Shipping and VAT

Do we charge VAT on shipping charges?

[shady]

I seem to receive different answers from different people and cannot find a solution on the government website.

Does a VAT registered company have to charge VAT on shipping fees (i.e. the charge levied for shipping the item to the customer) or are these exempt?

[gsx]

I assume you are talking about the UK.

VAT must be charged on all shipping, unless you are charge actual rate Royal Mail values - in which case it is exempt.

So if you send anything by courier - you must add VAT. If the Royal Mail charges £1.72, and you are charging £1.95 - you must add VAT. But if the Royal Mail charges £0.57 and you charge £0.57, you can get away without charging VAT - it is up to you, but the figure must match exactly and the description must not include packing etc...

It is easier just to add VAT to all shipping charges and call it 'post and packing' or 'post and insurance'. If you have anything other than post in your description, you must add VAT.

PS. VAT is calculated on a percentage of the order. So if you order a book (0% VAT) at £10 and some CDs at £30, 25% of your order is VATable, so you should charge 25% of 17.5% - i.e. 4.375%.

[shady]

Thanks gsx, thats very helpfull!
ps. I guess 75% of that order would be vatable

[pshea]

This comes at a perfect time for me as I also have a question. I am in the US. I am brokering a deal between two companies in South Africa. I'm buying goods from one and selling them back to the other. Both are in Cape Town. The goods will never leave South Africa, though the funds will come to me in the US and then leave from me in the US. The company I am buying from indicates a charge of 14% VAT. Does the VAT apply in this case?

Thanks.