Calculating VAT

[JonRB]

I'm confused.

I always thought that you multiplied the gross amount by 17.5% to get the VAT component, and the net amount was the gross less the VAT component.

Or to put it another way, G*0.175 = V, and N = G - V (where G is gross, N is net and V is the VAT component).

So can anyone englighten me as to why the spreadsheet I use (supplied by my accountant) uses V = G*(7/47) or V = G*0.148936170212766 to calculate the VAT component?

[Plotloss]

FRS?

www.bizhelp24.com/news/mar04/vat-flat-rate-scheme.shtml

[JonRB]

Oh tit-biscuits, I'm wrong, aren't I?

V = N*0.175 and
G = N + V

Or, letting R = 0.175

G = N(R+1)

So if G = 1 and R = 0.175, then N = 0.85106383
Which makes V = 0.14893617021 which is the number I was lookig for.

>> Edited by JonRB on Thursday 14th October 09:46

[Eric Mc]

The easiest way to calculate VAT on items is to use the "VAT Fraction" - i.e. 7/47. This is simply the fraction 17.5/117.5 turned into a more simplified equation.

It works like this.

You are quoted £117.50 as the "VAT Inclusive" price of a product.

a) What is the VAT Exclusive price?

b) What is the actual VAT amount included in the price?


Answers:

a) VAT exclusive price is found by the following formula: £117.50 x 40/47 = £100.00

b) VAT Element of the price is found by the following formula £117.50 x 7/47 = £17.50.

Easy really.

[JonRB]

Thanks Eric.

As you can see from my edited post, I worked it out in the end.

I think I really need to knock the rust off my maths if I want to stand any chance of breaking into the financial market.

It's scary what one can forget - I've got a degree in Applied Physics, FFS!

[john_p]

You need to read the good old VAT Guide, it explains it in there

[nicholas blair]

I prefer n= G/1.175, far quicker.