Vat Question

seamis60

Hello all
Here is my question
I purchase a product from my supplier EX Vat €1044
I now have to travel up country to install say diesel €100 install fee €250
Total now €1394

I now have to give final price to the customer plus 23% Vat = €320.62
Final Price: €1394 plus €320.62 = €1714.64

Is this the right way to work this price out with vat

DubTony

Yes.

But your basic addition is a little on the dodgy side.

Homer

You haven’t included any margin for yourself on the product? Other than diesel
And installation?

seamis60

Thanks for the replies

Here is an example of what im trying to figure out

From Supplier
Net €442.60
Vat €101.81
Total €544.41

I will go and install this unit
Diesel costings €100
Labour €350

Is my total to the customer
€544.41
€100
€350
€994.41 plus 23% vat €228.71
Total to Customer including vat: €1223.12

Binka

You can use the two thirds rule on a supply and fit service. If your labour is more than a third of the total price of the job you can charge the whole thing at at 13.5%. It makes it cheaper for the customer if they are not vat registered.

The_Chap

seamis60 wrote: »

Thanks for the replies

Here is an example of what im trying to figure out

From Supplier
Net €442.60
Vat €101.81
Total €544.41

I will go and install this unit
Diesel costings €100
Labour €350

Is my total to the customer
€544.41
€100
€350
€994.41 plus 23% vat €228.71
Total to Customer including vat: €1223.12

You can charge what you like to the customer, It’s up to you how you calculate it

seamis60

Thanks The Chap
Its just some people have said that i should be using the €442.60 figure then add diesel labour and vat

The_Chap

seamis60 wrote: »

Thanks The Chap
Its just some people have said that i should be using the €442.60 figure then add diesel labour and vat

Doesn’t matter what figure you use, you just need to account for the vat on the sale amount at the correct rate for the type of sale

The only decision on which figure is will the customer be happy to pay

Another way to look at it is what if you weren’t vat registered, how would you price it....

seamis60

Thanks i understand
But say i use the net figure of €442.60
how does the supplier then get his vat

thats the bit that confuses me

yes id sooner use this figure

New Price
€442.60
€100 diesel
Labour €350
Vat €205
Total price to customer €1097
Could i use this scenario?

The_Chap

seamis60 wrote: »

Thanks i understand
But say i use the net figure of €442.60
how does the supplier then get his vat

thats the bit that confuses me

yes id sooner use this figure

New Price
€442.60
€100 diesel
Labour €350
Vat €205
Total price to customer €1097
Could i use this scenario?

You could of course, you will still have to pay the supplier the net plus vat amount, that is separate from your selling price

Your revenue return would then include both the Sales vat and purchase vat

seamis60

its confusing
Whats the normal way to go about pricing
im probaly doing things wrong

it just seems to me,if its a larger job, and at the end,i add the vat, and its extra €500 or €600 that customer wont purchae

The_Chap

seamis60 wrote: »

its confusing
Whats the normal way to go about pricing
im probaly doing things wrong

it just seems to me,if its a larger job, and at the end,i add the vat, and its extra €500 or €600 that customer wont purchae

It’s a fine line alright between charging enough to be worth it and not too much that the customer won’t pay, ultimately, everyone pays vat somewhere

seamis60

Thanks for your help The Chap

seamis60

Thanks Binka

StupidLikeAFox

I would try think in terms "ex VAT". So if you are buying for 150 ex VAT and selling for 200 ex VAT then you are making 50 profit, which is an easy sum to do.

In reality what you need to do is pay 184.50e (150 + 34.50 VAT) and charge 246e (200 + 46 VAT). This leaves you with 61.50e in your pocket.

When you do your VAT return you subtract the VAT you have paid from the VAT you charged (46 - 34.50 = 11.50) and when you pay this from your 61.50 you are left with the e50 profit.

Essentially the VAT depends on the profit you decide to add on, which could be described as a measure of the "value you add", hence where the name comes from

jasper100

You might be better off if possible getting the customer to purchase the product directly from the supplier (unless you are adding margin to that) and just charging your labour and diesel.

Otherwise you could be stung for not just your labour and diesel but the cost of the unit as well.

A tradesman does work for me and that's how it goes. He gives me a list of materials, price and a reference number, then I ring the supplier and pay for the materials.

That way the tradesman is not on the hook for materials in the event I go tits up.