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This text refers to program version 4.0  

Item Formulae when Prices include VAT

Prices in Invoices, Orders and Quotations will include VAT in two circumstances:

1. You have specified in the Account Usage S/L setting in the Sales Ledger that Base Prices include VAT.
   

2. An individual Invoice, Order or Quotation uses a Price List that includes VAT.

In the example Invoice illustrated below, an Item has been sold for 100.00 including VAT. The figure of 100.00 appears in all Price fields:

If an Item with an Item Formula is added to this Invoice, you can specify whether the Item Formula calculation is to use the Price including VAT or the Price excluding VAT. Make this choice using the Item Formula check box in the Item Settings setting in the Sales Ledger.

In this example, the value of the Freight Insurance will be 10% of the total value of the other Items sold. If the Item Formula check box in the Item Settings setting is off, the Item Formula calculation will use the Price excluding VAT:

The value of the Freight Insurance is 8.51 (100 less VAT is 85.11. 10% of 85.11 is 8.51). The 8.51 figure itself includes VAT.

If the Item Formula check box in the Item Settings setting is on, the Item Formula calculation will use the Price including VAT:

In this case, the value of the Freight Insurance is 10.00 (10% of 100.00). The 10.00 figure itself includes VAT.

The Item Formula check box in the Item Settings setting is only used where prices include VAT as described above: it has no effect in other circumstances.

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