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Complete your VAT calculations here quickly and simply. Enter the amount of VAT you want to add or subtract on the calculator. This will then instantly provide you with your own ‘forwards’ or ’backwards’ VAT element. The standard rate of VAT in the UK in 2019 is 20%.
Businesses registered for VAT must pay HMRC a specific percentage of the income they receive from ‘taxable supplies’. This includes the selling of assets, business sales, and commission.
Multiply the net amount by 1 + VAT percentage (i.e. multiply by 1.15 if VAT is 15%) and you’ll get the gross amount.
You’ll need to pay a certain amount of VAT to HMRC, even if you didn’t charge VAT to your customer. This is why it’s crucial you know a) what goods or services to charge VAT on, and b) how much VAT needs to be charged.
Adding VAT is fairly straightforward. But what if your price already has VAT added and you need to work out the original value? This is where calculating VAT ‘backwards’ comes in.
Divide the gross amount by 1 + VAT percentage (i.e. if it is 15%, then you should divide by 1.15)
Unfortunately, working out VAT backwards isn’t quite as simple, so it’s always best to double check against handy online calculators at all times.
It is difficult to clearly determine the true origins of Value Added Tax.
It is officially recognised that the concept of VAT was first presented on April 10, 1954 by French engineer Maurice Laure.
It is worth mentioning, however, that this system was also mentioned by the son of the telecommunication magnate Dr. G. von Siemens in his works from 1920.
A tax of similar construction was also introduced in Norway in 1940 with a rate of 10%.
It is known, however, that since the inception VAT has become a very important tool of taxation and to this day is a significant source of income for many modern economies.
Over the years, VAT has been gaining popularity.
It was introduced successively in many economies around the world, eg Denmark (1967), United Kingdom (1973), Mexico (1980), China (1984), New Zealand (1986), Canada (1991), Australia ( 2000) or India (2005).
The increased interest in this form of taxation probably resulted from its two basic advantages:
1: VAT charges consumption, not production.
2. In contrast to the tax on profits, VAT is relatively insensitive to economic crises.
Right now, VAT faces a significant crossroad. With mass digitalisation, the economy faces both opportunities and obstacles ahead.
In the near future, authorities can utilise Big Data and Artificial Intelligence analytics in the struggle against fraud and tax avoidance.
Using these innovations also brings a more efficiently run process for taxpayers too.
However, digital business structures also provide challenges to the tax authorities, which many countries are already exploring now.
The ever-increasing trend of e-commerce, the huge rise in digital content sales, the ability to create strong anti-fraud measures, and the development of VAT management – have vast repercussions on VAT regulations and means that the future is shrouded in mystery.
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