Glenn any chance this could be implemented then? the calculation is fairly simple and i have not had the figure out, only one calculation the figure showed 1p more for VAT than it would have if done the reverse way or it was something i done but everything else worked fine
to calculate VAT from gross it is GROSS/((1 + VAT RATE) * VAT RATE)
to calculate net it is GROSS/((1 + VAT RATE) / QUANTITY)
We are not working on this area at the moment, we will revisit this and update the thread as and when we have the opportunity to take a good look.
I am really missing this feature too and would like to explain my reasoning.
1. Pricing
When pricing to customers excluding VAT, there are no issues. However the minute you need to price including VAT (basically in all B2C situation and some B2B ones too) you’re stuck. Imagine you’re selling a widgets for £2 including VAT. That’s the price you have on your posters and on your website. When people want to buy one, you need to send an invoice and enter the price as £1.6666666… which gets rounded to £1.67 which is not correct however not significantly in all cases (the higher the selling price the less significant the rounding error). Also, it looks odd (in B2C situations) on the invoice not to mention anywhere the selling price.
2. My Pricing
My business is to let people use my software and get a percentage on what they sell. If I advertise my commission rate as 2%, I need to enter 0.0166666… which gets rounded to 0.0167. This is not correct and leads to significant errors. It means that I need to decide my pricing based on what divides well by 1.2 - which is very restrictive and will be thrown out of the water if/when HRMC changes the VAT rate. That makes it extremely hard to live with.
3. Interface
I have read in this post that implementing this feature would require changing QF interface, adding an extra column for example. Looking at how other accounting software do it, it is not the case. In Quickbooks, you just tick a box, saying that your prices include VAT and no other fields or columns are required. All you need to know is found in the subtotal (excluding VAT), a VAT and a total (including VAT) lines. That’s how it would look like in QF:
4. VAT errors
I have read the various threads on the subject (including this one) and see that having a VAT inclusive invoicing would lead to rounding errors. Firstly, as explained above, not having VAT inclusive invoicing already leads to rounding errors. For example, if I take the same number used in the example above (2% commission on £10,000), I need to enter 10000 and 0.0167 which leads to a total of £167 and VAT of £33.40. That’s £0.07 too much VAT and £0.40 too much invoice total:
5. Competition
As pointed out before other accounting software do it for a reason - simply because it makes sense and it is (in my case desperately) needed.
I eagerly await your reply and hope that you will consider my points to reconsider implementing this.
Most of the points raised here seem to relate to extending the number of decimal points on the qty and unit cost field rather than the OPs question about enabling invoice totals to be keyed in as VAT inclusive amounts.
We need to put a sensible cap on the quantity rounding, we recently extended the QTY rounding to 4 decimal places, I’m not sure there’s a strong case to extend this further? The unit cost rounding is capped at 2 decimal places, perhaps this could be extend to 4DP, but I would suggest raising this on a separate feature request.
I’m sure we’ll always find certain users who want to push beyond 4DP but I think the vast majority of users will not require this functionality. Furthermore QF allows you to put whatever NET and VAT amounts in you wish. When you’re dealing with long decimals, I would suggest simply setting the qty to 1 (even hiding the column altogether if you like) then just set the NET and VAT amounts as required and enter the exact calculations in the description to show how the figures were deduced.
HMRC to my knowledge don’t mandate how rounding should be performed for VAT purposes and I’ve seen all kinds of rounding conventions on invoices I’ve received from my own suppliers. The key thing is that the convention used is consistently applied.
That’s just my 2p’s worth. Perhaps I’m seeing things from a different angle in the sense that I see how much development time and costs can rack-up from these micro-optimisations. Changing data-types can require significant recoding all over the application, not to mention the time required to run all the test cases and associated risks of getting things wrong.
Hello Glenn, thank you for your reply. The only point I am making is enabling invoices values to be entered inclusive (or exclusive) of VAT. Adding nth decimals is not the answer and for me entering calculations on each invoice every month would still need me to enter my calculation based on ex-VAT amounts which is the one things I want to avoid (for clarity to my customers and accuracy of calculations).
From where I stand I see that the only thing needed is how the invoice arrives at the subtotal and vat lines amounts. none of the fields data types would need to change (assuming you save records at invoice level rather that invoice item level).
Would you mind having another think about it? Also, I am happy to contribute to the cost of this development.
We would like to revisit this subject in due course. We’ve actually spent quite a bit of time recently with house-cleaning tasks. As soon as this is out of the way we can try to come up with some solutions and update you.
Hello Glenn, thanks for your reply and your wish to revisit this in due course.
I know it might be difficult for you to know but I need to get myself organised. Could you let me know the likely timeframe when something can be done? I mean, weeks? months? over 6 months? However approximate, it would be great for me to have an idea.
Provisionally I’d say about 2-3 months.
Hello Glenn, I look forward to seeing this implemented. Many thanks.
We’ve just dropped a new check-box into the invoice creation screen that will allow you to enter your line totals inclusive of VAT.
You can enter the quantity first, then the line total. Or you can just enter the line total and the quantity will default to 1.
Hopefully this will make VAT inclusive invoicing a little more straight forward.
I was so excited to see that you had come up with a solution. Unfortunately, it doesn’t provide any way to invoice with prices inclusive of VAT. As per @Stephen_Blakey initial post, charging £35 per hour will still be displayed as £29.17. In addition, there is a bug: when you actually type in “Gross Total” £70, the “Invoice Total” displays £70.01!!
What is required is the ability to enter the Unit Cost and Qty and tick (or not) an “Amounts inclusive of VAT” box. THEN the only thing the software does is calculate the correct Total, Sub Total, VAT and Invoice Total. See mock up of what would make sense:
The example in my demo screencast (scroll above) uses £70 gross with a quantity of 2. In your example above the VAT and sub totals do equal 70.01. I’m not sure however why the line total is £70, I’ve not been able to replicate this. Can you let me know what browser you are using (looks like Safari?) and the sequence in which you entered the figures?
Having gross amounts entered on the unit price unfortunately is not something we’re going to be able to do at this time. We did explore this option but the amount of refactoring required was much higher.
EDIT:
I see the issue regarding the 70.01 output. Please go into your “Account Settings” and click on the “Advanced Features” option. You need to make sure the following toggle is switched to ON.
