VAT and Corporate Tax Working Out

Hi Guys

I often browse around this forum and never contribute much but i have a question regarding my workings out on the business i have which is VAT and LTD.

I suffer from dyslexia so would appreciate your simplified help as i have spent around 2 hours trying to work out very basic stuff!

Example

Total Sales in: £14424.54
Of which VAT: £2404.09
Expenses (Costs which can be claimed)
Total Expenses: £7409.47
Of which VAT: £1035.30
Realistic Expenses: £6374.17
VAT OWED:
£2404.09 - £1035.30 = £1368.79
Now to work out my profit before tax do I do this:
£14424.54 - £1368.79 = £13055.75 (Remaining Sales After VAT owed)
To Find Profit minus corporate tax:
£13055.75 - £6374.17 (Realistic Expenses): £6681.58
Then Corporate Tax deductions:
£6681.58 * 0.2 = £1336.32
Final Profits after tax:
£5345.264


Thanks

can anyone help me on this and confirm if i got it right?

Looks wrong to me - will post again tomo with details.

OK Here we go from a Chartered Accountant

Your VAT on sales is correct if all vatable at standard rate

Your VAT on expenses should be £1,234.91 (£7,409.47/120*20)

Not sure what you mean by realistic expenses? - Presume to mean net allowable expenses

To get to PBT, every figure must be NET of VAT

So in the above it would be net sales of £12,020.45
Less
Net Expenses of £6,174.56

To give a PBT of £5,845.89 upon which 20% CT would be chargeable - assuming there are no 'adjustments' such as non-allowable expenses (what HMRC wont allow you to deduct; depreciation, fines etc) and no Capital allowances claimed.

Hope this helps

Looks4u beat me to it!

Anyway using your own numbers (rounded) = £14425 less vat £2404 = 12021 less (7409-1035) 6374 (or your realistic exps figure)
= 5647 (or 12021-

Tax @ 20% = 1129

Looks4u , sorry not sure where your 6174 comes from

No Typo matey, have another read.............................

7409 - 1035 = 6374 not 6174? Where's the £200

Please put me out of my misery!

The VAT on his expenses is not correct, i have used the correct figure assuming all are vatable................................

Oh your re-calculating his VAT - I used his own figures...

You're assuming all of his expenses have standard rate VAT. Could be, could not be...

Did not want to complicate things

We accountants are a boring bunch!

Cheers

If you want a quote for the company accounts and tax I have a form on my website...

Hi guys my expenses are those which I can claim back legally. Obviously some of them are vat deductible and some are not this is why the vat on expenses is not 20 percent of the expenses.

My turnover and expenses and the vat calculated for both are correct it's just the working our afterwards I want clarification on as that is where I get stuck.

Cheers guys

Ok - in which case just take your NET sales and deduct your NET allowable expenses and that will give you your PBT. CT for small Companies will be 20% on that figure.

Note that you cant included depreciation in your allowable expenses BUT you can claim capital allowances on purchases of 'capital' such as plant, fixtures, motor vehicles etc

Ok so my method of working out the total sales(14424.54) - vat payable (1368.79) was incorrect it should be net sales (12020.45) - net expenses (6374.17) - this makes sense now.

And my last question is this:
As I am dealing with the VAT separately we have 2404.09 which is from sales and 1035.30 from expenses (claimable).
What I don't see is where the money is coming from when we owe the VAT man and he takes it out of our account.

I have always understood that what I owe the VAT man is 2404.09 but i can reduce this amount by taking away 1035.30 = 1368.79 owed. So would this amount owed be coming out the 2404.09 we've generated from sales - if so don't that mean we have money left over?

I'm surprised no one else has asked yet, but why are you VAT registered with such a low turnover?

We were hitting 75K pre VAT and had to register as our sales were going up. However as we hit it and our prices went up the sales went down and are only now starting to pick back up again. Another month and we'd of been over that figure.

Ah, makes sense.

Just realised i am being stupid! I owe VAT man 1368.79 after doing output - input VAT. I was getting confused by thinking that I had to generate 1368.79 from my profits like i do corp tax but actually makes sense now that you've already accounted for it by separating the VAT in the first place. The only way I would have money left over is if my Input tax is more than my output tax!


As long as my working out for my output tax is correct and the above of what I have explained is correct then I am happy - please confirm.
Something I used to do before was do 14424.54 * 0.2 to find my VAT which I was told was actually incorrect and found on the HMRC website it should be 14424.54 / 6.

If VAT is included you / by 6 or x 20/120.

The proof is this:

We know £100+vat = £120

£120 / 6 = £20