HMRC internal manual

VAT Traders’ Records Manual

VATREC12010 - Rounding on invoices and rounding at retailers: What is the rounding concession?

You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.

The concession to round VAT on invoices has been available since the inception of the tax and is detailed in Notice 700, The VAT Guide, paragraph 17.5. The first sub-paragraph of 17.5 allows the rounding down of VAT “payable”.

When interpreting the provision, it is important to note that it is in the context of rules for invoice traders where the rounding is tax neutral. This is because it will normally impact on both the output tax of the supplier and the input tax of the customer. This means that when an invoice trader calculates the VAT on net values, the amount charged and payable by the customer may be rounded down.

The remaining subparagraphs of 17.5 cater for a variety of circumstances, none of which allow rounding down to whole pennies. The bullet points provide for:

  • rounding down to one tenth of a penny
  • rounding to the nearer 1p or 0.5p
  • rounding to 3 digits