VAT calculations

Unfortunately Linnworks isn't providing the correct VAT calculations.

We have set our UK VAT default to 20. We sell a mixture of adults and kids clothing. Our kids clothing has a zero rated overrideĀ in the inventory item.

If we sell a kids clothing item and the customer pays for shipping, Linnworks calculates the item tax as zero but the shipping at 20% (it uses the UK default of 20% to do this rather than the HMRC rule of shipping tax rate follows the tax rate of the item being sold).

This means our VAT returns have always been incorrect since we stated using Linnworks many years ago, as we have been paying HMRC 20% of this shipping cost when we should have been keeping that portion.

We are now looking into submitting a correct for the last 4 years to claim back our overpaid VAT.

In the future the only way to calculate this correctly would be to ensure OrderItemTaxRate column is shown on our monthly sales download. We can then manually correct the tax calculations on the one where this column shows a zero.

It would be nice if Linnworks just calculated the correct VAT reporting information for us rather than us having to do this extra work. Also I am unsure how many other customers would be unaware of the incorrect information that they are submitting to HMRC.


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