Question 1

What is reverse VAT calculation?

Accepted Answer

Reverse VAT calculation (also called VAT extraction) lets you find the original pre-tax price from a VAT-inclusive total. You divide the gross amount by (1 + VAT rate). For example, £120 at 20% VAT gives a net price of £100.

Question 2

How do I calculate the VAT amount from a gross price?

Accepted Answer

To find the VAT amount from a gross (VAT-inclusive) price, multiply the gross price by the VAT rate and divide by (1 + VAT rate). For 20% UK VAT: VAT = Gross × 20/120. So £120 gross contains £20 VAT.

Question 3

Can I reclaim VAT I've paid on business purchases?

Accepted Answer

If you are VAT-registered, yes — you can reclaim VAT paid on business expenses (input VAT) against VAT you collect from customers (output VAT). You report the difference on your VAT return. Keep all VAT receipts as evidence.

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