01st July 2015

Weekly Digest
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Working for PHES / AUDE Matt Sisson

Professional HE Services Ltd (PHES) – the umbrella group that covers BUFDG, HESPA, and HEPA, is expanding in the next few months to include the Association of University Directors of Estates (AUDE). We’re recruiting for two new positions, based in Loughborough, in support of AUDE and PHES, and details of these are now available on the PHES website. The two roles are:

AUDE Executive Officer, who will “provide administrative and operational support to the Association of Directors of Estates. Responsibilities include project managing AUDE projects where appropriate, servicing regular meetings, managing website content, producing newsletters and the annual report as well as being an integral part of the annual AUDE conference. If you are imaginative, well organised and with a keen eye for detail, we would like to hear from you.”

PHES Administrative Officer, who “will work closely with other team members and will provide administrative support to the PHES team, working across all three organisations. Responsibilities include being part of project teams, providing support to the learning and development function and arranging meeting dates and venues."

The closing date for both roles is Monday 6th July.

Vacation letting of student accommodation - exempt or standard-rated? Amanda Darley

It has come to our attention that some private sector student accommodation operators are in discussion with HMRC over the correct VAT liability of the letting of student accommodation during vacation periods. HMRC are keen to know the HE sector's views on this, so we would be grateful if you could spend 5 minutes completing this short survey about how your university treats vacation lettings of student accommodation.

There is a sense that, on the whole, universities treat these lettings as standard-rated, whereas private providers treat them as exempt from VAT. It may be that the circumstances regarding the type of guest, the length of stay, facilities provided etc. differ enough for different VAT treatments to be correct, but we would like to ensure that there is a level playing field for universities along with private providers, particularly in areas such as London, where they may be in direct competition. The survey will close on Friday 10th July.

FRS102 – Sample Financial Statements for Reference Siobhain Clarke

Hopefully by now many of you will making progress with your revised accounting policy choices under FRS102, and considering preparing revised statements and explaining the content to stakeholders. 

At the Welsh SORP session last week, the changes were described as “one of the biggest since 1992 SORP”, and for many the outputs may show significant volatility in reported results. As a result it will be important to describe the underlying business performance in the Strategic Report so that readers of the financial statements can put the reported results in context, e.g. although reported pension deficits may be very volatile employers’ pension contributions are likely to be relatively stable for long periods of time.

Miles Hedges, who chaired the Welsh session, encouraged attendees to look at sample financial statements from the insurance sector who already have to deal with volatility in reported results under IFRS and so use other ways of depicting their underlying business performance, with examples such as Standard Life, Legal and General, Prudential being cited.  For those wishing to think about how other universities deal with the requirements of the Strategic Report, there are some good examples  (by nature pre FRS102) already in the HE sector, including University of Edinburgh, University of Birmingham and The Open University.  

To assist with this challenge, and following on from the successful plenary session at the FD‘s conference in Lancaster, we have secured the services of Jon Moon to present a range of workshops on Impact and Clarity – how to make an impact with your reports and presentations.  Events will be held in Edinburgh, Cardiff, Liverpool, London, Darlington, Leicester and Sussex during September/October.  One free place per institution will be available and booking information will be available in due course.  Please give some thought to who should attend from your institution.

The Tax Function of the Future Amanda Darley

PwC ran an interesting webinar last week (watch the replay here) on 'The Tax Function of the Future'. This was the first in a series of webinars on this topic and they have also released the first in a series of reports on this. 

The over-riding message was that the tax function in an organisation has a broader responsibility to more stakeholders than ever before, and this is likely to increase rather than abate in the future.  Key points included:

  • There will be more legislative requirements on transparency - we are not at the end of this yet.
  • Regarding risk and governance, the reasoning for business decisions will be vital as the information is likely to be publicly available in future.
  • PwC believes that investment around tax data gives you the 'most bang for your buck'.
  • Technology is a key enabler so you have to engage with this.

 For more information see our full news article here.

HE Shared Legal Services Matt Sisson

HE Shared Legal is a shared, ‘in-house’ legal guidance service for HE members. It’s now in its fourth year, and has a growing number of member institutions. It provides legal guidance and support to subscriber institutions on specific enquiries, and assists with law firm selection, engagement and instruction. It covers a wide range of legal areas including employment, charity law, commercial agreements, corporate and governance, property, banking, insurance, pensions, and more. It also circulates a regular newsletter highlighting legal developments of relevance to the sector. 

You can find out more about the organisation on its website, and can get in touch on 0141 227 3955 or by email.

Phased developments - VAT risks highlighted by recent Tribunal Amanda Darley

The complexities and risks of the VAT rules associated with construction work were once again highlighted in the recent First-tier Tribunal decision in the York University Property Company Ltd case. The Tribunal held that the second phase of a phased construction was not a continuation of the first phase (as such it would have been the zero-rated construction of a new building used for a relevant charitable purpose) and was rather an extension or enlargement of the existing building and the work was therefore standard rated.  This is despite the fact that both externally and interally the 'completed' building looked like a single building, the project was designed as being both phases and had received planning permission for both at the same time, and that a 'sacrificial' wall had been constructed on one side of the building at Phase 1 in anticipation of Phase 2. However, construction of Phase 2 did not even start until Phase 1 had been in operation for 7 years.

The Tribunal stated that it was 'not persuaded that there is any legally recognised concept of “phasing”, as such, either in the legislation or in the HMRC guidance' but also stated '[h]owever, the HMRC guidance, and various previous cases, have dealt with situations where there have been two successive sets of construction works in relation to a building site.  In such cases it has been necessary to determine whether the first works resulted in a complete building, such that the second works were the “enlargement of, or extension to, an existing building”, or whether the first works were merely the incomplete construction of a building that was completed by the second works.'  

The Tribunal found that '[w]hile it may be the case that the Chemistry Department’s vision of interdisciplinarity could not be achieved until phase 2 was completed (a matter not of direct relevance….), there is no suggestion that the phase 1 construction could not function and be used for chemistry research until phase 2 was completed.  Phase 1 did so function, as did the Chemistry Department as a whole, for some 9 years until phase 2 was completed in 2013.  The Tribunal has found that there is no reason why phase 1 could not have continued to so function indefinitely, without phase 2.  There is no suggestion that any public authority required phase 2 to be completed within any stipulated timeframe, or at all.' Therefore, on '[w]eighing the relevant factors'  the Tribunal held that Phase 2 was an extension or enlargement of Phase 1 rather than completion thereof.

Lessons to be learnt from Wimbledon Siobhain Clarke

Wimbledon fortnight has just kicked off and the attached HR Grapevine article considers the parallels between high pressure sport and human resource management.

The article highlights how Learning and development can help to create an engaging workplace by fostering a learning culture, and how motivation can be temporary whilst talent permanent. It also points out how L&D can support this by providing a balance of support and challenge to employees. “Even the world’s top sports performers have periods of low motivation; the key is developing long term commitment.  No matter whether employees are at the top of their game or falling behind, if we can create an appetite to grow and learn more skills, the business will always maintain its energy as they strive for improved results.”

On a related note, the BUFDG and HEPA team are busy preparing the Learning and Development programme for next year so watch this space for further details over the next few weeks.

The importance of cyber-security Emma Keenan

What is a cyber-breach? Are you aware of the impact on or risks to your organisation of a cyber-breach and how do you ensure your tender documents include this risk management? A new free e-learning module, hosted by CIPS and financed by the government, addresses these issues and discusses how to protect yourself and your institution when working both inside and outside the office.

The learning is thorough, well presented, easy to absorb and counts towards your CPD points. It took me just over an hour to complete and I have come away with lots of ideas of how I would ensure my, and my organisation’s, security.  I would encourage you to make use of it within your institution. You can access the learning here.  

HMRC Appealing Littlewoods Compound Interest Case to Supreme Court Amanda Darley

On 23 June HMRC issued a policy paper to announce its response to the Court of Appeal's decision in the Littlewoods compound interest appeal. The Court of Appeal had upheld the decision by the High Court that simple interest was not adequate in the case of Littlewoods. This was based on the questions referred to the Court of Justice of the European Union which delivered its decision in the case in 2012.

HMRC has now announced that it does not agree with the Court of Appeal's decision and has therefore sought permission to appeal the decision to the Supreme Court. However, it could be months before the outcome of this application for permission is known.

HMRC considers that the Court of Appeal decision does not apply to other taxpayers. HMRC also believe that the ruling "does not provide a clear method for calculating the level of interest which provides adequate indemnity to claimants". 

In terms of existing and new claims for compound interest, HMRC state the following:

"HMRC will apply for any claims for compound interest already lodged (and new claims) with the High Court or County Court to continue to be stayed pending the final determination of the Littlewoods litigation.

HMRC position in relation to Tribunal appeals is unchanged, namely that these should continue to be stood over until there has been a final determination as to the availability of compound interest in the UK.

Any new requests for compound interest will continue to be refused."

Benefits of part-tme provision overlooked Matt Sisson

Government policies on part-time students mean that workers are not able to update their skills, and the UK economy is being deprived of an adaptable labour force, the new V-C at the Open University has said. Speaking to the Guardian, former BBC executive Peter Horrocks took aim at the  significant decrease in the part-time student numbers since the tuition fee rise, and is keen for the government to allow access to loans for students studying for a qualification at the same level they hold – so-called ELQs (Equivalent or Lower Qualifications). He told the Guardian that “There are lots of people who got a degree and who realise they took the wrong degree and need a different set of skills”, and thinks that part-time students are “spectacularly better bets in terms of paying back [loans] because they are starting from the position, overwhelmingly, of already being in work”.

He is also concerned that the nature of the “media/political bubble” often disregards the value of part-time Higher Education, instead choosing to focus only on full-time provision. “In terms of the numbers game, it’s been overwhelmingly focused on the full-time numbers, to the exclusion of a sector of society where it really matters”, he says. “People just don’t understand how important part-time is, because their own social experience is not with people who need the benefits of part-time education”. You can read the full story here

PhD students as employees? Amanda Darley

According to an article in the Times Higher, Queen Mary University of London "is considering whether PhD students might be counted as employees in the future".  Professor Simon Gaskell, Principal of Queen Mary, said that such individuals, who are “making a critical contribution” to research, could be thought of as fellow researchers in the early part of their careers.  Professor Gaskell thinks it “extremely likely” that some universities may make this kind  of change within the next ten years.

Whilst the article makes mention of the "individual's tax position" and "substantial practical obstacles to overcome", interestingly it doesn't specifically mention the employer's national insurance costs, PAYE obligations, pension costs or the cost/risk for employers associated with other benefits of employment such as sick pay and maternity and paternity leave/pay, which would all need to be considered.

This is an interesting development in light of the fact that we know that HMRC is currently looking into the way that payments are made to individuals under the Engineering Doctorate Scheme at a few universities already (see the discussion board), despite them not being employees (albeit this doesn't necessarily cover any other legal employment obligations, just PAYE and NIC).

Good teaching saves money Matt Sisson

Want to run a more efficient university and save money? Then teach better. That’s the message from the Higher Education Academy’s Lucy Haire on the Efficiency Exchange website this week. She explains that “The consequences of bad teaching can be dramatic – underperformance, higher dropout rates and much missed potential. It’s inefficient for the individual, the institution and wider society.”

The other side of that is that with better teaching, “attainment, engagement and satisfaction levels improve and make an institution more attractive”, and “a more attractive institution finds it easier to recruit both students and staff which can feed directly into tangible cost-savings.” Compelling stuff.

Charity Tax Group Conference 2015 - Report Amanda Darley

Amanda attended the CTG conference on 22 June and heard from the Exchequer Secretary (the minister with responsibility for charity taxation), Damian Hinds MP,  as well as leading consultants and in-house tax staff in the charity sector. It was also a good opportunity to catch up with some tax advisers on various issues, including HMRC's current thinking on subsidiary gift aid. For more information, see our update on the conference.

Saving lots of money a little at a time... Matt Sisson

With cuts expected in BISs HE sector budget over the next year or two, the pressure on universities to save money and become more efficient isn’t going to go away anytime soon. One university in the USA has approached cuts in an intelligent way, by asking their staff and students for ideas and suggestions on how to save money – with some surprising results. One of the respondents suggested changing the type of toilet paper used, which according to ‘research’ by a member of the clearly over-resourced College of Agriculture and Life Sciences “appears to be hydrophobic (water repellent) and sticks to the bowl”, and so wastes water by requiring more flushes. Other suggestions included an energy conservation drive, replacement of leaky windows, and the removal of cafeteria trays that encourage people to take more food than they eat.

Another option is to pay attention to case studies of measures taken elsewhere in the sector. The case studies on the Efficiency Exchange website, the Green Gown Awards winners, and the THE Leadership and Management Award winners are all great sources of ideas and inspiration. 

Bits and bobs Matt Sisson

Universities spend almost £1billion a year - 8% of their teaching budget - on quality assurance, according to a KPMG study, funded by HEFCE. The study found that the cost of academics managing the quality checks was around £380million, with another £380million spent on overheads. The report claims that £90million could be saved by the sector each year if external checks were abolished altogether.

The Leadership Foundation are launching their 2015 Executive Leaders programme, aimed at individuals "whose next role will be on the senior management or executive team at their institution". Amongst other things, the programme will "help strengthen the participant’s impact by understanding how they are influenced and can influence throughout their institution, while harnessing the benefits that this can bring". There are two intakes, beginning at the end of September and at the beginning of February 2016. Visit the website for more information.

Moves by research councils and funders in recent years to give out fewer but larger grants may not deliver the best outcomes, according to new research at the University of Sussex, and reported in the Times Higher. The study of 400 projects found that although the size of research groups loosely correlates with the volume and quality of their outputs, a law of diminishing returns means that the findings “support a funding model in which productivity is maximised by having many small groups”. 

Job of the Week for this week is for an Assistant Financial Controller at the LSE. The deadline for applications is the 24th July. In related news, Southampton City College are looking for a new VP Finance. Details can be found in the linked advert



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