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:
Secondly you are allowing VAT amount to be overridden on sales invoices which allows me to change what I pay HMRC and consequently create VAT differences (= “errors”). I conclude from all this that these rounding errors do not matter to HMRC and probably even out.
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.