# VAT rounding down-but it doesn't' work?!

Registered Posts: 3
Can anyone shed any light on this please......

My tutor and my textbook (Osborne) both tell me that VAT should always be rounded down. So how do you explain this;

Example:

Net value £704.88

VAT @20% is £140.976, so rounded down to £140.97

Gross value is £704.88 x 1.2= £845.856, so rounded up to £845.56

But..........Net (704.88) + VAT (£140.97)= £845.85! It's a penny different!

• Registered Posts: 17
£845.856, so rounded up to £845.56

Should you not round this down too so that you are consistent with your workings?
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• MAAT Posts: 139 Dedicated contributor 🌟 🐵 🌟
@SimplyLearnFinance is correct, you always round down (except in a retail environment).
• AAT Student, AATQB Posts: 14
Hi
Its 845.856 rounded down is 845.86
• MAAT Posts: 139 Dedicated contributor 🌟 🐵 🌟
@paulawelsh £845.856 rounded down is £845.85. You have just rounded up!
• Registered Posts: 3
Thanks all. So it sounds like the gross figure is always rounded down too
• Registered Posts: 2
Hi,

Yes, Its £845.856 rounded down is £845.86.