please could you answer anther query for me regarding VAT calculation?
I KNOW net invoice price + vat % = gross price.
Any trade discount offered would b - from net invoice, then VAT calculated on that net inovice price to = gross. But what if the net invoice total includes zero rated items?
e.g ill make my own example:
£ 50.00 adults clothes at 20 %
£50.00 childrens clothes at 0 %
net invoice = £100.00
vat = £10.00
now say trade discount is at 10 %
so would from the £100.00 net invoice price - 10 trade discount, which is £10.00 = £90.00 (new net invoice total)
Now what im confused about is a) would I calculate VAT at 20 % from this new total?so VAT would be £18.00? hence gross =£108.00
b) would i calculate VAT from £50.00 adult clothes - £5.00 trade discount = £45 so that is VAT WOULD be £9.00? so gross would be £99.00
Please can you clarify
Hiya, remember trade discount is taken off before the customer receives the product. Ie on a wholesalers listing a price is £25 and for trade discount is 10% off then the total invoice will be £22.50.
So If in your scenario you have a total of £100 on the invoice take the 10% off then work out the vat on the remaining £50 which is vat chargable so now its £10 Vat so £100-10%=£90 net £100 gross.
At least thats how it works out to me.
Actually it would probably be better doing this. Take 10% off each individual sale of £50 so £45 mow for adult clothes and £45 for childrens. Then work out vat on £45 adult clothes is £9. So gross would be £99
Edited at 03 Feb 2018 04:41 PM GMT