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Online orders & VAT on delivery

Am I missing something?

Didn't find your answer?

A question just posted has reminded me of something that has been quietly rattling around my brain for a while, re the perenial issue of VAT on delivery charges.

I recently purchased a new bicycle online, which is obviously standard rated. Delivery via courier (optional, as click and collect was also offered), was shown as a separate line on the invoice, and was zero rated for VAT. 

My understanding has always been that the VAT rate on delivery follows the VAT rate of the goods, although I don't profess to be an expert.

I've noted this issue a few times over the years, which makes me doubt myself. Am I missing something obvious, or are there just a lot of companies getting this wrong?

Replies (8)

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By amylady
14th Apr 2022 14:53

Interesting question, is the bicycle purchased with a return period available?

See 2.2 of this;
https://www.gov.uk/guidance/vat-on-postage-delivery-and-direct-marketing...

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Replying to amylady:
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By CB123
14th Apr 2022 15:14

I don't believe it would meet the 'goods on approval' criteria. In this instance I believe the sale would be subject to the usual distance selling rules of 14 day cooling-period, and obviously a return if the goods were defective.

Everything I can think of points to it being standard rated delivery, and if a client asked me, that would be my judgement. As I say, I've spotted it a few times over the years, and it's got me doubting myself!

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By amylady
14th Apr 2022 15:27

Have you raised this question with the person who issued the invoice?

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Replying to amylady:
VAT
By Jason Croke
14th Apr 2022 15:41

What, and potentially get stung for another 20% on the postage?

:)

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Replying to Jason Croke:
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By amylady
14th Apr 2022 15:54

LOL :)

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Replying to amylady:
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By CB123
14th Apr 2022 16:03

I did actually drop them an email saying they should check with their accountant that they are applying the correct VAT rate.
They replied to thank me, but obviously I've got no idea if they actually did anything about it.
Thankfully no sting of an additional £4 on my £20 delivery charge!

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VAT
By Jason Croke
14th Apr 2022 15:40

The VAT status of delivery charges match the VAT status of the supply being made, so a bicycle being delivered should in theory see the bicycle and the delivery cost being standard rated.

If the supplier is zero rating the delivery, they are likely doing it wrong....and even the big corporates can get it wrong, size is no measure of quality (so my wife tells me).

HMRC guidance here, section 2.2 https://www.gov.uk/guidance/vat-on-postage-delivery-and-direct-marketing...

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Replying to Jason Croke:
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By CB123
14th Apr 2022 16:08

Thanks Jason, I really couldn't think of any way it would be zero rated, but as they say, 'you don't know what you don't know', and I couldn't shake the feeling I was missing something blindingly obvious.

I've always found VAT 700 useful, but not being a VAT specialist, I was worried this was a point I'd somehow gotten this wrong and mis-advised clients on somewhere down the line.

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