Accurate vat calculation will help you calculate exact vat rates

Once you start issuing vat invoices to your clients then accurate vat calculation will help you calculate exact vat rates. Calculating vat rates is quite easy and you will have to display all your calculations within your vat invoices as well as your vat returns too.

In case you are based in the UK you would then have turned into a VAT registered trader once 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 would need to mention your vat number together with vat rates next to your goods or services that you have sold to your 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 and if you have trouble in slotting your products or services within the right classification then you 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 reduced 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 recommended site. Thus, in case a certain product is taxed at 17.5% then your calculations will need 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% 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 quantity 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 goods or services imported by you into the UK can 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 so as to accurately calculate vat on each vat invoice since mistakes will not be looked at kindly by the hmrc vat department.

Your vat returns will also need calculations of varied vat amounts paid and calculated. These calculations will also differ on the vat scheme which you choose because the flat rate scheme will call for different calculations when 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 exact amount of vat.

Accurate calculation of vat is very important while buying or selling items that are subject to vat tax. These amounts will have 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 when your vat calculation is accurate and clear in your vat documents and books.