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Accurate vat calculation will help you calculate exact vat rates


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When 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 of your calculations in your vat invoices and your vat returns too.

If you are located in the UK then you would have turned into a VAT registered trader as soon as your taxable sales would have reached the vat threshold figure of 70,000 pounds within the past 12 months. This could result in issuance of vat invoices by you to all of your future clients. Your vat invoice will have to mention your vat number along with http://vatvalidation.com vat rates alongside your goods or services that you have sold to the 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 all aspects of vat in the United Kingdom.

There are actually 14,000 vat classifications given by hmrc and if you’ve 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 if you import goods from any eu country. In the UK vat is spread into three slabs, namely the standard rate of 17.5% which will soon increase to 20% from January 4, 2011. There’s another reduced rate of 5% which is also applicable on certain children?s goods as well as other services along with a zero vat rate on specific goods and services. 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, if you sell a product at ?100 to a client that draws vat at 17.5% in that case your vat calculations will need to display the vat rate, i.e. ?17.50 after the product rate and also the total amount 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 services or goods imported by you into the UK might be claimed back via a vat reclaim form which also needs to calculate the vat amount paid. You can easily put in a vat accounting software package on your desktop in order to accurately calculate vat on each vat invoice since mistakes will not be viewed kindly by the hmrc vat department.

Your vat returns will also need calculations of various vat amounts paid and calculated. These calculations may also differ on the vat scheme that you choose because 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 exact amount of vat.

Accurate calculation of vat is extremely important while buying or selling goods that are subject to vat tax. These amounts will have to be reflected in your purchases, sales, vat returns, and vat refunds too. Your enterprise will run smoothly while hmrc will also remain pleased with you only when your vat calculation is accurate and clear in all your vat documents and books.