VAT Partial Exemption options and Appendix.
The KPMG report on partial exemption methods has now been published and can be downloaded as a powerpoint file from here. Also attached is a pdf file containing Appendices A & B. Appendix C is a report “Transparent Approach to Costing - An Overview of "TRAC"” prepared for the Joint Costing and Pricing Steering Group in June 2005 and Appendix D a report to the UK Funding Councils, Research Councils and the OST on the Quality Assurance review of "TRAC" in HEIs. They can both be downloaded by clicking the highlighted links.
BUFDG Charity Commission Guidance Note
BUFDG have published a guidance note on the recently issued Charity Commission Guidance to Research in HEIs (with thanks to Deborah Damment, Sheffield and John Harrison, King’s College), which aims to clarify some issues which have arisen regarding the interpretation of the guidance and the practical application of the public benefit tests. In most cases commercially funded research will be charitable and satisfy the public benefit tests and can continue to be undertaken through the university without creating any tax liabilities. However Institutions will need to ensure their internal systems and processes for reviewing such contracts are robust and well documented.
The guidance note is a single page and is now in the the Info-Bank. Colleagues in Scotland will still find this guidance useful as tax treatment is the same throughout the UK, despite different regulators.
Framework for HEI Partial Exemption Special Methods
HMRC have published guidance (Framework for HEI Partial Exemption Special Methods) for their staff on the practical interpretation and implementation of the KPMG study into partial exemption in the HE sector which was agreed and published earlier this year. BUFDG have had input into this document and supports its content. The document will be of considerable benefit to both HMRC Officers and HEIs. It will foster consistency of interpretation and application of the KPMG study by local VAT officers, will assist HEIs in preparing proposals which fall within the spirit of the framework and will help HEIs to ensure that in negotiating methods local officers are also observing the national policy formulated in response to the KPMG study. HEIs are reminded that some of the particularly beneficial aspects of the framework, such as the ability to backdate a fair and reasonable method which allows greater recovery than an HEI's current T-grant based method, are subject to time limitations and therefore they may wish to give this early attention.
Agreed current advice to members
Many of these documents are currently under review and revision - please check back soon for new versions.
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VAT in EC Framework Research projects - a letter dated 3rd May 2008 from HMRC clarifies the VAT treatment of EU Commission Framework Funding for UK research bodies.
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Tax on Payments to Volunteers in research projects (pdf file). Still current at 23/11/07
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Advice to members regarding the Money Laundering regulations effective from 1st March 2004 - this is being updated to reflect changes in regulations (23/11/07).
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- Under review - VAT zero-rating for new buildings used for non-business research Letter from HM C & E and Headcount guidance.
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Stamp Duty Land Tax guidance note - January 2008
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Under revision VAT anti-avoidance disclosure rules - advice note July 2004.
Recent court or tribunal decisions
- Edinburgh Telford College.
- University of Southampton - Report on the Appeal Hearing.
- University of Southampton - Decision.
- Halifax PLC and Others, BUPA Hospitals Ltd and Others, and University of Huddersfield.
- Library structures following U U Bibliotech v. HMRC.
- University of Sheffield v HM Revenue and Customs 2007.
The University of Sheffield case is put into context by the University who say:
"This was an appeal against assessments raised by HMRC relating to the University's residual VAT recovery and the basis for its business/non-business calculation. Sheffield's appeal concerned both the method of calculation of the non-business disallowance (specifically as to the status of the T-grant within such calculations if the T-grant was not included in the PESM operated at the time) and whether HMRC's assessment fell partly out of time as a result of HMRC having apparently changed their policy towards PFR during the period for which the assessments were raised. The arguments were not about either partial exemption per se or the general principle of whether PFR is a non-business activity, but were confined to the specific circumstances of the Sheffield assessments. As such the decision is unlikely to have relevance to the majority of other HEIs".
Advisers' reports
Deloitte report "The Burning Issues. the role and responsibilities of the in-house gloabl indirect tax advisor" uploaded November 2007.