A number of specific VAT rules apply to Universities.
VAT may have been intended to be a simple tax – but it was ended up being exceedingly complex. The basic rule is, "If in doubt, please ask!"
For general background information you may find it helpful to look at the Revenue and Customs guidance notes for Education.
VAT and Supplies
HM Revenue and Customs see the primary purpose of Universities as being to provide education. Education provided by the University (which includes tuition, educational seminars and conferences) is classed as an exempt supply – which means that no VAT is charged – regardless of whether the invoice is addressed to an individual or a company.
Research carried out for another "eligible body" (i.e. University, government department, local authority etc.) is also exempt – in circumstances only where there is no significant benefit to the funder and/or the funding is for the public good. To be assessed on a case by case basis. Research carried out for another organisation is standard-rated – and so VAT is charged. If the cost centre number does not begin with 8 at Level 3, then the work is not research.
Commercial sales are always standard-rated. Commercial sales include research carried out for commercial organisations. Consultancy work is also standard-rated – regardless of who the customer is.
VAT and Purchases
If you are buying education or research from another University, you will not be charged VAT.
If you are making purchases directly related to a vatable supply (i.e. Level 3 code beginning 53 or 81) then the VAT will be recovered in full and will not be charged to your cost centre.
If you are purchasing Advertising, no VAT is due.
If you are carrying out medically-related teaching or research, certain purchases of equipment and consumables will be zero-rated.
From 1 April 2000, all advertisements of any kind placed by the University of Dundee in any medium, including via the Internet, are eligible to be zero-rated by the supplier. Zero-rating also extends to the purchase of design and production services for the preparation of any advertisement (with the exception of advertisements on our own University website).
If you are placing an order through PECOS, the system will generate zero-rating documentation for you – but if you need a hard-copy form, you can access it below.
The University, as a charity, may purchase certain goods and equipment at the zero rate of VAT when they are to be used for medical research, training, diagnosis or treatment.
The goods that are eligible for relief are "medical, scientific, computer, video, sterilising, laboratory and refrigeration equipment for use in medical or veterinary research, training, diagnosis or treatment".
The zero rate also applies to the charges made by external contractors to repair or maintain existing qualifying equipment that was purchased or hired at the zero rate.
The goods must be used solely or mainly for the qualifying purpose. University staff are not able to obtain zero-rating on personal purchases.
If you are placing an order through PECOS, the system will generate zero-rating documentation for you – but if you need a hard-copy form, you can access below.
- VAT Certificate: Zero-rated - Medical Related Equipment
- VAT Certificate: Zero-rated - Medicinal Products and Substances