Once you start issuing vat invoices to your clients then accurate vat calculation can help you calculate exact vat rates. Calculating vat rates is very easy and you will have to display all of your calculations within your vat invoices and your vat returns too.
If you are located in the UK you would then have converted into a VAT registered trader once your taxable sales would have reached the vat threshold figure of 70,000 pounds in the past 12 months. This would result in issuance of vat invoices by you to all of your future clients. Your vat invoice would need to mention your vat number along with http://vatvalidation.com vat rates next to your services or goods that you have sold to your clients. In order to calculate vat you should 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 14,000 vat classifications given by hmrc just in case you have trouble in slotting your products or services in the right classification then you certainly should appoint a professional 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 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’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. Thus, if a certain product is taxed at 17.5% then your calculations will need to be according to that vat rate only.
As an example, if you sell a product 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 amount 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 in your vat returns. Similarly any vat already paid on goods or services imported by you to the UK might be claimed back through a vat reclaim form which also has to calculate the vat amount paid. You can easily put in a vat accounting software package on your computer 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 will 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 learn on the way 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 extremely important while buying or selling 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 operate correctly while hmrc will also remain pleased with you only once your vat calculation is accurate and clear in all your vat documents and books.