Need help understanding VAT - Any Quantity Surveyors?

Legacy_user

I'm hoping someone may be able to help me with this query although its doubtful.

Basically, I work as a trainee quantity surveyor and have had difficulty understanding VAT when it comes to purchasing items from suppliers. Everytime I get an invoice through, different accronyms and abbreviations are used.

Here's one invoice that threw me today. Its a purchase for a steel grill -

Total - £548.58

Total Nett EX Works Carriage - £548.58

Carriage - £40

Price Nett delievered excluding Vat - £588.58

Are there any quantity surveyor's in the house who can help me understand this? My manager should really be the one explaining this to me but he is a bit of a grump at the best of times and I don't feel I can really ask him anything technical as he does a bad job at explaining anyway.

bengalknights

Alot of companys will always show carriage as a seperate line to goods/services purchased VAT is only calculated on the full net amount which includes all services/goods plus carriage and any other charges.

The VAT amount on this invoice should be £103.01 for a total invoice value of £691.59 (figure rounded up)

00ec25

ex works simply means this is the price for the item sitting at the factory gates awaiting delivery.

net/nett can be confusing as it may mean either nett (ie after deducting) of all discounts from the list price to give the discounted price, alternatively, net may also be used to mean net of VAT - ie excluding VAT, so VAT has to be added on to give the gross price. However, used in the context of your example it refers to a list price since the VAT is clearly applied later hence the bottom line cost is stated to exclude VAT

the carriage is the carriage

the net price including carriage is obviously £40 more than the ex works price

the total value of the supply is £588.58 excluding VAT. therefore you add 17.5% to 588.58 to get the gross price including VAT.

It is normal in construction to quote all prices as net (nett) - ie excluding VAT. You would only calculate the VAT on the bottom line total cost when all other costs have been included

System

Thanks so much guys!! I understand it perfectly now!