VAT Calculations - 1p Difference
07/07/15 - Ref A1194
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You Said"We have one job on the system which for some reason the VAT is a penny out.
I’m not particularly worried about the penny but Excel adds it up to 762.84 inc. VAT yet Job Tracker only adds it up to 762.83
The book keeper has picked it up and asked me what is causing the difference?"
We Said“As per the HMRC website there are two acceptable ways to calculate VAT. 1) Calculate VAT on an Item by Item basis.
2) Calculate VAT on the overall net amount. e.g. an item costs £1.13 and you sell 3 of them. Method 1 will calculate the VAT to be 0.68, Method 2 will calculate the VAT to be 0.69
The higher the price and the more items involved results in a greater difference. Job Tracker Pro uses the Item by Item approach as per method 1. Unfortunately, as HMRC, do not recommend one particular method there are occasions where processes differ.”