VAT Calculation

[Candystore]

If an amount of R3 888 already includes VAT, if I want to show the amount minus the VAT portion in an invoice, it is R3,380.87, correct?

The client calculates it as R3304.80.

Pls assist.

 

[Sehcaep]

If an amount of R3 888 already includes VAT, if I want to show the amount minus the VAT portion in an invoice, it is R3,380.87, correct?

The client calculates it as R3304.80.

Pls assist.

Yes R 3380.87 is correct.

 

[Bikerbob]

3888 / 1.15 = 3380.87

3380.87 + 15% = 3888

Either your customer is smoking something or we are both wrong.

 

[Candystore]

Thanks to both of you.

 

[gregmcc]

3380.87 is the correct amount.
Client def smoking their socks.

 

[rodga]

Thats a lot of candy!

 

[Nithan15]

Check what brand calculator your client is using

 

[cr@zydude]

If an amount of R3 888 already includes VAT, if I want to show the amount minus the VAT portion in an invoice, it is R3,380.87, correct?

The client calculates it as R3304.80.

Pls assist.

Common error to calculate 3304.8

To go from price including VAT to excluding, take 3888 X 100 ÷ 115

The error is 3888 X 0.85

 

[Guest 290922]

If an amount of R3 888 already includes VAT, if I want to show the amount minus the VAT portion in an invoice, it is R3,380.87, correct?

The client calculates it as R3304.80.

Pls assist.

Easy way is 3888 / 1.15 = 3380.869565217391 to subtract and 3304.80 * 1.15 = 3800.52 to add vat.

 

[ScottulusMaximus]

Common error to calculate 3304.8

The error is 3888 X 0.85

That ^^^

100% is not 85% + 15% because math. To this day I get vat Inclusive calcs wrong

 

[Merlin]

Can one of you brainiacs please explain why this is. Try as I might, my frazzled brain cannot comprehend this at this time of the night.

3,888 - 15% on my Android calculator shows 3,304. Why is this incorrect?

Thanks.

 

[RonSwanson]

Can one of you brainiacs please explain why this is. Try as I might, my frazzled brain cannot comprehend this at this time of the night.

3,888 - 15% on my Android calculator shows 3,304. Why is this incorrect?

Thanks.

If 3888 is vat inclusive, then it's equal to (the price of the goods (100%) + (15% (or 15/100 which is 15 percent))

therefore

3888 = 100% +15%

or

3888 = 115% <---I suspect that this is where you went wrong, because you basically asked your calculator what 15% of 100% was, not 15% of 115%


If we want to determine what the price of the goods is (or 100%), it is easier to first determine what 1% is, and then multiply it by 100 to get 100%

so using our equation 3888 = 115%

the easiest way to get 1% would be to divide both side by 115 (remember the law of equations, what you do on the one side you do on the other)

so 3888/115 = 115/115
or
33.80869 = 1

therefore 1% would be 33.80869

To get 100%, multiply both sides of the equation by 100

therefore
100 x 33.80869 = 100 x 1
or
3380.869 = 100%

so the original cost of the goods is 3380.869, but we round it off to get 3380.87

 

[requiem]

Can one of you brainiacs please explain why this is. Try as I might, my frazzled brain cannot comprehend this at this time of the night.

3,888 - 15% on my Android calculator shows 3,304. Why is this incorrect?

Thanks.

Because you are calculating 15% of the vat inclusive amount instead of 15% of the vat exclusive amount.

 

[Merlin]

Much appreciated, Ron, and requiem.

Sterling effort, Ron. Impressive, and both frighteningly reminiscent of my school days.

Makes sense though.

 

[Guest 290922]

1.15 is your friend.

 

[Greg C]

Much appreciated, Ron, and requiem.

Sterling effort, Ron. Impressive, and both frighteningly reminiscent of my school days.

Makes sense though.

lol its kind of meant to. Its literally solving for X
Ron pretty much summed it up above, but it should bring you back to school days. In fact for me, this was grade 8 intro into algebra back in the day. I love how Ron even said "remember what you do to one you do to the other side" Love it. Literally the words from our old maths teacher

Write out the maths equation next time and you can also work backwards on the same equation Ron mention above. Solve for x

 

[DapperDanMan]

In fact for me, this was

... 15 months too late.

Nevertheless, @RonSwanson will still graciously accept your praises ...

 

[RonSwanson]

Hello. I was wondering how to handle reverse charged VAT. If it’s towards a customer it’s really easy and you don’t need to mention it at all, but if we get a reverse charge from a supplier there is no easy way to do it. Currently I use a custom tax code so it gets specified in the Tax summary, but it’s not ideal. Any ideas?

I'm not an accountant, nor a tax consultant, so I don't understand what reverse VAT is, can you explain? Reverse charge from a supplier?

 

[Affieplaas]

Hi, first post here so please be gentle!

I'm trying to calculate how much money I need to put aside to cover the VAT that will be due.

Turnover = £8,030.50
VAT Due @ 20% = £1,338.42
Cost of Goods = £1,768.92
COGs VATable @ 20% = £353.78

VAT Due - COGs VAT = £984.64 (this number I need to put aside to cover VAT)

I know this is just on supplies and doesn't take into consideration all the other deductible stuff.

Thanks

The way you calculated the VAT in the numbers above:

- Turnover number includes VAT
- COG number excluded VAT

Is that correct?

 

[RonSwanson]

Hi, first post here so please be gentle!

I'm trying to calculate how much money I need to put aside to cover the VAT that will be due.

Turnover = £8,030.50
VAT Due @ 20% = £1,338.42

This is correct, assuming that Turnover includes VAT@20%

Cost of Goods = £1,768.92
COGs VATable @ 20% = £353.78

Correct, if the Cost of Goods exclude VAT, If you were to add VAT @20% it would be 353.78

VAT Due - COGs VAT = £984.64 (this number I need to put aside to cover VAT)

Correct

I know this is just on supplies and doesn't take into consideration all the other deductible stuff.

Thanks