Accurate vat calculation can 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 simple and you will have to display all of your calculations within your vat invoices and your vat returns too.

If you are based in the UK you would then have turned into a VAT registered trader as soon as your taxable sales might have reached the vat threshold figure of 70,000 pounds within the past 12 months vatnumbersearch.com. This could lead to issuance of vat invoices by you to all your future clients. Your vat invoice will have to mention your vat number together with vat rates alongside your services or goods that you have sold to the 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 every aspect of vat in the UK.

There are actually 14,000 vat classifications provided by hmrc just in case you’ve trouble in slotting your products or services in the right classification then you should appoint an expert vat agent with complete knowledge on uk vat rules and even eu vat rules in the event you import goods from any eu country. In the UK 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 reduced rate of 5% which is also applicable on certain children?s goods as well as other services along with a zero vat rate on specific services and goods more about the author. Thus, if a certain product is taxed at 17.5% in that case your calculations will need to be based on that vat rate only.

For example, if you sell an item at ?100 to a client that attracts vat at 17.5% in that case your vat calculations will need to display the vat rate, i.e. ?17.50 after the product rate and also the total amount of the sale including vat, i.e. ?117.50, which is the final value of your vat invoice. These amounts will also need to be calculated and summed up in your vat returns. Similarly any vat already paid on services or goods imported by you to the UK might be claimed back via a vat reclaim form that also needs to calculate the vat amount paid. It is possible to install a vat accounting software program on your computer so as 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 varied vat amounts paid and calculated. These calculations may also differ on the vat scheme which you opt for because the flat rate scheme will call for different calculations as compared to the other schemes. You will additionally need to read on how to calculate vat amounts from vat exclusive and vat inclusive prices so as to get the precise amount of vat.

Accurate calculation of vat is very important while selling or buying goods that are subject to vat tax. These amounts will need to be reflected in your purchases, sales, vat returns, and vat refunds too. Your business will operate correctly while hmrc will also remain pleased with you when your vat calculation is accurate and clear in your vat documents and books.