Q:
Hi Folks,
I have “Z” totals from a till at the end of each day but all is shows is the total sales, total vat and gross but not all the sales are inclusive of vat. Is there any way of spliting the vat inclusive sales from the exclusive sales, apart from doing it a very very long way round!?
A:
Hi
If you are a retailer you may be able to use an apportionment scheme whereby you apply a percentage to your gross takings to split the different types of turnover. This would entail (if your annual turnover is less than £1 million) calculating, each quarter, your standard rated taxable PURCHASES as a percentage of total PURCHASES. This percentage is then applied to your gross takings to calculate your taxable takings, which you would then ‘de-VAT’ (ie x 7/47, or 1/6 after 4th Jan) to get your net and VAT.
There is still work to be done- the percentage must be calculated every quarter, and you must also do an annual adjustment to calculate any over/underpayment transpiring from an annual calculation.
You can get more information here http://www.hmrc.gov.uk/vat/start/schemes/retail.htm#1
Robert
A:
Hi
Well it depends on the type of business but assuming that you are a retailer, then as Robert has suggested, the first point of call would be to consider the retail schemes. Your accountant will probably have experience of using these schemes with other clients so should be able to help you decide whether they’d be appropriate for you. They look complicated as explained on the HMRC website, but actually they are very simple in principle and once you’ve done it for the first time, you’ll get the hang of it very easily. In practice it’s basically a case of working out the proportion of your sales that are standard rated (usually this is based on the proportion of purchases that are standard rated) and then calculating the VAT on that proportion of your total sales.
The other thing that you might want to consider is whether the Flat Rate Scheme would work for you. Y ou can only use this if your total turnover is £150,000 or less but if you can, then it’s a very simple scheme as you don’t need to calculate your input and output tax separately, but just apply a single VAT rate to your gross income. Have a look here for more info: http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#5.
Marie
20 November 2010