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Author's profile photo Suraj Shah

Making Tax Digital with SAP – UK HMRC’s Initiative

This blog will provide you with an overview of UK HMRC’s Making Tax Digital (MTD) and how you can achieve this mandatory requirement with SAP – Making Tax Digital is a key part of the UK government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs

Digitisation in all economies is bringing very rapid transformation between the governments and its citizens. Tax authorities are ever striving for efficiency with a focus on increase in revenues – one way to achieve this is by enabling the right technology, networks and security channels to obtain real time visibility of an individuals or businesses obligations and the ability to analyse the right level of detail to enable better audit management, review of refunds – achieving its goals.

As part of the 2020 Roadmap, the HMRC has a bold vision for the future of the tax system in the UK – to become the most digitally advanced tax administrations in the world. The focus will be on simplification of tax and the information the HMRC hold, tax in one place giving individuals and businesses a single picture of liabilities and entitlements and finally making tax digital for individuals and businesses. Making Tax Digital (MTD) is an initiative to achieve this vision.

How can SAP help with Making Tax Digital for VAT?

MTD for VAT requires business to keep digital records and accounts, which needs to be digitally linked – including all data transfer or exchange within and between software and applications. MTD finally mandates the use of functional compatible software to meet these requirements that must connect to the HMRC systems through APIs (Application Programming Interface).

The HMRC is working with software providers for Making Tax Digital for VAT in time for April 2019 – the requirements will become mandatory from this date.

MTD does not require you to keep additional records for VAT, but to record them digitally – Digital record keeping is something that has always been provided by SAP ERP Financials. The key change is the method with which HMRC receives the VAT obligation information from you.

SAP covers this requirement with SAP Advanced Compliance Reporting Service – delivered through the SAP Localisation Hub. The SAP Solution is listed as a Supplier supporting HMRC’s MTD for VAT initiative.

The SAP ACR Service is built on SAP Cloud Platform (SCP) and delivered as a SaaS solution – enabling a central framework for reporting compliance delivery, it is platform independent built for the cloud. The solution enables you to generate and submit statutory reports that contain country-specific indirect taxes (such as, value-added tax). These tax computations are in accordance with the guidelines defined by the local tax authorities.

SAP ACR Service provides the pre-packaged MTD requirements for rapid service activation and on-boarding with guided setup enabling a good time to value delivery option. The administrative setup will confirm the API and Secured connectivity with the HMRC System as shown below delivered through Fiori tiles:

For SAP ECC customers (and versions below SAP S/4HANA 1610) the service brings together all the required tax detail from SAP ECC into the ACR Service and thereafter enabling the preparation and generation of the HMRC obligations you need to report, providing a review and submission process. With the HMRC secured API based authentication already covered – the submission is sent to the HMRC and a confirmation receipt arrives back. The solution provides full audit trails and traceability which will tie in with your HMRC Digital Tax Account

For VAT registered companies that may be on non-SAP system or required submission through data loaded via excel – this capability is also covered by the service.

For customers on SAP S/4HANA 1610 onwards or SAP S/4HANA Cloud the process is streamlined further – the steps to prepare > generate > review and submit are fully covered within the SAP S/4HANA Advanced Compliance Reporting solution available with Enterprise Management also known as the Digital Core of the Intelligence Enterprise (also named ACR but note this solution is different to the localisation hub’s ACR Service). You then utilise the ACR Service to transmit the VAT return to and get confirm return from the HMRC via the API process delivered by the service.

An Overview of the Solution MTD for VAT report creation steps and tax submission analytics:

 

                                   

Finally would you like more information on SAP Advanced Compliance Reporting Service for Making Tax Digital in the UK?

UK Country Page: https://www.sap.com/products/globalization/accounting-finance-module/northern-europe.html

 

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      15 Comments
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      Author's profile photo Pankaj Adhikari
      Pankaj Adhikari

      Hi Suraj

      You have explained 'HMRC MTD VAT Return' very nicely. I have a question what exactly is 'SAP Advanced Compliance Reporting Service'? Is it paid service or free of cost? Any particular steps/configuration we need to follow to complete this process?

      Thanks in advance.

      Regards

      Pankaj

      Author's profile photo Ivan Sviridov
      Ivan Sviridov

      Thanks you for the article Suraj!

      I have a question regarding one topic that I think is relevant for a lot of customers: SAP SLH ACR service provides possibility of getting the data and submitting it to HMRC using API, but what about corrections and adjustments?

      My customer uses SAP ECC as the only source system, but before submission the data is being checked and adjusted with corrections in Excel. Does ACR service provide the possibility of correcting the data (and maybe even posting it back to SAP)?

       

       

      Author's profile photo Bart Delaere
      Bart Delaere

      Hi Ivan,

      Did you got feedback on your question "how to to handle corrections/adjustments"?

      Thanks

      Bart

      Author's profile photo Stefan Upmeier zu Belzen
      Stefan Upmeier zu Belzen

      Hi Suraj,

       

      is there any news on SAP ACR Service? We need a good solution for

      SAP ECC customers (and versions below SAP S/4HANA 1610)

      Regards

       

      Stefan

       

      Author's profile photo Jens Schwendemann
      Jens Schwendemann

      Well, there's this note https://launchpad.support.sap.com/#/notes/2700475 and a bunch of "infrastructural" things to sort out if you on ECC.

      • SDI Agent
      • Tenant provisioning for ACR
      • (maybe) Tenant provisioning for Cloud Portal if it is not in the same tenant
      • Firewall (outside / inside) issues for SDI Agent
      • ... some things that I don't know yet 'cause I only started with this topic O_O

      Cheers

      Jens

      Author's profile photo Tahir Chaudhry
      Tahir Chaudhry

      We are located in USA and have presence in UK as well. We are in the process of implementing MTD solution. One of the consulting company located in UK told us that there is no SAP solution yet and they have their own solution which they have tested with HMRC.

      My question:

      Have you implement SAP solution for MTD-UK?

      Have you implement non SAP solution/third party solution?

       

      I would appreciate your prompt response.

       

      Cheers

      Tahir

      Author's profile photo Davide Poletti
      Davide Poletti

      Hi,

      I have a question, why when I press "New run" trying to generate a new VAT declaration the XML file is always empty? I have checked several times the source connection and the SDI data replication but it's all ok.

      Thanks.

      Author's profile photo Rudy Putteman
      Rudy Putteman

      Hi Davide,

       

      I am facing the same situation. Have you found any solution?

       

      Regards,

      Natalino

      Author's profile photo Salvador Sánchez Gómez-Guillamon
      Salvador Sánchez Gómez-Guillamon

      We already know that SAP covers MTD requirement with SAP Advanced Compliance Reporting Service – delivered through the SAP Localisation Hub, but I am still looking for a solution through the classical transaction.

      Has someone generated the 9 boxes report required by HMRC’s with the transactions S_ALR_87012357 and running later FOTV?

      Author's profile photo Suraj Shah
      Suraj Shah
      Blog Post Author

      Due to the API requirements of MTD, the generation of the 9 boxes together with the submission process is only available in SAP ACR-Service in ECC.

      Author's profile photo Bilal Hashmi
      Bilal Hashmi

      Hello,

      I am trying to set up MTD in S/4HANA Cloud, for a customer in Q System. We have added ACR in the scope for country GB and can see config activities.

      However, I cannot find the report submission unit app to get a token from HMRC.

      What is the exact solution for cloud customers and is there any easy access documentation on how setup MTD in S/4HANA Cloud?

      Thanks

      Bilal Hashmi

       

      Author's profile photo Daniel Bauer
      Daniel Bauer

      Hello,

       

      we as PIKON implemented an ECC and S/4 Solution which is based on you SAP FI Documents, calculates the 9 Boxes with low customizing effort and takes over all communication to HMRC without the need of any cloud services. That's the short Version.

      If you're interested please visit https://www.pikon.com/de/leistungen/sap-add-ons/sap-integrated-mtd-vat-connector.html or contact me directly via daniel.bauer@pikon.com.

      Cheers,

      Daniel Bauer

      Author's profile photo Kris Battula
      Kris Battula

      Hi Suraj,

      We are implementing MTD on ECC6.0 and it would be really helpful if any step by step process guides/documents available, please?

      Much appreciated.

      Br

      Kris

      Author's profile photo Dominik Kuhlmann
      Dominik Kuhlmann

      Hi all,

       

      the SAP documentation for the SAP SLH-ACR service does contain an explanation how to generate a correction report. (see link: https://help.sap.com/viewer/7a60944343e543a1ab99e9b2904dab09/CLOUD/en-US/17fb1d51143842349e9355927ff7f483.html)

      As we cannot find the needed reporting activity "Correction 1(STD_CORR_1)" I would like to ask if anyone has already found out how to create and submit a correction report after submitting a regular one and notice that a mistake was made in there. Or is it maybe not possible/allowed to create and submit correction reports with MTD?

       

      BR

      Dominik

      Author's profile photo Rodney Jones
      Rodney Jones

      Hi,

      Is there a configuration document on how to complete Making Tax Digital in SAP S/4Hana Cloud (Essentials/Rise with SAP)?