Rounding down VAT or not

RagDoll822

Hi there

I've recently been studying the Bookkeeping Access Level 1 course. In the study materials my learning provider made available to me, I've been told VAT is always rounded down to the nearest penny. However, I've recently come across this https://www.gov.uk/hmrc-internal-manuals/vat-trader-records/vatrec12030 which tells a different story. It also happened recently that when buying something online I noticed that the provider didn't round down the VAT charged to me. They rounded up! So now I'm now feeling confused as to what's the right answer! A bit worried as want to avoid including the wrong answer in my exam (happening next week) if any questions on this come up.

If anybody can and would be happy to help that'd be much appreciated!

Thanks for reading in advance.

Emma

davealucas

@RagDoll822 It actually depends. In the retail sector, you must round to the nearest whole number (so either up or down). In other sectors, the VAT can always be rounded down but most staff raising invoices don't realise that (mainly because they don't actually understand the rules).

RagDoll822

Very helpful to know. Thanks for taking the time to post that. I'll bear that in mind.

Krisso

I thought it said in the exam vat rounded down from memory. I could be very wrong about that though