VAT calculations on sales orders and invoices

Rounding differences on sales orders

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.

Note: If you sell goods at a specified gross price, we recommend you select Prices include VAT on the SOP Settings Processing tab.

  1. Add 2 items to an order.

    • The first one for £10.43 plus VAT.

      10.43 x 20% = £2.086. This is rounded up to £2.09.

    • The second one for £0.83 plus VAT.

      0.83 x 20% = £0.166. This is rounded up to £0.17.

    • If you add the two lines together the total value is £13.52.
  2. In Sage 200, the VAT on the order is calculated using the total net amount for the goods.

    • Total net amount is £11.26.

      11.26 x 20% = 2.252. This is rounded down to £2.25.

    • Therefore, the total order value is £13.51.
      Line net Line VAT Line total
    Item 1 10.43 2.09 12.52
    Item 2 0.83 0.17 1.00
    Total 11.26 2.26 13.52
      Order net Order VAT Order total
      11.26 2.25 13.51

    There is a £0.01 difference between both calculations.

Notional VAT effects on order and invoice totals

Note - information

This feature is only available from Sage 200 Professional Summer 2019 version onwards.

Notional VAT is tax that should be declared on invoices, but is not payable, nor can be claimed back.

When you use notional VAT rates on orders and invoices, this will affect the VAT, Gross, and order/invoice Total as follows:

Note - information

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