DVD.co.uk - VAT deductions from commission

[nickhx]

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Hi everyone,

Just wondering whether anyone could explain why DVD.co.uk appear to be deducting VAT from their commissions?

I recently did a test order for a DVD which cost £5.95 - however, the order value showed up on our buy.at account as £5.06 -- which appears to reflect a deduction of VAT at 17.5%.

I thought as they are based in Jersey they do not have to account for VAT and therefore we should not have VAT effectively deducted from our commissions??

Cheers
Nick

[nickhx]

Sorry, just spotted Frostie's thread on the same issue -- however, the difference is it appears that commission has also been incorrectly calculated on DVDs as well as books.

I assume this will also be rectified by buy.at?

[drivetowin]

I thought dvd.co.uk were based in the UK mainland and not in Jersey - but I could be wrong.

[nickhx]

If that's the case, then my apologies -- although they are doing quite well to maintain the prices they do if they include VAT as well!

Update:

From DVD.co.uk's FAQ: http://www.dvd.co.uk/faq.asp

Items over £18 are shipped from the mainland UK and will not incur any customs charges.

Items under £18 are shipped from Jersey and may be subject to additional charges for import duties and taxes. Customs requirements vary from country to country and it is your responsibility to contact your local customs office for accurate information. DVD.CO.UK Ltd. is not responsible for these additional charges.

Does this suggest that items under £18 are shipped from Jersey -- which would make sense?

[drivetowin]

Yeah you're right - hadn't noticed that bit.

So they should be paying commission on the whole price then.

[nickhx]

Anyone from buy.at care to comment on this?

[Paul Newton]

My understanding is that dvd.co.uk are based on the UK mainland and so all of there sales attract a VAT charge where applicable.

This can be seen in the FAQ area (see the link above in previous posts) and copied below for reference;

Our Prices

All prices listed on the site include VAT (where appropriate) and postage to any UK address. European shipments will incur a postage and packing fee. This will be displayed on checkout and varies dependent on the goods ordered.

As DVDs are subject to VAT, they are quite correct in basing your commissions on the net amount in this case.

Reference this to the other post ongoing currently and you will see how the confusion has arisen. dvd.co.uk have obviously applied the same calculation logic to all sales and accidentally removed that VAT from books as well as DVDs, games etc. (a mistake that has been acknowledged and will be corrected in due course)

I hope that this clears things up, but please feel free to call me if there are any matters that require clarification.

[nickhx]

Thanks Paul for coming back on this so quickly.

Not being a VAT expert myself (and please correct me if I am wrong), but my understanding is that if the product is shipped from Jersey and the item value is £18 or under, then it does not attract VAT from the UK authorities.

That being the case, it seems to me that the way DVD.co.uk have structured their business is that items under £18 are shipped from their warehouse in Jersey (per their FAQ page) and £18 and over are shipped from their warehouse in the UK.

Indeed, the order confirmation I received for the DVD I recently purchased for £5.95 states:

We thought you would like to know that the following items have been successfully processed and will shortly be dispatched to you by Royal Mail First Class post from our warehouse in Jersey.

8223886 Scent Of A Woman

Based on the above, the logical explanation seems to be that items under £18 are shipped from Jersey to avoid the need to charge VAT to UK Customers (and hence keeping their prices competitive). Further if they are indeed charging VAT (and thereby accounting to the HM Customs and Revenue), they are legally required to provide a VAT invoice with the supply of the goods, which again I have not received in connection with this order.

I would be grateful if you could look into this further.

Many thanks

Regards
Nick

[Stuart]

Hi,

I may be able to help, don't know how DVD.co.uk have structured the tracking and the business, so I can't comment on ther business directly.

It should work like this, any items under £18 shipped from Jersey (as Nick stated) do not attract VAT from the UK authorities, so any tracking and ordering system should recognise this and not remove VAT on those sales, before calculating the commission.

Any items shipped from the UK (either under or over £18) would incur VAT charges and therefore the should remove VAT before calculating the Commission.

I think what Paul Newton was saying is that DVD.co.uk applied the calculation for commission to all orders, regardless of wherethey are shipped from...

Paul are you saying that is the case but they are going to resolve this as they are now aware of the issue?

Thanks
Stuart

[Paul Newton]

Thanks for this, much appreciated.

I will take this back to the guys at dvd.co.uk and take it up with them.

[Paul Newton]

Paul are you saying that is the case but they are going to resolve this as they are now aware of the issue?

I will be talking to dvd.co.uk and will be putting these issues to them and I will report back once I know the full situation.

Watch this space.

[Dave Booth]

We have now spoken to dvd.co.uk in regard of this issue.

Dvd.co.uk deliver their products from two separate warehouses, one in Jersey and one in mainland UK. Currently tax is deducted from the product values on which commission is calculated for all sales from both of these locations.

Unfortunately dvd.co.uk have informed us that they are currently unable to pass through information on which warehouse products have been distributed from. They will not be able to resolve this problem in the short term so therefore the current situation will remain unchanged.

As Paul earlier stated VAT will no longer be deducted from the amounts for which commissions are calculated on book sales.

We realise this is an undesirable situation for affiliates however dvd.co.uk are unable to change this at the moment.

If you wish to discuss this issue, please contact me directly.

[drivetowin]

Dave

Don't want to be picky, well ok then I do!! - but if their email to customers tells the customer which warehouse the goods are coming from, then it must be in their system somewhere.

Personally I'd wager that all DVDs under £18 come from Jersey - but of course that's just me being old and cynical

[Dave Booth]

I'm not sure of the exact reasoning why dvd.co.uk are unable to provide us with this. As I said though, unfortunately dvd.co.uk won't be changing this at the moment.

[nickhx]

Any update on this please Dave?

I still consider this a major issue with the DVD.co.uk program (no other DVD affiliate program that I am aware of does this). It would be great if this could resolved by a practical solution (e.g. commision is paid on the full order value for all DVD orders under £18).

Am I the only one who thinks that the above practice (of not charging VAT to customers, but then paying commissions to affiliates based on a price net of VAT) is fundamentally dishonest?

Thanks