VAT has me confused.

[kittycole]

I'm not long self-employed and the vat thing really has me confused. I provide a service and am obliged to add 13.5% to my labour bill. that much i know. i also provide materials and pay 21% on them. the bit that confuses me is. do i add my materials plus labour and then add 13.5% or what? if someone could explain i'd be extremely gratefull.

 

[mathepac]

Who suggested you charge VAT at 13.5%? This issue has been covered many times here, try using the search facility.

 

[kittycole]

had a look, you seem to know a thing or two about it. but if i may, where did the figure 17.35 come from in your previous post, and do you think a 10% up mark is acceptable?

 

[mathepac]

...

Materials purchased 100 inc 17.35 VAT

Net Materials cost 82.65
Add Margin 10% 8.26
SubTotal Materials 90.91
Labour 100.00
SubTotal 190.91
VAT @ 13.5% 25.77
Invoice Total 216.68

VAT Return
VAT Charged to Customer 25.77
VAT Paid on Purchases 17.35

VAT Due to Revenue 8.32

HTH

Do you mean this calculation? If so then the invoice total of 100.00 for materials purchased in the example will break down as follows :

Widgets Total : 82.65
VAT @ 21% : 17.35
Invoice Total :100.00

 

[mathepac]

But the question remains unanswered :

Who suggested you charge VAT at 13.5%?

 

[imeldaduff]

My understanding is that goods purchased (supply only)are levied at 21% but when supplied and fitted the rate levied is 13.5% of the total amount. So you are the collector of 13.5% = 25.77 and you deduct the amount you paid in VAT already = 17.35 and the balance of €8.42 is due to be paid by you to the Revenue.

 

[kittycole]

I checked it up on the revenue website. would you think 10% mark up is standard?. I now have a better grasp of it, thanks so much for your help.

 

[mathepac]

My understanding is that goods purchased (supply only)are levied at 21% but when supplied and fitted the rate levied is 13.5% of the total amount...

As posted previously, not necessarily, the 2/3rds rule applies.

If 2/3rds or more of the invoice total excluding VAT consists of goods supplied, than the applicable rate is 21%.

If you supply professional services only, (accountant or solicitor for example) then the applicable rate is 21%.

 

[mathepac]

... would you think 10% mark up is standard?. I now have a better grasp of it, thanks so much for your help.

No - this was a simple illustrative example, as it says in the post.