tax

[fairkatrina]

Can anyone explain to me why when I do our company accounts tax is calculated at 14.89%, even for shop purchases, when I thought it was 17.5%?

[Loosehead]

It's because the VAT is already in the total that is being calculated so to extract the amount of VAT that's in the total you multiply by 14.89%.

Eg 100 + vat at 17.5% = 117.5

to extract the vat from the total of 117.5 then multiply by 14.89% : 117.5 x 14.89 / 100 = 17.5 tada!

[fairkatrina]

You're a star! This means that some bag who's been pestering me every day for the last month about �500 she thinks we owe her actually owes us �50 because she worked her VAT out wrong!!! Yay!

[Loosehead]

All part of the service! try explaining it to the old bat though she'll probably think you are pulling the wool! I assume that the vat is indeed already in the figures you are talking about.

[fairkatrina]

it was, but then she tried to deduct it by dividing by 17.5% and then she added up the balance wrong...and basically messed everything up! I'm soooo glad it's sorted :-)

[Loosehead]

ah a common misunderstanding by the arithmetically challenged! another way to do it is to use the fraction that they issue when Vat is included in the figure it represents 7/47ths of the total, this can be derived thus:

100+vat = 117.5 he VAT part = 17.5/117.5 = (x2) = 35/253 ( divide by 5) = 7/47!

[fairkatrina]

OK you just went too far! I'm a literature student, I'm only doing accounts to make ends meet! This boggles me too..

[Loosehead]

sorry didn't mean to alarm you! when I said Arithmetically challenged I was referring to the woman who balls up the calc.

[cruella]

Here is a quicker way, take the gross amount 117.50 and divide by 1.175 = 100