There is a Magento module out there to purchase, which given the lack of information on Google relating to this topic I was really surprised about, but it seemed to require a declaration for each individual product and that wasn’t really suitable for the project I was working on, so here’s my solution.

The Problem

As I understood it via the brief we were given the scenario goes something like this:*

1. There are both VAT Inclusive and VAT Exempt products in the store, the VAT Inclusive products must charge VAT to every customer type.
2. Generic customers can buy both sets of products but must pay VAT as normal.
3. Customers eligible for VAT exemption can purchase VAT Exempt products without the VAT but still be charged VAT on VAT Inclusive products.

*Caveat Incoming: I could not tell you if the scenario described is accurate in every instance – it’s the brief we were given from our client and would suggest you find out for yourself the VAT terms you’re bound to in whatever scenario you decide to implement this solution in.

The Solution: Part 1

The first step was in getting Magento set up just right. We’ve 3 different tools at our disposal with which to do this, Customer Groups, Customer Tax Classes and Product Tax Classes.

Tax Rules

We did the simple bits first:

1. Set up two new Product Tax Classes – VAT Exempt and VAT Inclusive, this means that we can specify on each individual product if it is eligible to be purchased VAT free or not.
2. We then set up two Customer Tax Classes with exactly the same names, we’ll use these a little later.
3. For the last of the simple requirements we created two new Tax Rates, again VAT Inclusive at 20% and VAT Exempt at 0%.

Now we have everything in place we moved onto actually creating the Tax Rules. We have three different Tax Rules set up now, they are as follows:

1. VAT: This is applicable to both Customer Tax Classes, the VAT Inclusive Product Tax Class and the VAT Inclusive Product Tax Rate.
2. VAT Exempt: This is applicable to the VAT Exempt Customer Tax Class, the Vat Exempt Product Tax Class and the VAT Exempt Tax Rate.
3. VAT Inclusive: This is applicable to the VAT Inclusive Customer Tax Class, the VAT Exempt Product Tax Class and the VAT Inclusive Tax Rate.

What we’ve essentially done is specify a default tax rule – VAT – and told Magento that it applies to both groups for VAT Inclusive products (and to apply the VAT Inclusive rate). This means that both groups will pay VAT on VAT Inclusive products as is intended.

Next we’ve specified via VAT Exempt that customers with the VAT Exempt class should not pay VAT on VAT Exempt products.

Finally, we’ve specified with VAT Inclusive that the VAT Inclusive Customer Tax Class should have the VAT Inclusive Tax Rate also applied to those products specified as VAT Exempt. This final rule is where the magic lies as it ensures that standard customers who should pay VAT are paying it on both sets of products.

Still with me? Good, onto the last change for this part.

Customer Groups

We set up two separate Customer Groups for our scenario, let’s call them Normal and VAT Exempt for arguments sake. Normal has the VAT Inclusive Tax Class assigned to it, and as expected VAT Exempt has the VAT Exempt Tax Class assigned. Job done.

By all accounts you could stop things here, by manually assigning each customer to the relevant group you can ensure that VAT is removed where applicable. This is only achievable after a customer has checked out or created an account, it’s a bit of a messy, manual affair and first time customers will get charged VAT. All in all it’s a bit of an administrative nightmare – so let’s automate things.

The Solution: Part 2

Again, our understanding of the brief given is that customers are actually responsible for their own tax relief, providing they declare to the merchant they are eligible and a few basic details are taken by the merchant for tax purposes, then there’s actually no formal checking on the part of the merchant to be done. See the previous caveat if there’s any misunderstanding of my description here.

In which case we’re allowing the customer to specify themselves if they’re a candidate for VAT relief, my first thought was to do this via a question on checkout, but then we’d have to make some module changes to ensure the customer groups were set as a result. However we instead stumbled on a cheap as chips module that allowed you to do just that – Customer Group At Registration.

For the tiny sum of $25 this little module will allow our customers to decide on checkout which Customer Group they belong to, what’s better is the module will allow you to specify which groups are available for selection – so we can still maintain different internal Customer Groups should we wish. So with a small amount of modification we’re able to insert a declaration on the customers part that if they select a VAT Exempt Customer Group they’re agreeing to the usual legal mumbo jumbo associated with it.

In Summary

What did we do? We created two Product and Customer Tax Groups, we specified three Tax Rules that applied the right Tax Rates where applicable and we then automated the whole process using a little module so customers can declare on checkout if they are eligible for VAT relief or not. I can be no briefer and no more pleased with my little solution. Correction – if you use it and it works for you then I’ll be more pleased than I already am. Enjoy!

It’s fair to say that I started the day with an air of apprehension; I’d come down to London on my own and it was chucking it down as I trudged across to the conference hall after getting up at a time I’d quite frankly not seen for a while.

The Presentations

After finally getting around to typing up my scrawls from the big day I’ve ended up with 3 solid pages of notes, very much in short form and each and every one of importance – for me that has been the summary of how successful this conference was for me personally. The range of content and the value of the information was incredible at times, here’s a quick taste of what I’ve got.

• eCommerce Statistics – Just in case you needed to gee up your clients about why exactly eCommerce should be important to them.
• xCommerce – Clarification on what it is exactly and how it intends to develop.
• Personalised Shopping Experiences – Its potential to drive sales and just how it can be put to work.
• Magento Server Optimisation – Who doesn’t need to know about this?
• Loyalty Programmes – Generally discussing how it impacts NPS scores.
• Magento Best Practices – A great overview and had something for everyone.
• Shopping Cart Abandonment – Fantastic insight into how this section of your visitors behave and why.

As you can see, the notes I made were across a broad range of topics and represent what I found to be the most useful of the topics discussed. There were a couple more, one covered multi-store setups which I’ve a good handle on so didn’t discuss anything I wasn’t already familiar with and another on the future of cloud hosting.

The People

Given how highly I’ve rated the content I’d rate the people even higher, from those involved at the very top echelons of Magento to the small scale merchants and developers just entering the crazy world the Meet Magento UK 2011 conference completely surpassed my expectations in terms of how approachable and friendly the whole scene is.

I only have myself to blame on discovering this so late in my 2-3 year Magento career so far, being busy has generally been my excuses thus far, but I’ve since thrown that one out of the window – it’d be folly not to get involved now. So whilst I’m at it, a quick shout out to Tom and Nick at Meanbee, Tracy, Gillian and Deryck from Future Clients and Luke from Develodesign. Thanks for a fun 24 hours guys and gals!

The After Party

Take a selection of talented eCommerce industry experts, put them in a bar, in an arcade – and then give them drinks vouchers and turn all of the games to free-play. You know those adverts on TV about planning your funeral in advance? I think I’ve got mine sorted out now. All of this basically resulted in making a typically shy demographic that ever so slightly more talkative and made for a great night in general.

The Conference Overall?

In a word, fantastic. I’m already planning to attend again next yearand looking out for any similar conferences on the go in the meanwhile. From the actual content of the presentations, to the great people making up the community at large everything was incredibly well put together. I’m super pleased that I went, I even got that carried away by the end of the day that I ended up asking a question about HTML5!