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Partially exempt VAT in the UK

Former Member
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Hello,

I wonder if anyone can help. My client has customers in the UK that are partially exempt for VAT i.e. customer 123 and material ABC are taxable but HMCE calculate that only 70% of there goods are taxable, they therefore agree that they only need to pay tax on 70%

%. e.g.Customer 123; Material ABC, for qty 100, qty 70 are taxed @ 15% and qty 30 are taxed @ 0% VAT.

Now I know that I could create two lines one with tax and one without but what they would really like is to calculate this in one line. I know that conditions LCIT and LCFR work similar to this for Italy and France but I wondered if there was any standard way it could be used in the UK

Any help will be rewarded accordingly

Kind regards

Sue

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Answers (1)

Answers (1)

Lakshmipathi
Active Contributor
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Dear Sue

Do you mean to say that tax is based on quantity and not on value ?? As you would be aware the calculation type for tax conditions is percentage based and if you want to calculate based on order quantity, you have apply this logic in your routine with the help of ABAPer.

thanks

G. Lakshmipathi

Former Member
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Hi G. Lakshmipathi

the customer has been given an partial exemption on their VAT that they have to pay, therefore instead of paying all of the 15% of VAT, they only have to pay half of that because they are 50% exempt.

We want to show 15% as the rate but only calcuate charge the customer 50% of that.

E.g

customer without exemption

Customer orders qty 10 @ £10 each = £100

VAT @ 15% = 15

Total - 115

Customer with 50% exemption

Customers orders qty 10 @ 10 = 100

VAT @15% but with 50% exemption = 7.50

Total 107.50

I hope this helps

Sue

Former Member
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One other point, different customers could have different exemption amounts i.e. 50%, 30% etc

Thanks

Sue

Lakshmipathi
Active Contributor
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Dear sue

We want to show 15% as the rate but only calcuate 
     charge the customer 50% of that

In the above case, you have apply this logic in the routine with the help of your ABAPer. Through standard settings, I dont think, it is possible.

Alternatively, you can maintain 50% for the VAT condition type in FTXP, so that in billing also, directly it will consider 50% only, but the condition percentage will also show as 7.50% in your case.

thanks

G. Lakshmipathi

Former Member
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Hello G. Lakshmipathi

Yes, i had come to the same conclusion but did wonder if there was anything like LCIT. We don't want to show a reduced VAT rate so have suggested the following to the customer:

We would store the exemption percentage in an additional customer master field (This would make this customer specific and only apply to customers that have this exemption it could can be maintained by a user with the authorisation for maintaining customers). We would then create a new price condition with formula that takes the line item amount, then looks at the % in the customer master field to calculate the reduced VATable amount. We then assign this to the MWST VAT price condition to calculate the VAT at the standard rate but for the reduce amount. If there is not a % in the additional customer master field then the VAT will be calculated on the standard amount.

For example prince of £1 each, SAP would calculate the net price as £1 x 100 = £100, the price calculation would then go to the customer master, find 70% and calculate the new condition as £100 x 70% = £70. The VAT would then be charged on the £70.

Thanks for your help though, much appreciated.

Kind regards

Sue

Lakshmipathi
Active Contributor
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Dear Sue

I should also thank you due to the fact that only few members have the practice of updating the forum once they got solution and now those "FEW" lists includes your name )