SAP Knowledge Base Article - Public

3090913 - Implementation of VAT Change for Hospitality Sector in the UK


A temporary VAT reduction for the hospitality sector has been introduced for the United Kingdom.

This is described in the What's New in SAP Business ByDesign - section.

  1. What's New in Financial Management
  2. Country/Region-Specific Changes
  3. United Kingdom
  4. Reduced Tax Rate

For United Kingdom, a reduced rate of VAT at 12.5% has now been introduced for the hospitality sector, hotel accommodation, and admissions to certain attractions. This new rate will be applicable from 1 October 2021 and will be valid until 31 March 2022.

Shipped changes contain the delivery of a new Tax Rate Type 4 (Rate: 12.5 %).

Respective custom tax codes will have to be set up in the system in order to to facilitate the application of reduced rates and reporting to tax authorities.


SAP Business ByDesign


Please proceed as follows in order to create respective custom tax codes and to verify the the VAT Return form box mapping.

Creation of custom Tax Codes and Tax Event mapping:

  1. Access the the Tax on Goods and Services fine-tune activity, either from the Implementation project or from the Business Configuration Overview.
  2. Navigate to and sub-activity Define Tax Codes.
  3. Select Country/Region: GB - United Kingdom.

For Tax Event 310 - Domestic Sale of Goods create a custom tax code, e.g. Z55, and details.

Details: Z55
Tax Type: 1 - VAT
Tax Rate Type: 4 - Special Reduced

For Tax Event 10 - Domestic Purchase of Goods create a custom tax code, e.g. Z56 and details.

Details: Z56
Tax Type: 1 - VAT
Tax Rate Type: 4 - Special Reduced
Tax Deductibility: 1 - Fully Deductible

Maintain the validity as per legal notification from 01.10.2021 to 31.03.2022.

Mapping of Tax Events and new Tax Rate Type in VAT Returns:

  1. Access the the Tax Returns for Goods and Services - UK fine-tune activity.
  2. Navigate to and sub-activity Product Tax Return UK.

The following mappings should be verified for:

Tax Return Type: 1 - VAT Return
Tax Rate Type: 4 - Special Reduced

Tax event: 310 - Domestic Sale of Goods:

0 - Tax Amount: Form Box: 1 - VAT due in this period on sales
1 - Tax Base Amount: Form Box: 6 - Total values of sales & other output tax

Tax event: 10 - Domestic Purchase of Goods:

6 - Deductible Tax Amount: 4 - VAT claimed in this period on purchases
1 - Tax Base Amount: Form Box: 7 - Total value of purchases&other input tax


VAT Great Britain Temporary VAT Change Hospitaltiy , KBA , SRD-FIN-GLO-TAX , GLO - Tax Declaration , Problem


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