I keep mixing them up: when do I choose add VAT and when extract VAT?

The quick test: is the tax inside the number or outside it?

Every figure you handle either has not had tax added yet or already contains it. Add takes you from the first to the second; extract takes you back from the second to the first. Know which kind of number you hold and you know the mode.

Numbers that need add

• Your fee or price worked out for yourself before tax.
• A supplier price marked as excluding tax.
• The sum of quote lines before the tax line.

Numbers that need extract

• A price in your store that customers see including tax.
• The total on a receipt or purchase invoice you actually paid.
• A transfer from a customer or a marketplace, because it is what was paid in full.

If you are unsure which kind of number it is, look for wording like including tax or excluding tax on the document, or ask whoever sent it. Do not guess: a wrong guess is not something the calculator can catch on its own.

How the calculator shows a mistake

In the VAT calculator, the amount field's label changes with the mode: Net amount (before tax) for add, Gross amount (tax included) for extract. Read the label before you type. Then look at the result: the figure you typed shows up either on the net line or on the gross line. If it is on the wrong line, the mode is wrong.

Example: you hold a receipt totalling 100. In add mode you will read a gross of 115, which is impossible, since the receipt says you paid 100. Switch to extract and you get the right answer: net 86.96, tax 13.04.

A way to remember

Add makes the number bigger; extract makes it smaller. If you expect the answer to be larger than what you have, you want add. If you are looking for a part of a figure you already know, you want extract. And when building an invoice in the Basic invoice generator, lines go in before tax, so if your prices include tax, extract them first.