On Mon, Oct 12, 2009 at 02:37:01PM +0100, James Taylor wrote:
On Mon, Oct 12, 2009 at 2:27 PM, Chris G cl@isbd.net wrote:
As a general point re this VAT rounding lark - the VAT rules say that you're allowed to *truncate* fractions of a penny. In other words if the VAT on an item you sell is anywhere between (say) 95.00000001 pence and 95.99999999 pence then the amount you have to send the VAT man is 95p.
*Lots* of accounting packages don't follow this rule though, I regularly had to adjust my invoices when I was a contractor because the agency paid me 1p more than my (truncating) software said was due.
I am not a lawyer or accountant, but from google (and Ive pasted the section below). From HMRC: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?...
I take this to mean you can do whatever you like as long as you're consistent - but you can only round down the TOTAL not the individual items (which might equate to more then a penny lost (consider 10 * 0.9p items = 0 p if rounded down separately and 9p if rounded at the end))
Yes, you're quite right, that was what applied in my case of course because the invoices I issued were for a single 'item'.
.... but note that the remaining complexities apply only "If you wish to work out the VAT separately for a line of goods.....". Thus if you simply add up the total cost of the invoice you can then add the VAT as a single item (truncationg if you want). This is what nearly all of the invoices I have ever seen do, you rarely see VAT itemised for each line of the invoice.
JT
----- Paste start -----
17.5 Calculation of VAT on invoices – rounding of amounts
Note: The concession in this paragraph to round down amounts of VAT is designed for invoice traders and applies only where the VAT charged to customers and the VAT paid to Customs and Excise is the same. As a general rule, the concession to round down is not appropriate to retailers, who should see paragraph 17.6.
You may round down the total VAT payable on all goods and services shown on a VAT invoice to a whole penny. You can ignore any fraction of a penny.
17.5.1 Calculation based on lines of goods or services
If you wish to work out the VAT separately for a line of goods or services, which are included with other goods or services in the same invoice, you should calculate the separate amounts of VAT either by rounding:
down to the nearest 0.1p - for example, 86.76p would be rounded down to 86.7p; or to the nearest 1p or 0.5p - for example, 86.76p would be rounded up to 87p. Whatever you decide, you must be consistent.
The final total amount of VAT payable may be rounded down to the nearest whole penny.
17.5.2 Calculation based on tax per unit or per article
If you want to work out the VAT per unit or per article (for example, for use in price lists), you must work out the amounts of VAT either to:
4 digits after the decimal point and then round to 3 digits - for example, if the VAT is £0.0024, it should be rounded to £0.002 (0.2p); or the nearest 1p or 0.5p. If you decide to do this, you must not round the VAT down to “nil” on any unit or article that is liable at the standard or reduced rate - for example, if the VAT is £0.0024, it should be rounded to £0.005 (0.5p).
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