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Vat on carriage

Hello

I have been with my accountant for 7 years.

I have an Internet business where I sell through Amazon and E Bay.

VAT is charged on the selling price of each item. I have not been charging VAT on the carriage.

I recently had a routine VAT inspection where the inspector informed me that VAT should be charged
On carriage.

My accountants know my business and prepare my accounts every year, on no occasion have they mentioned
that I should be charging VAT on carriage.

Are my accountants at fault in not informing me of this and should they bare the costs in this investigation?

Regards

Michael Keen

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By DMGbus
09th Jun 2012 22:43

Plantiflor Ltd (Spalding Bulb Co) case

The above VAT case established that VAT on carriage / delivery / packaging follows the liability of the main supply (the goods being supplied).

So, sell books (zero rate) and no VAT on carriage, etc.

Sell goods liable to VAT  in which case VAT is due on carriage etc.

A few things to remember about accountants:

# Not all are VAT experts (but they might get enthusiastic about correct notes and disclosures in the accounts)

# Most have "engagement letters" that limit their liability for this situation

# Many use junior members of staff to draw up accounts (who know not a lot about fine rules of VAT) who wouldn't spot this type of error

 

 

 

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With my customer hat on

Comments from DMGBus acknowledged but in my opinion the correct processing of Sales related VAT is so fundamental and the checks needed to see that things are being done correctly so basic (just glancing at a couple of invoices would have done it) it's a pretty poor show that this wasn't identified very early on.

Captain

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By DMGbus
10th Jun 2012 10:44

Specialist advice

It is a fact that many "general practicioner" accountants lack specialist knowledge.   In my case the lack of knowledge is with regard to audits, liquidations, insolvency and business plans.

Earlier this year one "general practicioner" accountant did call me in the review one of his internet mail order clients VAT accounting methods.  A number of issues were found and the client advised accordingly.  Three important VAT issues were found to not be being dealt with properly, one of them was VAT on P&P / carriage - in this instance sale of zero rated food wrongly had VAT applied to the P&P / carriage charge.    I would not necessarily expect all "general practcioner" accountants to find any or all of the three errors that I did as VAT, like so many things, is rather overly complex nowadays.

Some accountants feel under commercial pressure and consequently "only skim the surface" when dealing with clients tax / accounts to keep their costs down.  They might get the income tax and accounts profit correct but not pay attention to tax credits and VAT. 

Some might not advise clients about small business rates relief either.   But, they might get the note technically correct in the accounts about "related party disclosures" or "deferred tax"!  It's all about priorities (I believe I know what's more important).  In an ideal world "every accountant knows everything".  In the real world this admirable aspiration is sometimes not attained.

 

 

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10th Jun 2012 19:45

Answers

"Are my accountants at fault in not informing me of this"

Yes.

If an accountant doesn't use appropriately knowledgeable staff it is their fault.

"and should they bare the costs in this investigation?"

What investigation?

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By DMGbus
10th Jun 2012 22:28

Make a claim

The majority opinion of the responses seems to be that the OP's accountant is at fault.

This being the case I think that it is appropriate to advise the OP how to make a claim.

The "loss" will be any penalty / interest charged by HMRC on the underpaid VAT.

The costs of dealing with "the investigation" may or may not be claimable, since (a) Are there in fact any identifiable "costs"? and (b) Routine VAT visits are a normal occurrence which incur costs or management time even if no errors are found to exist.

Anyway, here's a specialist professional negilgence claim company's link (I can't say if they're ethical, unethical, effective, ineffective or any good as I've not got enough information about them):

http://www.yourdispute.co.uk/?ref=796

 

 

 

 

 

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25th Jan 2013 14:24

VAT on carriage

Hello

 

My accounts say that as they do not perform a full audit the mistake in not charging vat on

carriage would not be picked up.

Can any please comment on this

 

regards

 

michael

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