Swansea University

TAW

Useful information on Value Added Tax

If you have any queries regarding the application of VAT please contact Catherine Hunt on extension 3504.

The following advice may be useful in the first instance  

As a general rule the university is unable to recover VAT paid either on its purchases or its services received.  There are, however, a number of exceptions, where VAT can be recovered such as equipment purchased for medical research or where a taxable activity takes place (e.g. research carried out for commercial organisations).

Accordingly, the VAT treatment of invoices and purchase orders has to be accurate to ensure that the university recovers VAT where appropriate and accounts for its VAT in a proper manner to HM Customs and Excise.

Further information regarding VAT can be found in the University’s Financial Procedures under F-E.17.7

F-E.17.7 Guidance on Value Added Tax (VAT)

Purchase Order Processing

In order to ensure the correct VAT treatment when using POP, tax codes need to be input as follows at the order stage.00 - supplier is not VAT registered, no VAT charged. 02 - supplier is VAT registered but there is no VAT charged e.g. i) Zero rated items such as books or ii) ‘exempt’ items such as foodstuffs or iii) when a certificate to obtain Zero rate has been submitted to the supplier.(e.g. medical research, advertising) 03 - supplier is VAT registered, VAT is charged but is not recoverable – in practice this code will be used the most. 05 - 5% VAT rate, charged for certain utilities, or any other non standard rate. 06 - VAT is reclaimable e.g. some ‘R’ & all ‘V’ codes, some catering & Taliesin codes. (This should be used where VAT is generated on this account.) Using code 6, any VAT will automatically be charged to VAT code and the net amount to the appropriate nominal code. Failure to input this code will effectively cost money! 08 This should be used for any non-UK suppliers. Usually the payment will be in foreign currency and paid by foreign draft/bank credit. This code should also be used for all non-UK based suppliers who have requested payment in sterling. Where the supply is for goods and services from the EU, VAT will not usually be charged by that supplier so long as they have been given the University’s VAT number (123/8534/77) UK VAT will then be added by means of a journal directly to the codes concerned by Finance (this is known as the reverse charge rate). In addition services received from any worldwide supplier will be eligible to reverse charge VAT.