VAT rounding down-but it doesn't' work?!
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Do224
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!
Help 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!
Help please
0
Comments
-
£845.856, so rounded up to £845.56
Should you not round this down too so that you are consistent with your workings?Personalised Lessons from the Comfort of Your Home
hello@simplylearnfinance.co.uk
www.simplylearnfinance.co.uk0 -
@SimplyLearnFinance is correct, you always round down (except in a retail environment).1
-
Hi
Its 845.856 rounded down is 845.860 -
@paulawelsh £845.856 rounded down is £845.85. You have just rounded up!1
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Thanks all. So it sounds like the gross figure is always rounded down too0
-
Hi,
Yes, Its £845.856 rounded down is £845.86.1
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