Accurate vat calculation will help you calculate exact vat rates

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

If you are based in the UK then you would have turned into a VAT registered trader as soon as your taxable sales might have reached the vat threshold figure of 70,000 pounds in the past Year vat number search. This could result in 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 goods or services that you have sold to your clients. In order 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 United Kingdom.

There are actually 14,000 vat classifications provided 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 as well as eu vat rules in the event you import goods from any eu country. In the UK vat is spread into three slabs, namely the regular 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 bonuses. 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, if you sell an item at ?100 to a client that draws vat at 17.5% in that case your vat calculations will have to display the vat rate, i.e. ?17.50 following the product rate as well as the total quantity 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 in your vat returns. Similarly any vat already paid on goods or services imported by you into the UK might be claimed back through a vat reclaim form which also needs to calculate the vat amount paid. You can easily install a vat accounting software package on your computer 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 various vat amounts paid and calculated. These calculations will also differ on the vat scheme that you opt for because 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 selling or buying goods that are subject to 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 once your vat calculation is accurate and clear in all your vat documents and books.