Octopus Energy Bills - Watch those pennies folks

MWT

mmmmikey said:

superkoopauk said:

Spoonie_Turtle said:

superkoopauk said:

I have sympathy with the OP.  If Octopus are using non rounded ex VAT rates then they should either show on the bill or be available on the website somewhere.

More accurate figures sh available in the tariff information in their account online.  (Which is where my screenshot is from.)

But were those rates ex or inc VAT.  If inc then it doesn't really solve the problem

Is there actually a problem that needs solving here?

No, not really.

Octopus are properly compliant with Ofgem and HMRC VAT rules and guidelines on calculations and presentation.

These tiny variations are a natural consequence of correctly following the rules.

armith

debitcardmayhem said:

superkoopauk said:

I have sympathy with the OP.  If Octopus are using non rounded ex VAT rates then they should either show on the bill or be available on the website somewhere.

The customer knows what the tariff says inc vat simple to work out divide by 1.05,
e.g. my rate is 5.74p inc vat but is 5.74/1.05=5.466666666666666666666666666666666667, how many decimal places do you want on the bill? Better is to say xxxx kWh @ 5.74 / 1.05 ( net of VAT ) , of course the calorific value is shown as 38.0 (basically between 37.5000000000001 and 38.49999999999]. 

or quote the ex-vat and cv to 6 dps and similar the kWh figure. 
At the end of the day who cares perhaps they should show the lines of code that determines these figures, and of course the database of the daily calorific values.

I hope the police have the time to investigate this non-crime scam .

This is a great example of where VAT and rounding isn't entirely intuitive. The pre-VAT figure is not actually "What I pay divided by 1.05". It's actually "What I pay multiplied by "100 divided by 105"! So, if your bill, including VAT, is £100 this isn't a nice round figure of £95 + £5 VAT, it's actually £95.238095 + £4.761905 VAT, which rounds to £95.24 + £4.76. But this is a rounded figure. If you multiply this pre-VAT figure by 1.05 the answer comes to £100.002. Fine, but on a £1000 bill this would come out at £1000.02 - a phantom 2p has appeared out of nowhere. 

This isn't generally a problem because the big worry tends to be the £1000, not the 2p. As has been said, sometimes you might "win" and gain a penny or two.

debitcardmayhem

armith said:

debitcardmayhem said:

superkoopauk said:

I have sympathy with the OP.  If Octopus are using non rounded ex VAT rates then they should either show on the bill or be available on the website somewhere.

The customer knows what the tariff says inc vat simple to work out divide by 1.05,
e.g. my rate is 5.74p inc vat but is 5.74/1.05=5.466666666666666666666666666666666667, how many decimal places do you want on the bill? Better is to say xxxx kWh @ 5.74 / 1.05 ( net of VAT ) , of course the calorific value is shown as 38.0 (basically between 37.5000000000001 and 38.49999999999]. 

or quote the ex-vat and cv to 6 dps and similar the kWh figure. 
At the end of the day who cares perhaps they should show the lines of code that determines these figures, and of course the database of the daily calorific values.

I hope the police have the time to investigate this non-crime scam .

This is a great example of where VAT and rounding isn't entirely intuitive. The pre-VAT figure is not actually "What I pay divided by 1.05". It's actually "What I pay multiplied by "100 divided by 105"! So, if your bill, including VAT, is £100 this isn't a nice round figure of £95 + £5 VAT, it's actually £95.238095 + £4.761905 VAT, which rounds to £95.24 + £4.76. But this is a rounded figure. If you multiply this pre-VAT figure by 1.05 the answer comes to £100.002. Fine, but on a £1000 bill this would come out at £1000.02 - a phantom 2p has appeared out of nowhere. 

This isn't generally a problem because the big worry tends to be the £1000, not the 2p. As has been said, sometimes you might "win" and gain a penny or two.

Duh thats exactly the same as 100/105
x / 1.05 = x * 100/105

QrizB

debitcardmayhem said:

armith said:

This is a great example of where VAT and rounding isn't entirely intuitive. The pre-VAT figure is not actually "What I pay divided by 1.05". It's actually "What I pay multiplied by "100 divided by 105"!

Duh thats exactly the same as 100/105
x / 1.05 = x * 100/105

Yes.

100/105 = 1/1.05

N x 100 / 105 = N / 1.05

debitcardmayhem

QrizB said:

debitcardmayhem said:

armith said:

This is a great example of where VAT and rounding isn't entirely intuitive. The pre-VAT figure is not actually "What I pay divided by 1.05". It's actually "What I pay multiplied by "100 divided by 105"!

Duh thats exactly the same as 100/105
x / 1.05 = x * 100/105

Yes.

100/105 = 1/1.05

N x 100 / 105 = N / 1.05

Finally ….Someone who knows maths, bet you probably knew BODMAS too.

QrizB

debitcardmayhem said:

QrizB said:

debitcardmayhem said:

armith said:

This is a great example of where VAT and rounding isn't entirely intuitive. The pre-VAT figure is not actually "What I pay divided by 1.05". It's actually "What I pay multiplied by "100 divided by 105"!

Duh thats exactly the same as 100/105
x / 1.05 = x * 100/105

Yes.

100/105 = 1/1.05

N x 100 / 105 = N / 1.05

Finally ….Someone who knows maths, bet you probably knew BODMAS too.

Knew, and still do know

The thing that often catches people out (and which armith might've had in mind) is thinking that "oh, they've added 5% VAT so I can work out the ex-VAT price by taking 5% off" and then multiplying by 0.95 instead of dividing by 1.05.

105 x 0.95 = 99.75 ...

MattMattMattUK

QrizB said:

debitcardmayhem said:

QrizB said:

debitcardmayhem said:

armith said:

This is a great example of where VAT and rounding isn't entirely intuitive. The pre-VAT figure is not actually "What I pay divided by 1.05". It's actually "What I pay multiplied by "100 divided by 105"!

Duh thats exactly the same as 100/105
x / 1.05 = x * 100/105

Yes.

100/105 = 1/1.05

N x 100 / 105 = N / 1.05

Finally ….Someone who knows maths, bet you probably knew BODMAS too.

Knew, and still do know

The thing that often catches people out (and which armith might've had in mind) is thinking that "oh, they've added 5% VAT so I can work out the ex-VAT price by taking 5% off" and then multiplying by 0.95 instead of dividing by 1.05.

105 x 0.95 = 99.75 ...

I have customers in financial services who still do not seem to understand how VAT works on the most basic level, I am no longer surprised that the general public lack the mental capacity to understand how to take VAT off a total figure. It is the same reason that news media have moved to one-in-ten rather than 10%, because a significant majority of the public were unable to understand how many/what proportion 10% was.

Alnat1

It's now an accepted fact that the "general public" don't understand percentages or fractions, even the simplest ones.

That's the reason you hear things like "one in two people will get cancer in their lifetime".  The general public aren't now expected to understand 50% or half.

HillStreetBlues

Alnat1 said:

It's now an accepted fact that the "general public" don't understand percentages or fractions, even the simplest ones.

That's the reason you hear things like "one in two people will get cancer in their lifetime".  The general public aren't now expected to understand 50% or half.

75% of people still understand percentages, 40% don't.

Magnitio

HillStreetBlues said:

Alnat1 said:

It's now an accepted fact that the "general public" don't understand percentages or fractions, even the simplest ones.

That's the reason you hear things like "one in two people will get cancer in their lifetime".  The general public aren't now expected to understand 50% or half.

75% of people still understand percentages, 40% don't.

Does that allow for the people who put in 115% effort?