would read from left to right: -

Product Name with details | price, excluding VAT | VAT, rate | VAT Amount Unit | Price, including VAT | QTY | Total

This would then make evryone happy - *I think!*

Kind regards

ITVV

[xim]

Originally Posted by ITVV

Just my two cents: -

As you are going through all the trouble to get this right, I would personally add another column called 'VAT Amount Unit'. The columns would read from left to right: -

Product Name with details | price, excluding VAT | VAT, rate | VAT Amount Unit | Price, including VAT | QTY | Total

This would then make evryone happy - *I think!*

Kind regards

ITVV

I do not see that it is necessary by provided requirements. That's why it's not added to the table

[Triple A Racing]

Originally Posted by xim

Here is the draft how the full invoice will look <SNIP> this is the simplified <SNIP> Correct? <SNIP> how you show prices for service? VAT inclusive or exclusive? What is the more general?

Things are looking a lot better now! Both those invoices appear to comply with the requirements shown on the link you used (https://www.gov.uk/vat-record-keeping/vat-invoices?) The simplified invoice is slightly over compliant, but we think that's a better approach and it is still a simple document.

In our Live and Dev stores currently, the price for shipping is only shown as a VAT inclusive (Gross) amount and is shown separate from the table containing the products within the invoice view. That's the way the current module works.

With the full invoice, yes we think it should be shown exactly as you have illustrated. The simplified invoice view is different, but is still correct and for both invoices, yes, we think it's much clearer to show the shipping as part of the table within the invoice, as you intend to do.

Our thoughts on invoice item label names are 'less is more' so shortened labels could work fine too - Full Invoice example:

Product | Price Ex VAT | VAT | Price Incl VAT | Qty | Total

Subtotal | VAT | Discount | Total

These can be customised / altered by end users anyway, but thought it worth a mention

@ITVV We can see your thoughts behind VAT Amount Unit You mean show the actual amount of VAT charged on each product (as well as showing the VAT rate on each product) within the table. Ironically this item isn't actually a HMRC invoice requirement (that must be a first!) and having just looked through lots of our own UK purchase invoices, it's only a random inclusion amongst them all. It's a valid point and other users may want it included, but we ourselves are happy to live without that extra item.

[phil_]

Originally Posted by Triple A Racing

The Shipping question first, which then leads into the others. This needs a little care and attention during setup but then it works fine (for us anyway). We found a good method for our own setup was this:

Setup the correct Countries, Counties (States) and Zones

Setup the VAT / GST main page (and any tax classes on the 2nd page) We use these values on the main page:

Address for VAT / GST calculation: Shipping Address
The VAT / GST inclusive prices as defined in the product details are intended for: UK ***
Display prices in catalog including VAT / GST: ✔️
Display 'inc/ex VAT' labels next to prices: On all Catalogue Pages

*** We actually use UK - Mainland - The Channel Islands are treated differently for VAT, so although they are within the UK, we set them up as a separate Country, which makes VAT / Shipping etc easier when dealing with the Channel Islands.

Just to add some input regarding the shipping and tax zones. I too had issues with the UK VAT setup. I ended up getting custom modifications. The end result is that I can assign the set of countries belonging to the UK & EU which are assigned as a 'tax' zone, so the VAT calculation checks whether the shipping address country is on that tax zone list and then applies VAT accordingly.

At the same time, I also have the various countries assigned in separate 'shipping' zones. So I can independently assign countries for shipping calculations.

This enables me to have a simple shipping setup as UK, Europe and Worldwide shipping options, but at the same time takes into account the exceptions such as channel Islands, Norway etc. For example, Norway is part of mainland Europe, so my Europe shipping rate covers that zone (without me having to define a separate shipping option for that) but at the same time VAT is not applied.

It seemed to me when setting up shipping and taxes, using the default X-Cart 5, that you were essentially restricted to defining a shipping zone that was also used to define its tax status. I think the approach I took with separating them is more flexible and might be a more useful option for all customers in X-Cart 5.3. It's already implemented on my site 5.2 site, so not much effort for X-Cart to lift it and merge that in for use in 5.3.

I also have various other fixes to make the VAT validation and calculation behave correctly. Again this already exists on my site. Of course I paid a lot to have these changes and fixes made, but I kept hitting a brick wall with X-Cart that there was default X-Cart behavior and I should pay to get things changed or fixed my way... I had a whole load of other changes and customisations done, which ended up taking an excruciating long time to accomplish, but best we don't go into that... anyway have a look at the site, I only went live a couple of weeks ago... https://www.prototools.co.uk, still various bits and pieces to tidy up, but you can see how the VAT is done on my setup.

Regards, Philip