Do I add VAT to existing prices or include it within existing price?

Accounting
1

Hi all,

Just a quick question regarding VAT.

I’ve newly gone VAT registered and am starting to create invoices showing the VAT.
I know i am to select which rate of VAT is charged per product line which adds the VAT to the product value however which of the following do I do?

Existing Product = £100 (before going VAT registered)

  1. Charge £100.00 + VAT = £120
  2. Charge £83.33 + VAT = £100

Is it down to me which I do?

Regards

Tony

2

your call, if you want to reduce net price for lower profit then option 2

3

I suppose my customer can claim the VAT back themselves…

However for products i’m already supplying at agreed rates would you opt for option 1 or 2?

My customers are all VAT registered.

Regards

4

If they are VAT registered, I don’t suppose you adding VAT on or not would make a difference (seems technically the value would be the same before and after), so I’d go for option 1.

If the clients weren’t VAT registered, I’d opt for option 2.

5

I’d second that. I had the same deliberation when I went VAT registered, most of my clients were VAT registered so option 1 effectively made no difference to them at all.