In Caterbook, room rates and extras pricing are entered including VAT, to simplify the price guests will pay. HMRC provides guidelines on how to calculate the VAT due on invoices in this situation, where "rounding" may be required as the maths involved doesn't give neat, whole-pence values.

Caterbook will calculate the VAT on each individual line of an invoice, based on the Total of the Inc VAT price multiplied by the quantity. We then work out the Ex VAT total, and where necessary round up from 4 decimal places to 3, and again to obtain the "pence" value. We then subtract the Ex VAT total from the Inc VAT total to arrive at the VAT due for that row.

Each individual line's VAT will then be summed together to get the total VAT due for the invoice, and as a result of rounding it is possible that the VAT due is a few pence "out" when compared with calculating the VAT by working backwards from the total value of the invoice. This is perfectly normal and accepted practice.

By way of example, at the current 20% VAT rate :

Qty |
Inc VAT |
Total |
Ex VAT = (Total / 6) * 5 |
Ex VAT Rounded |

9 | £9.99 | £89.91 | £74.925 | £74.93 |

VAT due on this row is then £89.91 - £74.93 = £14.98

In contrast, if we were to calculate the VAT directly from the invoice total by dividing by 6 we'd get :

£89.91 / 6 =£14.985 which would round to £14.99

For reference, we are calculating this in the same way as the accounting software Xero calculates VAT on line items with VAT inclusive pricing.