In Sage 200, the VAT on the sales order is calculated using the total net amount entered for goods at each VAT rate. This is in accordance with the HMRC regulations.
This can create small differences between the VAT calculated for the total order and the VAT calculated for each order line. This is due to rounding differences, as VAT is calculated to two decimal places.
Add 2 items to an order. The first one for £10.43 plus VAT.
10.43 x 17.5% = £1.825. This is rounded up to £1.83.
The second one for £0.85 plus VAT.
0.85 x 17.5% = 0.148. This is rounded up to £0.15.
If you add the two lines together the total value is £13.26.
In Sage 200, the VAT on the order is calculated using the total net amount for the goods. This is £11.28.
11.28 x 17.5% = 1.974. This is rounded down to £1.97.
Therefore, the total order value is £13.25.
| Line net | Line VAT | Line total | |
|---|---|---|---|
| Item 1 | 10.43 | 1.83 | 12.26 |
| Item 2 | 0.85 | 0.15 | 1.00 |
| Total | 11.58 | 1.98 | 13.26 |
| Order net | Order VAT | Order total | |
| 11.28 | 1.97 | 13.25 |
There is a £0.01 difference between both calculations.
Note: If you sell goods at a specified gross price, we recommend you select Order prices include tax on the SOP Settings Order Processing tab.