Accurate vat calculation will help you calculate exact vat rates

Once you start issuing vat invoices to the clients then accurate vat calculation will help you calculate exact vat rates. Calculating vat rates is very easy and you will need to display all your calculations within your vat invoices as well as your vat returns too.

If you are based in the UK then you would have converted into a VAT registered trader as soon as your taxable sales would have reached the vat threshold figure of 70,000 pounds within the past Year vatnumbersearch. This could result in issuance of vat invoices by you to all of your future clients. Your vat invoice would need to mention your vat number together with vat rates alongside your goods or services which you have sold to your clients. To be able to calculate vat you need to know the classification of the goods and services as decided by HM Revenue and Customs or hmrc vat department that manages all aspects of vat in the United Kingdom.

There are 14,000 vat classifications provided by hmrc and if you have trouble in slotting your goods and services within the right classification then you should appoint an expert vat agent with complete knowledge on uk vat rules as well as eu vat rules if you import goods from any eu country. In the United Kingdom vat is spread into three slabs, namely the standard rate of 17.5% which will soon increase to 20% from January 4, 2011. There’s another lower rate of 5% that is also applicable on certain children?s goods as well as other services along with a zero vat rate on specific services and goods my blog. Thus, if a certain product is taxed at 17.5% in that case your calculations will have to be based on that vat rate only.

As an example, let’s say you sell an item at ?100 to a client that attracts vat at 17.5% in that case your vat calculations will have to display the vat rate, i.e. ?17.50 after the product rate as well as the total quantity of the sale including vat, i.e. ?117.50, the final value of your vat invoice. These amounts must also be calculated and summed up within your vat returns. Similarly any vat already paid on services or goods imported by you into the UK can be claimed back through a vat reclaim form which also has to calculate the vat amount paid. It is possible to install a vat accounting software program on your desktop in order to accurately calculate vat on each vat invoice since mistakes won’t be looked at kindly by the hmrc vat department.

Your vat returns will likely need calculations of various vat amounts paid and calculated. These calculations may also differ on the vat scheme that you opt for since the flat rate scheme will require different calculations as compared to the other schemes. You will also need to read on how to calculate vat amounts from vat exclusive and vat inclusive prices so as to get the exact amount of vat.

Accurate calculation of vat is very important while buying or selling items that are subject to vat tax. These amounts will have to be reflected in your purchases, sales, vat returns, and vat refunds too. Your enterprise will run smoothly while hmrc will also remain pleased with you once your vat calculation is accurate and clear in your vat documents and books.