If turnover includes P&P, do you deduct P&P expenses when calculating gross profit?
My client is on a VAT Flat Rate scheme, so I calculated her turnover including postage payments. I.e. customer paid for the product plus P&P, so I've used the total price when calculating for VAT.
I now need to work out her gross profit, which I understand is sales minus product purchases, but should I not minus the P&P costs too? In view of the fact that they have been included in the sales?
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We deduct carriage costs (both for goods arriving and leaving) prior to reaching our 'definition' of gross profit.
But we do have a fair bit of it, so it is a variable cost, and fits well there.