Accurate vat calculation can help you calculate exact vat rates

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

In case you are based 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 Year. 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 together with www.vatvalidation.com 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 United Kingdom.

There are 14,000 vat classifications provided by hmrc and if you've trouble in slotting your products or services within the right classification then you should appoint a professional vat agent with complete knowledge on uk vat rules and even eu vat rules if you import goods from any eu country. In the UK 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% which is also applicable on certain children?s goods as well as other services and also a zero vat rate on specific services and goods. Thus, if a certain product is taxed at 17.5% in that case your calculations will have to be according to that vat rate only.

For example, let's say you sell an item at ?100 to your client that draws vat at 17.5% then 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, which is 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 might be claimed back through a vat reclaim form which also has to calculate the vat amount paid. You can easily install a vat accounting software program on your desktop in order 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 because the flat rate scheme will require different calculations when 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 to get the exact amount of vat.

Accurate calculation of vat is very important while selling or buying items 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 run smoothly while hmrc will also remain pleased with you only once your vat calculation is accurate and clear in your vat documents and books.