Do you know guys any websites that teach how to calculate VAT from both the net figures (not inclusive of VAT) and the gross figures (inclusive of VAT) ? I have some problems with understanding this one.
The problem that you are probably having is getting your head around calculating back to the base figure and why it is not 20% less than the inclusive figure.
The issue is that you would be calculating VAT on VAT if you did it that way so for example :
Inclusive figure = £100
Exclusive figure a lay person would think would be £80 as there is 20% VAT.
Thats wrong.
What you actually need to do to calulate the VAT by dividing by 6 (The old calculation at 17.5% was multiply by 7 divide by 47).
So, doing that again, 100/6 = 16.6667 and that is the amount of VAT in the figure
To check it simply subtract 16.6667 from 100 giving 83.33333 (the VAT exclusive amount) and then multiply by 1.2 (the base figure +20%) and the result will be 100.
There's not much more to it than that. The complicated thing about VAT is knowing on what to charge it and at what rate and for that your start point would be VAT notice 700.
Hope that helps,
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
isn't accountancy great where we all have different ways of doing exactly the same thing. :)
lol, you can spot the banker in me where everyone else works to the penny I'm giving lessons to five decimal places.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
