Quote:
Originally Posted by pete
I guess it's that you owe the VAT out, less the VAT in you paid when you bought. But does that mean you have to track that on every purchase? You have six identical items in stock, which you bought at six different costs, so you have to keep up with the VAT you paid on each individual item? Or can you average it out as you would the cost, using "average cost" in an accounting system. Can you use "average VAT"?
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It is a lot more simple as your purchases are already tracked via your suppliers invoices and your own invoices.
Regardless of the price you pay, each invoice will have the VAT amount as a percentage. That is the amount you claim back.
As for your sales, the same applies. Everytime you invoice a customer the VAT amount is automatically calculated and displayed.
It is then just a case of Sales VAT minus Purchase VAT.
You can also claim the VAT amount on all company purchases such as rent, computers, professional services and generally any business costs or business purchases.