How Tax Values are Calculated

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Overview

NOTE: that HM Revenue & Customs require that VAT is calculated on the basis that the buyer will take any discount offered for early settlement.

Tax Analysis & Tax Total for a Document

The system will use one of two possible methods to calculate the Tax Analysis & Tax Total for a document.

They are described below :

Tax Calculated at Line Level - No

1.	The Extended Values of document lines having the same Tax Rate are summed to give the Tax Analysis Taxable Values – one for each Tax Rate.

2.	The Tax Analysis Taxable Values are decreased by any Settlement Discount percentage and the results (rounded to the nearest 2 decimal places) are the Discounted Tax Analysis Taxable Values (not displayed).

3.	The Tax Rate percentages are applied to each of the Discounted Tax Analysis Taxable Values and the results rounded (up, down or to the nearest 2 decimal places - according to the setting for your organisation) are the Tax Analysis Tax Values.

4.	The Tax Analysis Tax Values are summed to give the Total Tax for the document.

Tax Calculated at Line Level – Yes

1.	The Extended Values and Tax Values (see below) of document lines having the same Tax Rate are summed to give the Tax Analysis Taxable Values and Tax Analysis Tax Values.

2.	All Tax Values (see below) calculated for document lines are summed to give the Total Tax for the document.

Tax Value for a Document Line

1.	The Price is multiplied by Quantity and the result (rounded to the nearest 2 decimal places) is the line Extended Value.

2.	The line Extended Value is decreased by any Settlement Discount percentage and the result (rounded to the nearest 2 decimal places) is the Discounted Line Value (not displayed).

3. The Tax Rate percentage for the line is applied to the Discounted Line Value and the result (rounded to the nearest 2 decimal places) is the Tax Value for the line.