A new to the world sugar tax solution, delivered in 12 weeks and described by HMRC as exemplary

Background

The client, a global drinks manufacturer with some of the UK’s favourite soft drink brands was faced with a daunting challenge. Having decided they wanted the new sugar tax accounting and reporting done within their SAP system, they still hadn’t got a solution with only months to go before the implementation.

At first, they had hoped that the solution they had within their French subsidiary would suffice, but the UK sugar tax proved to be quite different in operation to its equivalent in France. There was no tailor-made module available from SAP and the client’s support partner declined to deliver a solution, perhaps given the complexity and the deadlines involved.

The client turned to Pivot for help.

The Solution

With the benefit of their extensive experience within the alcoholic drinks industry, the Pivot consultants quickly identified the SAP excise duty solution as a good starting point.

This is a reporting tool only and wouldn’t provide the full range of functionality required in this instance. Plus, there are many differences between the application of UK excise duty and sugar tax. In particular liability for UK sugar tax occurs with the first supply of finished product within the UK and at the point of supply. Given the complexity of the supply chain typically in the drinks industry with sub-contract packers, fillers, and manufacturers, special arrangements for export markets, and other movements not subject to tax, this made for a very high number of potential scenarios. Nevertheless, the existing SAP Excise Duty solution provided a good basis for further development and made a 15 week timescale for a Go-Live feasible.

The Pivot consultants immediately set to work to design the new functionality required. All daily movements of materials were to be recorded and written onto a ‘duty table’ according to type of material and type of movement as categorized under the new tax regime. This was required to provide the granularity of information to support submissions to HMRC.

From there automatic postings are made to the accounts and the calculations made for submission to HMRC via their portal at the end of each quarter. (As yet unfortunately, the HMRC site is not equipped for direct submission.)

Using the approach of iterative build and playback with the business users, the solution was delivered in 12 weeks, in good time for the tax’s introduction. It was then inspected and approved by HMRC officials, who described it as exemplary.