Chapter 9 - VAT and Other Taxes

On this page:

• Introduction to VAT
• Processing goods and services charged without VAT in the UK
• Purchasing goods from the EC
• Purchasing goods from outside the EC
• Gift Aid on Donations

Introduction to VAT

It is the responsibility of Heads of Departments to ensure that their Department accounts correctly for VAT and, where appropriate, corporation tax¹.

The aim of this guidance is to give a brief overview of Value Added Tax (VAT) and how it works, followed by a more in depth look at how VAT applies to the University. This will include the following topics:

• VAT on income and choosing the correct tax rate to apply to income received;
• What purchases are liable to VAT and what will not have a VAT charge; and
• Transactions involving overseas customers and suppliers.

The guidance also covers other tax issues including:

• Duty charges on imports and exemptions from duty;
• Corporation tax issues; and
• Gift Aid on Donations.

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Processing goods and services charged without VAT in the UK

The tax code for entering all purchases charged without VAT (within the UK) on CUFS is 'No UK VAT'. This is irrespective of whether the supply is zero-rated, exempt or outside the scope.

This does not cover medically exempt purchases which should always be entered on CUFS using the tax code ME0% (please see Medically Exempt purchases).

For purchases from outside the UK you may have to apply a self-charge VAT. The accounting mechanism and tax codes to use are covered in these web pages.

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Purchasing goods from the EC

From 1 Jan 2021

Following the end of the Brexit Transition Period purchases from suppliers in the EC are treated in a similar manner to those from the rest of the world. Please see the Import Export Hub for current information

Intrastat

From 1 January 2022, the University no longer needs to submit summaries of purchase invoices from EU countries (known as Intrastats) to HM Revenue & Customs. Therefore, Departments are no longer required to send copies of invoices to the Tax Team. 

Goods not physically brought into the UK

If goods are purchased which will not be physically brought into the UK, then the supplier should charge VAT in their country. This VAT must not be separately identified when the invoice is coded to UFS.

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Purchasing goods from outside the EC

From 1 Jan 2021

Following the end of the Brexit Transition Period purchases from suppliers both in the EC and outside are treated in a similar manner. Please refer to the Import Export Hub for the current information.

When buying goods from countries outside the EC you will not get charged VAT by the supplier. However, both VAT and duty will be applied when the item comes through Customs at the port of entry, if applicable, and is usually charged via your import agent.

There are some reliefs from paying duty and VAT that the University may be able to benefit from. Details of the reliefs are set out in Duty Relief.

If any VAT or duty relief is applicable, the agent must be informed and provided with the relevant certificate before the goods arrive in the UK. This will ensure that the correct documentation is correctly completed before the point of import, and no VAT and/or duty charged by HMRC.

You should use the relevant  'IMPORT VAT' code for both the supplier's and the import agent's invoices on UFS.

See Accounts Payable guidance for processing import agent invoices.

NB: The University does not have a VAT Deferment account, and under no circumstances should departments set one up.

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Gift Aid on Donations

Gift Aid is a procedure where the University can reclaim from HM Revenue & Customs the basic rate of income tax on a donation given to the University by an individual. Currently the University is able to increase the value of the donation by 25%.

All Gift Aid reclaims for the University are made by The Development Office (CUDO).

For details on how Gift Aid works and the procedures to follow please refer to: Chapter 14, Financial Procedures Manual Accounting for Donations & Grant Income

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If you have a query that is not covered by this guidance the University Tax Team will be happy to deal with issues by telephone or e-mail.

Changes from May 2023

¹Financial Regulations 2012, regulation 12.1