How do I know when to use the VAT proportion of the consideration (20/120) and the VAT rate of 20%. Am confused please help.
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VAT
When an item is VAT Inclusive, you want to use 20/120 which is the same as 1/6.
When an item is VAT Exclusive, you want to use 20%.
You would use those 2 calculations in determining your VAT Payable or Refundable when doing your VAT Computation.
accachris is correct, it all depends on whether a figure is given VAT inclusive or exclusive. The question will clearly state this.
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