Precise vat calculations undoubtedly are a must for perfect vat accounting

If you are a VAT registered trader in the United Kingdom or other vat-enabled eu country then precise vat calculations really are a must for perfect vat accounting. All countries which have embraced vat use various vat rates on different services and goods, and you also have to calculate each vat rate precisely so as to file proper vat returns and also give the proper amount of vat tax.

In the United Kingdom, all vat rules are issued by HM Revenue and Customs or hmrc vat department. Hmrc has classified all taxable and vat exempt services and goods into 14,000 classifications. Thus, any product or service which you sell or buy is likely to fall under one such classifications. Most of these services and goods come under the standard vat rate of 17.5% that is slated to rise to 20% from January 4, 2011 onwards. Other services and goods come under the lower vat rate of 5% while a select few come under the zero vat rate vatregistrationnumber. There are also certain services and goods such as those associated with charitable events, amongst others that come under the vat exempt scheme where no vat can be added or claimed back.

Your vat calculations will begin when you know the correct vat rate of each of your goods and services. For example, if you sell a set of shoes to your customers for ?200 exclusive of vat then at 17.5% vat, your vat amount will be ?35 whilst the total amount of your vat invoice including vat is going to be ?235. Similarly, if you sell a product for ?50 that attracts 5% vat rate then the vat amount on that product will be ?2.50 while the total amount inclusive of vat is going to be ?52.50. It is crucial to understand your basic products or services cost, your vat cost and your total cost including vat to be able to bill your clients at the best possible rates while also filing your vat returns without making any calculation errors.

Calculating the correct amount of vat can also be vital when you apply for vat refunds homepage. You'll have to do that if your goods or services are imported to the UK from any other eu country that has already collected vat on them. In such a case, you should make application for vat reclaim for getting your money back already paid in the nation of origin. You need to hire an expert vat agent so that probability of any miscalculations are minimized. Your vat agent could also take over all vat calculations in order that all of your vat returns and vat refunds are handled in the stipulated time frame and that too without any calculation mistakes. The hmrc vat department offers various vat accounting schemes such as the flat rate scheme, and in this type of case different calculation methods will need to be employed.

Although vat is not a very complex tax method, you will still require calculations that are able to separate your basic costs from taxes. This will likely allow you to purchase and sell your goods and services after calculating proper profit margins. Since you also have to file regular vat returns and might also have to make an application for vat refunds, precise vat calculations will help you stay on the appropriate side of the vat law.