Rounding Differences in Advanced Payroll?

I've also a problem with rounding relating to gross pay.

E.g. I have two employees. Employee A has done 14.25 hours @ £10.70 per hour = £152.4750 (to 4 decimal places). Payroll rounds this up to £152.48 as you would expect. Employee B has done 14.25 hours @ £8.50ph = £155.1250. Payroll rounds this DOWN to £155.12.

I have chatted to quickbooks support and here is a transcript for your own amusement!

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Spoiler

Quickbooks at 9:22 am said I need to raise your concern to our TIER 2 support as I checked the calculation it here the 155.125 will 155.13 is correct since payroll will automatically round up the decimal places. Please bear with me for a moment.

Customer at 9:25 am said Ok.

Quickbooks at 9:28 am said As I checked it here. Its just how rounding works you would round up when its 5 above to the closest penny. But it only goes to decimal places on QuickBooks Online and as it only goes to 1 decimal place it will round down on here for the amounts you have posted above and the provided calculation is correct in QuickBooks Online.

Customer at 9:31 am said Sorry, I don't follow. The calculation is being rounded down when the non-rounded figure is £155.125 not up as it should be.

Quickbooks at 9:32 am said Yes as it only goes to that many decimal placest it will round down.

Customer at 9:34 am said That doesn't make sense. It must round to 2 decimal places to get pounds and whole pence. 12.5 pence must round to 13 pence, not 12 pence.

Quickbooks at 9:34 am said it is working correctly due to decimal placest and how QuickBooks payroll deals on payroll there isn't away to change this with out manually editing them.

Quickbooks at 9:36 am said As I mentioned earlier if the penny is 5 it will automatically round up to closest penny like for example 12.5 round up to the nearest penny it is for 13.

Quickbooks at 9:36 am said if the last digit is less than 5, round the previous digit down. However, if it's 5 or more than you should round the previous digit up. So, if the number you are about to round is followed by 5, 6, 7, 8, 9 round the number up. And if it is followed by 0, 1, 2, 3, 4 round the number down.

Customer at 9:37 am said Yes. I know what rounding is thank you. If you look at the screenshot, £155.125 is being rounded DOWN to £155.12 not UP to £155.13 as it should be.

Quickbooks at 9:39 am said Since 155 is a whole amount the next number is 1 so it will round down.

Quickbooks at 9:40 am said it just the way the system is working as designed with regards to this, you can leave a feedback on the gear icon >> feedback about it so our product engineers can take a look at it.

Customer at 9:44 am said That makes no sense. You are saying it rounds the pence based on the value of the tenths? If that were the case, then my other example of £152.475 would be rounded down as the "next number is 4". But it's not, it rounds up to £152.48, like it should. I'd like to talk to next level support please.

Quickbooks at 9:44 am said As we checked it here further, HMRCs rules, do all calculations to 4 decimal places and round up to 2 for the calculation of free pay and round down to two for calculation of taxable pay.

Quickbooks at 9:46 am said Please bear with me as I check it here if there is an available manager.

Quickbooks at 9:48 am said Also, as per HMC rules it will round down. As per our back end them if you this is incorrect you would need to speak to HMRC due to it being there rules/guidlines.

Customer at 9:48 am said Why does £152.475 round up and £155.125 round down.

Quickbooks at 9:50 am said Its all down to decimal place as I mentioned earlier.

Customer at 9:52 am said What decimal place?

Quickbooks at 9:52 am said It is the position of a digit to the right of a decimal point.

Customer at 9:53 am said Ok. So £152.475 - the 1st digit to the right is 4. for £155.125, the 1st digit is 1. What has that got to do with anything?

Quickbooks at 9:55 am said One moment, let me calculate it here.

Quickbooks at 9:59 am said 155.125 is only 3 decimal place not 4 as you wont see all 4 so it will all depend on the other decimal place what you cant see for the rounding and as per HMRC guidlines it goes by 4 Decimal places so the cx will only see 3 but it will be working on 4 what will be affecting the amounts. I would highly suggest to contact HMRC for this and can I also have the best call back number so I can raise it to our manager since as of the moment there is no available manager as they are currently busy.

Customer at 10:02 am said The 4th decimal place in both examples is zero. £152.4750 is being rounded up to £152.48 £155.1250 is being rounded down to £155.12 - this is just to work out gross pay - it has nothing to do with rounding for tax. Please give me a link to the HMRC guidelines.

Quickbooks at 10:05 am said One moment, let me check on the link.

Quickbooks at 10:07 am said Hi, as per our back end team we can not provide you the link for the guidelines as you need to contact HMRC for this.

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So a totally inconsistent response to a problem - all part of the guidelines apparently which I need to ask HMRC for.  Nothing to see here, please move on!  

I await a call back from a manager who hopefully can explain what is going on but I'm not holding out much hope.

Has anyone else experienced this with Advanced payroll?  Anyone know what the HMRC rounding guidelines are?

Thanks!!

 

 

 

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Hi StevC, thanks for joining this thread - our payroll system follows HMRC guidelines for rounding; while the pay is rounded to two decimal places, the calculations in the background themselves retain further d.p. for improved accuracy which may account for minor rounding differences. 

Did you read the post?

Ok, 4 decimal places - calculations in the background etc etc.

If that's the case, why does £152.4750 get rounded UP to £152.48 and £155.1250 get rounded DOWN to £155.12?  The 4th decimal place gains you no extra accuracy in the background as it's a zero.

Where do HMRC guidelines define this inconsistency?  Link please!

Hi StevC, we don't have an external link for this, we'd recommend that you reach out to HMRC directly if you would like further clarification on their guidelines. From the example given above, 14.25 hours @ £8.50ph would not total £155.1250; you can double check the PAYE calculation for your employee in QuickBooks against HMRC using their calculator linked here. 

Sorry, that's a typo. It's 18.25 hours @ £8.50 per hour which equals £155.125

Quickbooks rounds this gross pay down to £155.12

You suggest that HMRC is behind this but can't link to any guidance or produce any explanation. Is there anyone there who knows how the product works in the backend?

Hello, StevC.

Regarding the rounding differences, QuickBooks is already working with the HMRC

I've got an article that provide details about HMRC's Self Assessment. This contents include the self assessment overview, deadlines, and penalties to name a few: HMRC Self Assessment | Self Assessment | QuickBooks UK 

If you need additional assistance with this process, you can always reach out to our Customer Care Team. They have the ability to pull up your account securely and discuss this matter further with you.

Additionally, I've got you this helpful article for about tax rounding calculation : 

• Tax Rounding off logic in QuickBooks Online API 
• Manage sales tax for non-US locales 

If you have any additional questions, you can always leave a reply on this thread. I'll be around to help you out again. Have a good day ahead.

TirzahC,

I've already tried support and they have not been able to help as they don't understand how Quickbooks is working either.

You've provided links to documents on Self Assessment and Tax rounding for US and non-us businesses.

None of this is relevant to the issue.

The issue is to do with Quickbooks advanced payroll and why it rounds gross pay the way it does.

For example, entering the following into payroll for 4 employees calculates their gross pay as follows:

Employee A did 7.75 hrs @ £10.70ph = £82.925 - Quickbooks rounds this DOWN to £82.92
Employee B did 7.25 hrs @ £10.70ph = £77.575 - Quickbooks rounds this UP to £77.58
Employee C did 6.25 @ £10.70ph = £66.875 - Quickbooks rounds this UP to £66.88
Employee D did 6.75 hrs @ £10.70ph = £72.225 - Quickbooks rounds this DOWN to £72.22

My question in a nutshell is why does is it round down Employee A and Employee D when logically they should all be rounded UP!!!!  Get yourself a calculator - type 7.75 x 10.7 and explain why the result of this calculation would be rounded down rather than up.

Hello StevC, thanks for that information can you please ring the support line on 0808 234 5337 it is open mon to fri 8am to 7pm and is free from any UK landline and mobile, so the agent on the phone can set up a screen share with you and look into this more for you as I would have thought it would be rounded up as well not down.