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Post Info TOPIC: Rounding VAT up to nearest penny
new start up


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Rounding VAT up to nearest penny
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So lets see. I have Non VAT invoices from VAT registered companies. You know companies like Argos, B@Q and ASDA. And they dont list sub total "with out vat" and they dont list "the vat only". they only list "the grand total"

So an example is total on bill = £69.99 so to work out price with out VAT the equassion is divide by 6 then times it by 5 =  £58.325

Now when I was at school we where told if its 0.5 or above you round it up and if its below 0.5 you round it down

Is this the same with VAT or not? How would the Inland Revenue view this?

Thanks



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Shamus


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The rounding still works out to £69.99

i.e.
69.99 *1/6 = 11.67 or more precisely 11.665 VAT
69.99 /6*5 = 58.33 or more precisely 58.325 Sales Price excl. VAT
11.67+58.33 = 69.99
11.665+58.325 = 69.990
any alternate rounding, up or down, and you would end up with a penny difference.

The calculation of VAT is officially recognised by HMRC as *1/6 so they're cool with it.

All the best,

Shaun.



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Shaun

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new start up


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Ow I see then yes you would be a penny out of balance for the total sum if you rounded the VAT upwards in favor of paying more VAT to the inland revenue
Reason I ask as I have just done my first colum and
sub total is £397.34
VAT                £79.44
Total            £476.78

20% of £476.78= £79.463r -£79.44 = £0.023r short fall in VAT



-- Edited by new start up on Tuesday 8th of February 2022 09:15:35 PM

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Shamus


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new start up wrote:

Ow I see then yes you would be a penny out of balance for the total sum if you rounded the VAT upwards in favor of paying more VAT to the inland revenue
Reason I ask as I have just done my first colum and
sub total is £397.34
VAT                £79.44
Total            £476.78

20% of £476.78= £79.463r -£79.44 = £0.023r short fall in VAT

Yep, the calculation of VAT is (potentially) wrong in the above.

VAT on £476.78 is 79.46 (actually £79.4633). so the excluding VAT figure should be £397.32.

HTH,

Shaun

 



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Shaun

Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
new start up


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I know its only tuppence but people file law suites for less then that
So was just making sure that it was OK with the accounts of the treasurybiggrin

Thanks



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Shamus


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Oh, you're talking to the right person about thngs needing to be spot on.

First time I used VT Transaction+ I was out by 9p... I spent a week tracking it down but I found the bugger eventually.

I come from a background in banking where we work to 16 decimal places on around £450 billion throughput per day throughput with specific points where rounding issues need to be accounted for against expected average loss/gain, so yep, if its  penny out it matters to me on the comparatively small amounts of money we play with.

Used to drive a couple of the members here up the wall that I need everything to be exact, to the penny, where for many there or there abouts is acceptable.



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Shaun

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