VAT question

[robfosters]

Ok, how much is the original price of an product if you have to pay £500 inc VAT?

 

[PiKe]

£416.67

 

[Deleted User 298457]

£416.67

https://www.scoosh.com/vat-calculator/

 

[PiKe]

Just divide the VAT inclusive amount by 1.2

 

[VincentHanna]

Just remember to divide by 1.2 in future.

 

[Syla5]

price /1.x

with x being the rate of vat.

 

[robfosters]

Thank you for settling an argument. I will now be informing my argumentative brother that he has been paying too much tax on his private jobs.

 

[touch]

Thank you for settling an argument. I will now be informing my argumentative brother that he has been paying too much tax on his private jobs.

Is he doing 20% of the total price? 20% of £500 is £100 VAT so £400 cost before VAT. That's a common mistake.

 

[div0]

Depends on the VAT rate which applies to the goods or services in question.

 

[Pudney]

Depends on the VAT rate which applies to the goods or services in question.

This is the correct answer!

Edit: and given the lack of details in the original question it may not be just a pedantically correct answer, it could be fundamental to the question, e.g. if the product or services involve the construction industry.

Edit2: it gets worse the more I think about it. Please don't give your brother tax advice based on this thread!

 

[VincentHanna]

https://www.gov.uk/guidance/rates-of-vat-on-different-goods-and-services

 

[dowie]

price /1.x

with x being the rate of vat.

^^^ this, where, in the UK, x could commonly be .2, .05 or 0

 

[Pudney]

price /1.x

with x being the rate of vat.

^^^ this, where, in the UK, x could commonly be .2, .05 or 0

Except if you're using something like a Margin Scheme (e.g. on the purchase and sale of second hand goods).

VAT is one of those things that looks simple from afar, but the closer you get to the detail the more it's better to back away. Slowly. Then turn and run away.

 

[robfosters]

Is he doing 20% of the total price? 20% of £500 is £100 VAT so £400 cost before VAT. That's a common mistake.

Yes, exactly that.

 

[peterwalkley]

Except if you're using something like a Margin Scheme (e.g. on the purchase and sale of second hand goods).

VAT is one of those things that looks simple from afar, but the closer you get to the detail the more it's better to back away. Slowly. Then turn and run away.

You need to answer this with "I am an accountant, but I'm not YOUR accountant."

 

[Deleted User 298457]

Yes, exactly that.

Make sure you get your commission if you are right. Could offset all of your recent identity fraud losses

 

[robfosters]

I said he should just charge a price and forget the vat completely.

probably not the best advice tbh, but then I’m no accountant.

 

[Deleted User 298457]

I said he should just charge a price and forget the vat completely.

probably not the best advice tbh, but then I’m no accountant.

Good self awareness

 

[secretspy]

I said he should just charge a price and forget the vat completely.

probably not the best advice tbh, but then I’m no accountant.

He can do a correction to claim back the extra VAT he's given to hmrc in error , though depending on how much it all totals to, he might have to make them aware (I can't remember the exact figure off the top of my head but it's in the thousands so if it's only a few hundred then he can do the correction without having to also notify them)

 

[el_dazza]

He can do a correction to claim back the extra VAT he's given to hmrc in error , though depending on how much it all totals to, he might have to make them aware (I can't remember the exact figure off the top of my head but it's in the thousands so if it's only a few hundred then he can do the correction without having to also notify them)

It's up to £10,000 without needing to notify them according to my indirect tax AAT study book!