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Calculating VAT
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Fri 04 May 2012 01:46 PM
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TinaC
Student
21 posts
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Hello,
I'm new to this forum, so I hope it's ok to ask a question. I've just started Manual Level 1 and have a quick question about VAT - are you supposed to round up or down when calculating VAT? I've seen it calculated both ways, so wasn't sure which way was correct.
Sorry, if this is an obvious question to ask. Thankyou Tina
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Fri 04 May 2012 01:50 PM
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Mandy S
No Membership
32 posts
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TINA
im quiet new to, just done level 1 manual.
there isnt a right or wrong for up or down, its preference - i found I was always out which ever way I worked it, my tutur advised set your calculation to 2 decimels then no rounded up or down required 
Good luck
Mandy
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Mandy S
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Fri 04 May 2012 01:58 PM
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Spark
Associate CB.Cert
96 posts
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Hi Tina,
The the manual level 1 exam it said to round down, so I would advise that. But yes i too have seen it either way and it is very annoying.
Good luck with your studying, I'm not on level 2.
Sue
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Fri 04 May 2012 08:02 PM
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Stardoe
Associate CB.Cert PM.Dip
Practice Licence
166 posts
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Hi there,
Strictly speaking VAT is supposed to be rounded down, (well that's what I was always taught...lol) but as you have noticed, it is commonly done both ways! Sage I think usually rounds up!
Pauline
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Sat 05 May 2012 10:58 AM
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gjbarber
Associate CB.Cert
2 posts
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Hi; another newbie here.........
I'm pretty sure that I made a rounding error in my Level 1 exam, but still cannot work out why. Perhaps I could ask my question via an example:
- If the net price is £1.01, then the VAT would be 20.2p & the gross would be £1.21.2. Clearly, these figures would be rounded down to 20p & £1.21.
- The reverse case is less obvious:
- Starting with the Gross price at £1.21, the normal maths would give us:
- Net price at £1.0083
- VAT at 20.16p
- So, the answers should be rounded:
- UP for the Net price to get £1.01
- DOWN for the VAT to get 20p.
Have I got that right? I'm pretty sure that's what I did in the exam (question was to calculate the Net from the Gross), but my answer was marked as incorrect.
Thanks
Graham
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Sat 05 May 2012 11:01 AM
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TinaC
Student
21 posts
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Hello,
Thanks so much for replies, I just wanted to check I was doing it right, it's confusing when you read to do something one way and then see it done another way!
Thankyou again,
Tina
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Sat 05 May 2012 10:27 PM
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KerryB
Member CB.Dip PM.Dip
268 posts
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There is a section under 'examinations' about VAT rounding;
http://www.bookkeepers.org.uk/Examinations/VAT%20Rounding
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www.berrybookkeeping.co.uk
My responses are based on my opinions, not necessarily facts.
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