Hello there, d-phillips. I'm here to clarify things about why your VAT is being calculated at 0.33p.
The calculation of the Exclusive of tax and Inclusive of tax are different from one another. QuickBooks Online calculation is also based on the His Majesty's Revenue & Customs (HMRC) Value-added tax (VAT), which is the national taxing authority of the United Kingdom.
For the Exclusive of tax, we simply add the % rate value to the base amount. For example, £2 as the base rate + 20% value of the £2 (0.4) = 2.4
Meanwhile for the Inclusive of tax, here's how it's calculated:
100% value (1.) + the 20% VAT value (0.2) = 1.2
We'll use this to get the inclusive base amount and the calculated tax.
Next, to get the base value, we just need to divide the Price value (£2) over the calculated inclusive tax value: £2/1.2 = 1.67
The remaining amount will be the calculated inclusive tax value: £2-1.67 = 0.33
Moreover, you can visit this article to learn more about creating new tax rates: Set up and edit VAT settings, codes and rates in QuickBooks Online.
Please let me know if you have more concerns about VAT in QuickBooks Online. I'll be around to help. Stay safe!
