Tax Calculations

cblakey

Hi all,

I seem to have got myself confused while studying Indirect Tax.

In what scenarios are the following calculations used, with standard rate VAT being used;

£100 * 120 x 100 = £83.3333

£100 x 0.2 = 20

CeeJaySix

The first is when you are given the gross amount and asked to calculate net (gross is 100% plus 20% VAT = 120% - therefore divide by 120 then multiply by 100 to get back to net value).

Second is when you are given net amount and asked to calculate gross.

cblakey

Thank you very much. I had a feeling there was a simple explanation.

I blame baby brain.