Internet retailers fulfilling orders from an overseas or offshore base need to ensure the contracts with their customers are concluded there otherwise there may be undesirable VAT consequences. The website may be seen as a shop window and therefore an “invitation to treat”. The customer makes an “offer to buy” a product when he places it in the shopping trolley and takes it to “checkout”. The retailer “accepts” the customer’s offer when he dispatches the product and sends an order confirmation email to the customer after successfully taking the credit card payment.
Therefore it is critical that the customer T&Cs accurately reflect these sequence of events and are structured correctly regarding issues such as taking and acceptance of the order, despatch of the goods, timing of the transfer of risk, ownership and title of the goods, the manner in which refunds and returns are handled, the jurisdiction under whose laws the contract is made and other such matters. All of these issues have VAT implications and it is surprising to see the large number of customer contracts that would simply not stand up to scrutiny before the taxman. Therefore it is vital that a thorough review of customer T&Cs are performed before the overseas fulfilment operation goes live.