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Sales Tax Manager

Last Updated: 27/05/16


Prepared by: Willem Enslin
Release Version: 1603

CONTENTS
1. Introduction ........................................................................................................................................................3
1.1. Terminology ................................................................................................................................................3
1.1.1. Tax Rate ..............................................................................................................................................3
1.1.2. Tax Code .............................................................................................................................................3
1.1.3. Tax Category .......................................................................................................................................4
1.1.4. Tax Profile ...........................................................................................................................................4
1.1.5. Inventory Override .............................................................................................................................5
1.1.6. Gross And Net .....................................................................................................................................6
2. Configuring Sales Tax Manager ..........................................................................................................................6
2.1. Configuring Sales Tax Manager ..................................................................................................................7
2.1.1. Creating A New Sales Tax Category ....................................................................................................8
2.1.2. Creating A New Sales Tax Code And Assigning Rates .........................................................................9
2.1.3. Creating A New Tax Profile ...............................................................................................................11
2.1.4. Applying A New Tax Profile...............................................................................................................12
2.1.5. Overriding The Default Code For Specific Inventory Items ..............................................................13
3. Examples ...........................................................................................................................................................14
3.1. UK .............................................................................................................................................................14
3.1.1. Commercial .......................................................................................................................................15
3.1.2. Charitable .........................................................................................................................................17
3.2. Ireland.......................................................................................................................................................18
3.2.1. Commercial .......................................................................................................................................18
3.2.2. Charitable .........................................................................................................................................19
4. Frequently Asked Questions .............................................................................................................................20

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4.1. What Happens When A New Club Is Created? .........................................................................................20
4.2. If I Book For Another Club With A different Tax Profile, Which Tax Profile Will Apply? ..........................20

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1. INTRODUCTION

The Sales Tax system is designed to allow a more flexible approach to assigning rates of tax to your
inventory items and facilities.

1.1. TERMINOLOGY

The important terms are:


• Tax Rate
• Tax Code
• Tax Category
• Tax Profile
• Inventory Override
• Gross and Net

1.1.1. TAX RATE

This refers to a specific value, such as 20%, and the date/time from which it becomes active. If the 'Active From'
date/time on the rate is before the current date/time then the rate is either currently active or has been active
in the past. Note that the value for past rates cannot be changed, as it is possible that it has been used in a tax
calculation. If a new value is required then it must be created on a new rate that becomes active immediately.

1.1.2. TAX CODE

A tax code will, potentially, have a history of rates associated with it, though only one of these rates can be
active at any one time. This means that whenever a code is referenced it is always possible to see the rate of tax
that was used at a particular point in time.

Relationship between a Tax Code and Tax Rates

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1.1.3. TAX CATEGORY

This refers to a particular tax that will be applied, such as Value Added Tax (VAT) in the UK. This will be specified
by the local tax authority, including the different ways it can be applied and the rates at which each application
applies.

Relationship between a category and the various codes it can have

1.1.4. TAX PROFILE

This defines how various applicable taxes should be applied unless specified otherwise. In an area such as the UK
the configuration might only include the 'Value Added Tax' category using a 'Standard' code which will have a
current rate (shown below).

A simple Tax Profile set-up

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A complex Tax Profile set-up. Note this set-up is just for illustration purposes

A Tax Profile is basically used to derive a set of tax rates that are to be applied during tax calculations or used to
calculate how much tax has been applied to an item and needs to be reported. During tax calculation the
inventory item and the club at which the item is being sold (which will have a Tax Profile configured) will be
checked, as well as any overrides for the item against the Tax Profile. The final Tax Rate is then calculated and
applied as required.

1.1.5. INVENTORY OVERRIDE

It is possible to assign a different Tax Code for a specific Tax Category to an inventory item. For example, under
the 'Value Added Tax' Tax Category the majority of inventory items will probably require the standard tax rate,
but certain items might be charged at a low rate, zero rate or might be exempt all together. In these cases is it
possible to override the Tax Code that is used for a Tax Category under a specific Tax Profile in Control Panel >>
Inventory Management >> Inventory Item >> Tax.

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1.1.6. GROSS AND NET

Sales Tax Manager currently only supports Gross tax, as this is the standard for UK and Ireland. Net will be
available soon.

If a Sales Tax Category is marked as Gross then the price set for an item in Control Panel will be the price the
customer pays. The calculation for this is:

Gross - (Gross / ((Tax Rate / 100) + 1)) = Tax Amount

So, for example, if an item costs £12.00 and the tax rate is 20%:
12 – (12/ (20/100) + 1)) = 2

So the tax for example above would be £2.00

If a Sales Tax Category is marked as Net (Is Gross is not checked) then the price set in Control Panel is the price
without tax applied. The calculation for this is:

Net x (Rate/100) = Tax Amount

So, for example, if an item costs £5.00 and the tax rate is 25%:

5 x (25/100) = 1.25

So the price the customer would pay is the net plus the tax; £6.25 in the example above.

Please note that you will not be able to combine gross and net tax categories in to one profile in Sales Tax
Manager.

2. CONFIGURING SALES TAX MANAGER

Sales Tax Manager must be turned on by a Legend administrator. If you would like Sales Tax Manager enabled
please log a ticket with Legend Support, and they will enable access to Sales Tax Manager. Once this has been
done you will need to complete your configuration, then contact Legend again to have your configuration
applied. Until this is done Legend applications will continue to use your “old” tax rates. This is done to allow for a
smooth transition, preventing you from having some clubs with tax profiles fully configured, and some not. Note
that Sales Tax cannot be disabled once it has been configured and enabled.

Please be aware we advise you not to ask for Sales Tax Manager to be enabled on the day of your direct debit
runs, as enabling Tax Manager in the middle of a direct debit collection could cause tax to be incorrectly
calculated for that collection.

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2.1. CONFIGURING SALES TAX MANAGER

Once Sales Tax Manager is enabled you will be able to see the Tax Rates icon in Control Panel (provided you
have the CP_SALES_TAX_START security token):

Clicking the Tax Rates icon will launch Sales Tax Manager.

Firstly, you will need to set up Sales Tax Categories (see Tax Category above).

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2.1.1. CREATING A NEW SALES TAX CATEGORY

To create a new Sales Tax Category enter a Category Name and a Priority (this feature is upcoming, so can
currently be set as 0). Tick Enabled to make the Category active, and tick Is Gross (gross is currently the only tax
type supported, as this is the standard in the UK and Ireland). Click Add and the Category name will appear on
the left.

You can edit existing categories by highlighting the appropriate category and amending the text on the right.
Click Save.

Once you have a Sales Tax Category set up you will need to add Sales Tax Codes (see Tax Code and Tax Rate
above).

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2.1.2. CREATING A NEW SALES TAX CODE AND ASSIGNING RATES

To create a new Sales Tax Code click add new Sales Tax Code

This will open the New Tax Code window:

Enter a Tax Code Name and a Tax Code. Legend applications will usually display the Tax Code rather than the Tax
Name. Click Save Code.

You can now choose to assign various rates or mark the code as exempt. To assign rates tick Tax Code Enabled,
to mark as exempt tick Exempt. Once a Code is marked as exempt click Save Code and close the screen.

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Once a code is marked as enabled you can click Add Rate. This will make the Rate % and Active From fields
available. Enter a Rate, an Active From date and click Save Rate:

Please note that you can only delete future rates; once a rate has reached its active date it will not be available
for editing. Once a rate reaches its active date it will become active and the previous rate will become inactive.
The currently active rate will be shown in bold.

Once all your Categories, Codes and Rates have been added you will need to create a Tax Profile (see Tax Profile
above).

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2.1.3. CREATING A NEW TAX PROFILE

To create a new Tax Profile click the Tax Profile Configuration tab at the top of Tax Manager.

Click New Profile and enter a Name and Description. Click Save Profile and the Profile will appear on the left:

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Click Add Item and the Category and Code to Apply boxes will become available. Select the appropriate Category
and Code and click Save Item. This is the default code you want to apply across inventory items – you will be
able to override this and select any other code from that category in Inventory Management (see Overriding the
Default Code for Specific Inventory Items below).

Once you’ve set up your profiles you can start applying them to your clubs.

2.1.4. APPLYING A NEW TAX PROFILE

A club can have a single Tax Profile associated with it. To assign a Profile open Control Panel >> Club Settings >>
Tax and select the appropriate Profile from the drop down list. Note that Profiles without any Categories will not
appear in the list.

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You can check which profiles are assigned in Tax Manager >> Club Profile Configuration:

2.1.5. OVERRIDING THE DEFAULT CODE FOR SPECIFIC INVENTORY ITEMS

To override the default code for an inventory item open Control Panel >> Inventory Management >> Inventory
item >> Tax. From here you will be able to select a new override code, as shown:

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Note that you will need to click Save within the form to save your overrides. If your clubs have different profiles,
select the appropriate Tax Profile from the drop down at the top, and override the code from there.

3. EXAMPLES

3.1. UK

In the UK there are 4 standard tax codes and rates:

• Standard – 20%
• Reduced – 5%
• Zero – 0%
• Exempt

So you could set up a Category called UK, with the rates above:

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3.1.1. COMMERCIAL

If the majority of your items use the standard tax rate of 20%, set up a profile with a default tax rate of Standard,
as shown:

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Assign this profile to your clubs. You can then override the tax rate for specific inventory items, if needed. For
example, Children’s Goggles may be exempt:

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3.1.2. CHARITABLE

If the majority of your items are exempt from tax, set up a profile with a default exempt tax rate:

Assign this profile to your clubs. You can then override the tax rate for specific inventory items, if needed. For
example swimwear may have 20% VAT.

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3.2. IRELAND

In Ireland there are 5 standard tax rates:

• Standard – 23%
• Reduced – 13.5%
• Second Reduced: 9%
• Zero – 0%
• Exempt

So you could set up a Category called IRE, with the rates above:

3.2.1. COMMERCIAL

If the majority of your items use the standard tax rate of 23%, set up a profile with a default tax rate of Standard,
as shown:

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Assign this profile to your clubs. You can then override the tax rate for specific inventory items, if needed.

3.2.2. CHARITABLE

If the majority of your items are exempt from tax, set up a profile with a default exempt tax rate:

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Assign this profile to your clubs. You can then override the tax rate for specific inventory items, if needed.

4. FREQUENTLY ASKED QUESTIONS

4.1. WHAT HAPPENS WHEN A NEW CLUB IS CREATED?

If you attempt to create a new club without specifying a Tax Profile you will see a warning:

You will be unable to close Club Settings until you have specified a Tax Profile.

4.2. IF I BOOK FOR ANOTHE R CLUB WITH A DIFFERENT TAX PROFILE, WHICH TAX PROFILE
WILL APPLY?

Tax is calculated where the activity is scheduled, so the tax code applicable to the booking club, rather than the
payment club, is applied.
For example, if Club A has a tax rate of 20% and Club B has a tax rate of 25%, when a member books a class held
at Club A whilst at Club B they will be charged 20% tax, as that is the correct rate for the price at Club A.

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