CareLineLive uses the unit(/article) method of calculating tax, which is accepted by HMRC. This method has a few advantages for us over other methods.

The calculation method primarily affects cases where the gross amount of an item has more than 2 decimal places.

In the context of CareLineLive, any item that's added to an invoice would be considered a unit. This includes bookings, transactions, and credits.

The unit method applies tax to each individual unit.

For example, you have a 1h booking being charged £13.06 (net), and you need to apply 20% VAT to it. The gross amount would be £15.672 before rounding, and £15.67 after rounding.

If you have 4 of these bookings being charged in an invoice, the total inc VAT would be £62.68 when using the unit method.

In comparison, if you applied the line or transaction methods of calculating the total inc VAT would be (4 x £13.06) x 1.2 = £62.688, which when rounded would be £62.69 - a difference of 1p.

This method will seem familiar if you've bought multiple of the same item in a shop.

The unit method enables quick & accurate reporting of amounts in other areas of the system. This is particularly important when you need to report on a subset of items.

Secondly, the unit method allows mixed tax items to be included in a single invoice. This means that if you have multiple items on your invoice, some of which are taxable and some of which are not, you can still apply tax to the appropriate items. The transaction method (applying VAT to the invoice total) would prohibit this.

It is possible to change the number of decimal places that the gross for each unit (visit) by following the steps outlined in Service contracts: invoice rounding precision. However, please note that this is capped at 6 decimal places, and there is still an opportunity for gross discrepancy between the unit method and other tax calculation methods.

It’s also important to note that the rounding precision is applied to the net amount of the unit before tax is applied.