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Finance & Business · pattern A, Numeric fields

VAT added, removed, and reclaimed.

Enter a net amount and rate for the VAT and gross figure, with the reverse calculation and the net VAT position a business would report.

Inputs

The formula used

VAT = net × rate; net = gross ÷ (1 + rate)

VAT is charged at each stage of supply, with businesses reclaiming the VAT they paid on inputs. The net position is output VAT less input VAT.

VAT

200.00

Gross amount
1,200.00
Net from a gross figure
1,000.00
VAT within the gross figure
200.00
VAT fraction of the gross
0.16667
Output VAT less input VAT
120.00
Position
payable to the tax authority

Rates, registration thresholds, exemptions and scheme rules differ by country and change. Treat this as arithmetic practice, not as tax compliance.

VAT is collected in stages, not at the end.

Each business charges VAT on its sales and reclaims the VAT on its purchases, remitting only the difference — so the tax is paid on the value added at each stage rather than on the whole price once. The economic burden still lands on the final consumer, but the collection mechanism is what makes VAT harder to evade than a single-stage sales tax.

Questions about vat

Why is the UK VAT fraction one sixth?
Because 20% of the net is 20/120 of the gross, which reduces to 1/6. It is a useful shortcut for mental arithmetic.
What is the difference between zero-rated and exempt?
Zero-rated supplies carry VAT at 0% and allow input VAT recovery; exempt supplies do not allow recovery at all. The distinction matters considerably to a business.
Do I charge VAT below the threshold?
Only if voluntarily registered. Below the threshold registration is optional, and it can be worthwhile where most customers are VAT-registered businesses.

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