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Accurate vat calculation can help you calculate exact vat rates


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When you start issuing vat invoices to your clients then accurate vat calculation can help you calculate exact vat rates. Calculating vat rates is very simple and you will have to display all your calculations in your vat invoices as well as your vat returns too.

If you are located in the UK then you would have converted 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 vat number search. This could lead to issuance of vat invoices by you to all of your future clients. Your vat invoice will have to mention your vat number together with vat rates alongside your goods or services which you have sold to your clients. In order to calculate vat you need to know the classification of your products or services as decided by HM Revenue and Customs or hmrc vat department that manages all aspects of vat in the UK.

There are 14,000 vat classifications provided by hmrc and if you have trouble in slotting your products or services within the right classification then you certainly should appoint an expert vat agent with complete knowledge on uk vat rules as well as eu vat rules in the event you import goods from any eu country. In the United Kingdom vat is spread into three slabs, namely the standard rate of 17.5% that will soon increase to 20% from January 4, 2011. There is 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 article source. Thus, in case a certain product is taxed at 17.5% in that case your calculations will have to be according to that vat rate only.

As an example, let’s say you sell an item at ?100 to your client that attracts vat at 17.5% then your vat calculations will need to display the vat rate, i.e. ?17.50 following the product rate and also the total quantity of the sale including vat, i.e. ?117.50, 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 can be claimed back via a vat reclaim form that also has to calculate the vat amount paid. You can easily install a vat accounting software program on your desktop so as to accurately calculate vat on each vat invoice since mistakes won’t be viewed 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 that you opt for since the flat rate scheme will call for different calculations as compared to the other schemes. You will additionally need to learn on how to calculate vat amounts from vat exclusive and vat inclusive prices to get the precise amount of vat.

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