Split mind - VAT

Marky AstraMarky Astra Feels At HomeRegistered Posts: 45
Hi all,

me and my brother are having a discussion and ive got to the stage where im so confused i dont know which answer is right.


for example... (forget roundings)


He is saying..

182.82 - VAT at 17.5% = £150.83 on a calculator

150.83 + VAT at 17.5% = £177.21 on a calculator

Im saying..

£182.82 - VAT at 17.5% = £155.59

£155.59 + VAT at 17.5% = £182.82

Now ive given his a go on the calculator by putting in '182.82 - 17.5%' and it does equal the £150.83 so can someone give it a few minutes and work out the right suggestion, its doing my head in!!!

Marcus

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    150.83+VAT = £177.22
    The maths is 150.83 * 1.175

    182.82 minus VAT is 182.82 / 1.175 = £155.59

    You cannot take the gross and minus 17.5% because the gross is 117.5%. The VAT is 17.5% of the Net, which is 100%.

    If you are trying to find the VAT from the gross, do not use percentages, use 1.175 or the VAT fraction of 7/47

    Obviously VAT is now 20%.... :D
  • Marky AstraMarky Astra Feels At Home Registered Posts: 45
    yes i dont know where his company are getting these figures from, and yes agreed with the 20%, this was just a one off example back in the 17.5% days :D
  • slackdaslackda Trusted Regular Registered Posts: 460
    Cause the calc % function assumes you are at 100% when you use (-)%

    Nice way my tutor once put it is like a Mark up.

    Gross - 117.5% 182.82/117.5 = 1.555915
    VAT -17.5% 1.555915* 17.5 =27.22851
    Net-100% 182.82-27.22851= 155.5915 or 1.55915*100

    They way your brother is calc'ing is on a Margin basis.
    i.e
    Gross =100% 182.82/100 to give 1% =1.8282
    VAT =17.5% 1.8282 *17.5 = 31.9935
    Net =82.5% 182.82-31.9935=150.8265 or 1.8282*82.5
  • sdvsdv Experienced Mentor Registered Posts: 585
    Hi all,

    me and my brother are having a discussion and ive got to the stage where im so confused i dont know which answer is right.


    for example... (forget roundings)


    He is saying..

    182.82 - VAT at 17.5% = £150.83 on a calculator

    150.83 + VAT at 17.5% = £177.21 on a calculator

    Im saying..

    £182.82 - VAT at 17.5% = £155.59

    £155.59 + VAT at 17.5% = £182.82

    Now ive given his a go on the calculator by putting in '182.82 - 17.5%' and it does equal the £150.83 so can someone give it a few minutes and work out the right suggestion, its doing my head in!!!

    Marcus

    This reminds me of a puzzle

    3 friends go to a pub.

    They all put in £10 each in a pot and a give it to a bar man to look after it.

    at the end of outing, the total of bill came at £25

    The bar man knew his customers. So that none of the friends (typical accountants) do not feen that their contribution to the pot was unfair, the bar man gave back £3 so that each friend will get back £1 each. He retained £2 as a tip.

    Reconciliation

    Cost to each friend ( £10 - £1) = £ 9 time 3 = £27

    £27 plus £2 retained by barman as a tip = £29

    But the bar man was given £30 to start with!

    where has the £1 gone?
  • JanJan Experienced Mentor Registered Posts: 654
    I'm sure you all know this one but - the £ 1 hasn't gone anywhere.
    Total bar bill = £25 plus £2 tip = £27

    Each friend pays £9 x 3 = £27

    The barman was given £30, less £3 = £27
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