Problem with VAT calculations?

1

Hi All

I am experiencing the following issue.

My VAT rate is 23%. I have updated this in the settings.

When creating a sales invoice the VAT is calculating at 18.6% instead of 23%. I’ve attached an example too.

My calculations show the VAT is €1.15 per item, with an overall total of €2.30. Instead it’s showing €1.86 as the total.

I have deleted out the VAT settings & re-instated them. I’ve deleted this invoice & re-created it a number of times too. I can’t get my head around why it’s not calculating correctly. I’ve also tried inputting 1 item on the invoice to no avail.

I saw there was a previous question about this, but not concrete solution. I’m hoping there is one now, as I love the software, but need the VAT to calculate correctly.

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2

Your sales invoice is set to VAT inclusive. Just uncheck that and it will work fine. ( Amounts are Tax Inclusive ). Just uncheck that. Or if you have set it to default change the settings.

3

Not that it would affect your VAT calculations, but it also looks like your version of Manager should be updated, based on the fact that the Item column shows. That was eliminated some time ago, since it was meant as an aid for invoice generation, not as something to show to customers. What version are you using?

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4

My VAT is inclusive, as it’s second hand goods I’m selling & I’ve to pay VAT on the profit instead of the whole amount.

Manager 16.2.58 is the version I am using. I’ll update it now, thank you for your advice, I’ll see if that fixes the problem.

5

I’m now using Manager 16.3.54

The only way to have it correctly apply the 23% VAT rate is to put 23% in the box called “Withholding Tax”
Screen shot attached.

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Otherwise I still get the mis-calculation. That I was experiencing in my first post.

6

If you are using Vat inclusive, that means the Vat is part of the Product price - 4.07 + 23% = 5.00 (Vat = .93)
If you are using Vat exclusive that means the Vat is in addition of the Product price 5.00 + 23% = 6.15

Your original setting and invoice were correct - 2 X 4.07 X 23% = 10.00 or 5.00 each therefore = Vat 1.86.
Vat is calculated as an addition to the product price not a deduction from the product selling price. By trying to show 2.30 you would be “overpaying” your Vat Liability

To calculate your Vat amount on a product selling price multiple by 18.6% - 5.00 x 18.6% = .93
23% on a product price = 18.6% off a product selling price - in your case both = .93 on 5.00

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7

Withholding tax is not VAT. Do not use it as a substitute for VAT.

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8

Thank you for this.

After reading your reply, I’ve realised that the part of the reason why it’s not calculating is that my VAT is calculated on my profit less purchase price, instead of on full amount, due to the fact I sell second hand goods.

I think the only way around this for my situation is to keep an excel spreadsheet to calculate VAT.

Thanks to everyone for their replies!

9

VAT is calculated on the amount you are charging to customer. Always. Manager knows nothing about “second hand goods”

VAT per item should be 0.93 EUR, exactly as Manager says.

Have a look at this Wikipedia article: Tax rate - Wikipedia

It is pretty much what @Brucanna is talking about.