- Original Poster
- #1
My apology from the out if this is in the wrong section, as it is a general question here goes;
The VAT flat rate scheme, how does one go about calculating the VAT payable, as I have found 2 ways to do this, and both make sense?
1st off, say a value of £28+VAT (20%) = £33.6 (the VAT equals £5.6)
2nd off say the same amount being charged equals £28+VAT (20% [multiplied by 1.25]) = £35 (VAT being £7).
This 2nd calc states that when you add or deduct the 20%VAT the initial rate (£28) stays the same, whereas in the first calculation the initial rate of £28 reduces to £26.88 if you deduct VAT (20%), which indicates the initial rate is not the correct rate before VAT (20%) is added.
My argument is if a contractor charges ‘x’ amount, then if one doesn’t work out the correct way to add/subtract VAT then the initial rate with/without VAT can be deduced wrongly.
Whereas, one would expect adding VAT would need to be proportionate the same as deducting VAT to maintain the initial rate, correct?
Advice most welcomed, as this is confusing.
The VAT flat rate scheme, how does one go about calculating the VAT payable, as I have found 2 ways to do this, and both make sense?
1st off, say a value of £28+VAT (20%) = £33.6 (the VAT equals £5.6)
2nd off say the same amount being charged equals £28+VAT (20% [multiplied by 1.25]) = £35 (VAT being £7).
This 2nd calc states that when you add or deduct the 20%VAT the initial rate (£28) stays the same, whereas in the first calculation the initial rate of £28 reduces to £26.88 if you deduct VAT (20%), which indicates the initial rate is not the correct rate before VAT (20%) is added.
My argument is if a contractor charges ‘x’ amount, then if one doesn’t work out the correct way to add/subtract VAT then the initial rate with/without VAT can be deduced wrongly.
Whereas, one would expect adding VAT would need to be proportionate the same as deducting VAT to maintain the initial rate, correct?
Advice most welcomed, as this is confusing.
