For Great Britain, what value is used in Tax category field for tax accounts?

[former_member418516]

Hello,

For GB, what value is populated in tax category field for tax accounts? Is populating * is OK? Or we need to  use < or >? What could be the consequences of using *?

Thanks,

Sanjay W.

[Former Member]

Please note that tax accounts are different from tax-relevant accounts.  Tax account can either be an input tax account or an output tax account (the balances in these accounts reflect the tax payable or VAT credit available for use, etc.).  Tax-relevant GL accounts are accounts that are "subject to" input tax or output tax (these are sales, purchases, etc. accounts that are subject to tax).

* is allowed only for tax-relevant GL accounts.

For tax accounts, either an input tax or output tax category only is allowed (< or >).

Please read the help text (F1) on this field in FS00; it is very detailed explanation.

[former_member418516]

Hello Srikanth,

Thanks for taking time to answer my questions. I understand that tax relevant accounts such as revenue and expenses are different than the tax accounts. And also that SAP documentation mentions that we need to specify either < or > for tax accounts depending on input or output tax account.

However, is it really followed in practice in European countries including GB? What are the consequences if we just specify * for tax account. The client wants just one tax account for both input and output tax and I am trying to understand the options.

In US often external software is used for sales/purchase tax and tax account settings are generally *.

Thanks,

Sanjay W.

[Former Member]

I think the behaviour of tax category field is universal irrespective of the country that the company code belongs to.

If you specify *, system interprets this account as a tax-relevant account and not a tax account (meaning, you should not be using this account in OB40 account determination for taxes).

As an accountant, I am having hard time understanding how anyone can post input and output tax to the same account.  I would question the requirement itself.  Why not manage in separate accounts and keep it clean?  If you end up using the same account for both tax types inspite of all your efforts in pushing back on this, I would leave a blank rather than a * on the account.

I have been on a US project where Sabrix is used as an external tax software and the setting we have in SAP is blank as opposed to < or > for tax accounts.