DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Need ability to change VAT amount


#1

I seem to be getting a lot of invoices where the VAT amount is one penny less than what Manager is calculating. I understand that Manager calculates per line and a lot of companies calculate on the subtotal although a lot of companies seem to be rounding down regardless of whether the VAT should be rounded up or down.

However, quite a few invoices only show the ex vat amount for each item, so I have to either manually calculate the VAT inclusive amount for each item or I have to alter the ex vat cost of an item(s) down by a penny or two to get the amounts to balance.

I would honestly find it simpler to be able to directly edit the vat amount from £19.98 to £19.97 on the purchase orders and purchase invoices as it is always the VAT amount that differs between the two invoies not the item costs. Would it be possible to allow Manager to do this as this problem is driving me nuts


#2

Let’s find some other solution. Ability to change VAT amount will make people abuse it. This could make people lodge their VAT returns with “weird” figures which could expose them to unnecessary audits.

Perhaps what I could do is that if you find yourself 1 pence short. Then add that extra line item for this one pence. Select VAT tax code and Manager will put this 1 pence to VAT rather than leaving it in Suspense or whatever account you have used on line item.

I don’t think this would be more effort than overriding VAT amounts. Thoughts?


#3

I do agree with your basic premise. One should not be able to alter the VAT amount as in best practice. Allowing people to fiddle with the VAT amounts would be a bad practise, so I have no objection to finding a solution that addresses my issue without introducing bad accounting concepts.

Just so that I am clear, the problem is not that I am one penny short on the VAT due, but rather I am one penny over.

For example the supplier says I paid 21.66 VAT but manager says I paid £21.67 VAT so my total invoice says £130 whereas their invoice says £129.99 so I need to remove a penny rather than add a penny!

I will ask my accountant what he recommends.


#4

This may not be the correct way but just thought I’d say…
To get my purchase invoices to mirror my suppliers, on a line item, I add a 0.01% discount (or what ever is needed to get it to match) so I loose the penny.


#5

I will have a look at that and see how that works out. My chief complaint with my current method at the moment is that I am altering the ex vat prices on my purchase invoice so it doesn’t match the actual price. Maybe adding a “discount” might be a better solution. I was thinking of maybe having a special VAT income and VAT expense account where you could have VAT rounding? I don’t know what other accounting programs, but this program is not unique to Manager. Other accounting programs must face the same issue.

My concern for me is I am effectively implementing a hack to the get the amounts to balance but it distorts my inventory costs as the amount I am actually paying for inventory and the amount I am paying on paper are now differing. This is not a good solution in my opinion.

I like the suggestion that Lubos of creating a line to add the penny, but the problem is I need to remove the penny, not add it!


#6

Lubos’es way sounds the proper way. I just added a tiny discount to loose the penny. It generally reduces my inventory item by a penny which I’m not fussed about, just want Manager and invoice to match.


#7

What surprise me is that nobody else has ever requested this issue be addressed. I would have thought that a lot of people would have issues balancing the 1 cent/penny. Maybe I just complain too much :smile:


#8

I don’t think it’s such an issue. First of all, this can only happen if you are entering purchase invoices with amounts as tax-exclusive (default is tax-inclusive), have multiple line items, using tax codes and your supplier is using an accounting system which is not rounding tax amounts per line item (all major accounting packages that I know of apply the same rounding rules as Manager though)

Then and only then, there is a possibility, the total of purchase invoice in Manager won’t match the total on purchase invoice from supplier.

If that happens, then you can always reduce or increase the invoice total by one cent/penny by simply adding one more line item.


#9

You misunderstood me. I meant that a lot of people must have this issue where their suppliers are not rounding the amount correctly. I realise that Manager is no different from other accounting programs in that respect. The problem is that manager is rounding correctly, quite a few suppliers are not!

I did’t realise that you could remove a penny. What expense/income account would I put the penny under? I don’t see VAT tax under income or expenses.


#10

Can I bump this topic up? I am not sure how to credit the VAT account on a line. I can’t select VAT tax under income or expenses?


#11

You cannot directly debit or credit VAT tax account from sales invoice. This is on purpose.

Are you worried about overstating VAT by 1 penny? That’s not an issue. Simply increase or decrease the amount of any line item by 1 penny to make total in Manager match the original purchase invoice.


#12

Oh I see, I misunderstood what you are saying. What you are saying is if I have two items on the purchase order, I should alter one item by a penny up or down on one of those two lines. I was under the impression that you meant to create a third new line and add/remove a penny on that line - but I didn’t know which expense/income account to allocate the third line to! I follow now.


#13

You can either alter the amount on existing line item or add one more line item to account for that 1 penny difference. And what account to select? You can create Rounding adjustments expense account and allocate 1 penny there.

I would recommend to just alter amount by 1 cent on some existing line item so your general ledger doesn’t get polluted with these 1 penny transactions.


#14

I have faced this problem a few times as well. By default, I enter invoices with tax-exclusive amounts. When I have a penny/cent difference, I switch to tax-inclusive amounts. I can’t recall for sure, but I believe that in all cases this fixed the difference.


#15

The problem with using tax-inclusive is that i have to manually convert the ex vat prices to inclusive as a lot of my suppliers do not show the inclusive price of the product item. So tax-inclusive does not really work for. The simplest method I have found so far is to take a penny or two of one of the line items to get everything to balanc.