School of Oriental and African Studies (SOAS)
VAT Guide
Revised: February 2012
This guide is intended to provide an overview and simple guidance on the
common VAT issues that affect SOAS.
Contents:
1. General VAT information
1.1. VAT overview
1.2. VAT at SOAS
1.3. VAT Partial exemption
1.4. Responsibilities and contact details
2. VAT on SOAS activities
2.1. Education and ‘closely related’ good/services
2.2. Research
2.3. Conference facilities
2.4. Consultancy
2.5. Library services and publication sales
2.6. Catering
2.7. Donations and sponsorship
2.8. Re-sales
2.9. Supplies made outside of the UK
2.10. Course application administration fees
2.11. Royalties
2.12. Merchandise sales
3. VAT on purchases
3.1. Overview
3.2. Zero rating for charitable advertising
3.3. Exemption for purchases connected to a supply of education
3.4. Capital expenditure
3.5. Imports of goods and services to the School from overseas
3.6. Import VAT and EORI Numbers (formerly TURNS)
3.7. University museums that provided free entry to collections
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4. VAT on Agresso
4.1. General
4.2. Accounts payable
4.3. Accounts receivable
4.4. Non VAT transactions
5.
Appendices
Appendix I: Glossary of terms
Appendix II: Basic VAT model
Appendix III: Consultancy definition
Appendix IV: Conference VAT Exemption Declaration Template
Appendix V: Zero Rate VAT certificate for Advertising
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1. General VAT information
1.1.
VAT overview
1.1.1. Value Added Tax (VAT) is a tax on consumer expenditure.
1.1.2. Businesses are generally required to add the tax to the value of goods and
services that they supply to their customers. This is known as Output tax.
When a business suffers VAT on goods and services which it has purchased
in furtherance of its own business activities (and therefore relates to the
supply of goods and services to its own customers) it is entitled to recover the
tax. The tax on purchases is known as Input tax.
1.1.3. As such VAT is designed to be a non-cumulative tax, with the actual tax cost
only suffered by the ultimate consumer (as illustrated in Appendix II).
1.1.4. VAT registered businesses submit periodic returns (usually quarterly) to HM
Revenue & Customs. Input tax is deducted from Output tax on the return and
the balance is paid to or recovered from HM Revenue & Customs.
1.1.5. This basic model is complicated by the fact that certain goods and services
are specifically exempted from VAT. A business engaged in an exempt
activity does not charge VAT to its customers but neither can it recover VAT
costs it may have suffered in providing such supplies.
1.1.6. The standard rate for VAT in the UK is 20.0% and applies for most goods
and services. The reduced rate (5%) and zero rate (0%) are used for
specific types of supply, as defined in law.
1.2.
VAT at SOAS
1.2.1. SOAS is a VAT registered organisation.
1.2.2. SOAS is primarily involved in activities that are either exempt from VAT or
outside the scope of VAT as they do not represent a business supply. This
is because the supply of education by an eligible body (that is basically a
non-profit making organisation) is specifically exempt from VAT. Nonbusiness research is outside the scope of VAT.
1.2.3. Those activities which do not meet the definition of relating to a supply of
education are however taxable.
1.2.4. The University will generally be charged VAT on the goods and services it
purchases, just like any other business. The School’s charitable status only
has a very limited impact in reducing the level of input tax suffered.
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1.3.
VAT Partial exemption
1.3.1.
Organisations such as SOAS that provide a mixture of exempt and taxable
supplies are subject to VAT Partial Exemption rules.
1.3.2.
Partial exemption basically means that the amount of input tax recoverable
on purchases that relate to both exempt and taxable supplies (such as
general overheads like fuel and power, telephone costs etc) is determined
by the ratio of exempt and taxable supplies made by the business. So, for
example, if a business made 75% exempt supplies and 25% taxable
supplies, it would only be able to recover 25% of the input VAT it had
suffered on general expenditure.
1.3.3.
Input VAT which directly relates to taxable supplies is fully recoverable by a
partially exempt business. Input VAT which directly relates to exempt
supplies is fully non recoverable by a partially exempt business.
1.3.4.
As SOAS makes mainly exempt supplies it can only recover a very limited
amount of the VAT it incurs each year. VAT therefore represents a
significant annual cost to the School.
1.4.
Responsibilities and contact details
1.4.1.
The Finance Department is responsible for advising on the School’s VAT
affairs and for liaison with HMRC.
1.4.2.
Compliance with VAT requirements is however a School wide responsibility.
VAT guidance should therefore be sought on all new areas of activity,
particularly if they relate to capital expenditure or new income streams.
Early involvement and tax planning are essential in managing the School’s
VAT exposure.
1.4.3.
The Senior Financial Accountant is responsible for VAT advice and
administration in the School. Tax planning and compliance assurance are
carried out in partnership with the School’s external tax advisors.
Contact:
Richard Lucus
Senior Financial Accountant
Email:
[email protected]
Extension:
5023
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2. VAT on SOAS activites
2.1.
Education and ‘closely related’ good/services
2.1.1. Education provided by SOAS is exempt from VAT.
School’s status as an eligible body.
This is due to the
2.1.2. Education in this context includes a course, class or lesson of instruction or
study, in any subject, and regardless of where and when it takes place.
2.1.3. It therefore applies to the full scope of educational services provided by the
School: SOAS taught summer schools; non credit bearing language courses;
specialist tailored briefings; educational aspects of distance learning; as well
as the supply of on-campus undergraduate and postgraduate courses.
2.1.4. In addition, the exemption from VAT is extended to goods and services
which are ‘closely related’ to the supply of education.
2.1.5. Closely related is defined as being for the direct use of students and
necessary for the delivery of education. Closely-related goods and services
would include, but not be limited to, accommodation, catering, course
materials and field trips.
2.2.
Research
2.2.1. The VAT status of research is determined by whether it represents an actual
supply to those funding the research and if so, the business status of the
funder.
2.2.2. The majority of SOAS research is outside the scope of VAT, and therefore
no VAT is chargeable or recoverable.
2.2.3. Research is outside the scope of VAT when no supply is deemed to be
made to the research funder. Most commonly this occurs when no unique
benefit accrues to the research funder. This will be the case with research
sponsored by the Funding Councils who generally fund research for the
benefit of everyone.
2.2.4. Research activity carried out by SOAS which is deemed to be a supply is
exempt from VAT when provided to another eligible body. In all other cases
the supply would generally be standard rated.
2.3.
Conference facilities
2.3.1.
Conference facilities provided by the School generally represent a
combination of room hire and other services such as catering and security.
There are separate VAT considerations in each case.
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2.3.2.
The general rule is:Room hire within Brunei gallery or 23/24 Russell Square - taxable at
standard rate
Room hire anywhere other than Brunei gallery – exempt
Other services such as IT/AV setup/hire & security – taxable at standard
rate
2.3.3.
However where the conference facilities are being used by an eligible body
as part of a supply of education and are for the direct use of students the
whole supply is exempt from VAT.
2.3.4.
Customers claiming this exemption must make a declaration that they meet
the relevant criteria when making an order. Appendix IV provides a
template declaration form.
2.3.5.
Room hire in the Brunei Gallery and 23/24 Russell Square are generally
subject to VAT as options to tax were exercised on these buildings. There
is also an option to tax on the land adjoining 25 – 28 Russell Square.
2.3.6.
When SOAS provides a supply of education as part of a conference (either
independently or with another organisation) the whole supply becomes an
exempt supply of education.
2.4.
Consultancy
2.4.1.
Consultancy services are taxable at the standard rate.
2.4.2.
Consultancy can be basically defined as the supply of professional services
to a client for consideration. It is distinct from the School’s primary objects
of education and research.
2.4.3.
A broad definition of consultancy is included in Appendix III.
2.5.
Library services and publication sales
2.5.1.
The supply of books and similar printed material are taxable at the zero rate.
2.5.2.
Therefore the supply of printed study packs, books and other publications
sold by the School are zero rated outputs.
2.5.3.
As an extension of this, income generated by the library which relates to the
lending of books is also taxable at the zero rate. This includes fees and
income from inter-library lending.
2.5.4.
E-books and electronic services (including subscriptions) are standard rated
in the UK unlike printed books.
2.5.5.
Fines are treated as compensation payments and therefore outside the
scope of VAT.
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2.5.6.
Photocopying charges for students should be treated as VAT exempt as
closely related to the supply of Education.
2.5.7.
The sale of DVDs are subject to VAT at the standard rate.
2.6.
Catering
2.6.1.
The supply of catering is generally standard rated for VAT purposes
2.6.2.
However the supply of catering to students where closely related to a
supply of education is exempt from VAT.
2.6.3.
An apportionment between standard rated and exempt sales is therefore
made for catering outlets which supply both students and staff / other
customers. This is currently a fixed rate applied by Elior based on a survey
of actual usage.
2.6.4.
VAT is not applicable on the provision of internal catering. This is as Elior
are providing catering services as an agent of SOAS. Therefore internal
catering does not represent an actual supply (SOAS being effectively both
supplier and consumer).
2.7.
Donations and sponsorship
2.7.1.
Donations and sponsorship will generally be outside the scope of VAT as
they do not relate to a supply of goods or services
2.7.2.
However if SOAS is obliged to provide a ‘significant’ benefit to a donor a
supply will be deemed to have occurred and the funding will be subject to
VAT at the standard rate.
2.7.3.
The acknowledgement of a genuine donation, such as the naming of a
Chair or building, does not constitute a significant benefit.
2.8.
Re-sales
2.8.1.
SOAS must generally charge VAT on resold goods.
2.8.2.
This includes computers purchased on behalf of staff through the School
and merchandising sold through the Brunei Gallery shop. On such items
the School will recover the relevant input VAT.
2.8.3.
The VAT inclusive cost charged to staff members for computer purchases
will be taken gross to the computer loan account. SOAS will simply recover
and charge the same amount of VAT.
2.9.
Supplies made outside of the UK
2.9.1.
Determining the VAT status of supplies to customers outside of the UK can
be complex. It is therefore advised that guidance is sought from the
Finance department on a case by case basis.
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2.9.2.
It is important to obtain evidence of the business status of the international
customer, where the customer is established for business purposes and
details of where the service is physically being performed.
2.9.3.
The Business to Business (B2B) general rule for supplies of services is that
the supply is made where the customer belongs. The Business to
Customer (B2C) general rule for supplies of services is that the supply is
made where the supplier belongs.
2.10.
Course Application Administration Fees
2.10.1. HMRC have ruled that course application fees are standard rated (HMRC
letter to SOAS 28/07/2010).
2.11.
Royalty Fees
2.11.1. VAT is charged at the standard rate on royalties received by UK businesses.
Overseas Royalties from businesses established abroad are subject to the
normal B2B place of supply rule and are outside of the scope of UK VAT.
2.11.2. The Senior Financial Accountant reviews royalty income (account code
1420 and 9320 CAT 4 CLAF etc) and declares VAT on the gross amount as
the amount has already been received including VAT.
2.11.3. Certain organisations such as Adam Matthew require a VAT invoice before
they will transfer royalties to the School.
2.12.
Merchandise Sales
2.12.1. The sale of study packs to the book store is zero rated.
2.12.2. The sale of pens or bags to the Students Union or book store is standard
rated.
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3. VAT on purchases
3.1.
Overview
3.1.1.
Most goods and services purchased by the School will be subject to VAT.
3.1.2.
As SOAS has a very limited ability to recover input VAT it is essential that
irrecoverable VAT costs be considered when preparing budgets and
costings.
3.2.
Zero rating for charitable advertising
3.2.1.
There are limited VAT benefits that result from holding charitable status.
The most relevant for SOAS is the zero rating of advertising.
3.2.2.
Supplies of advertising can be made to the School at the zero rate of VAT.
The relief covers both the cost of displaying the advert and the cost of
producing it.
3.2.3.
There are no restrictions on the purpose of the advertising or the media in
which it is placed, however it must use a third party’s time or space. As
such costs relating to advertising on the School’s own website would not be
eligible for the relief.
3.2.4.
The supplier will require a declaration of the School’s eligibility for VAT zero
rating. A declaration template, and guidance on completion, should be
obtained from the Finance department. An example declaration template is
included in Appendix V.
3.3.
Exemption for purchases connected to a supply of education
3.3.1.
The School’s eligible body status means that certain educationally related
purchases should be exempt from VAT.
3.3.2.
All examination services, regardless of the status of the organisation
providing them, should be exempt
3.3.3.
The supply of education or closely related services are exempt from VAT
when provided by another eligible body, such as a University.
3.4.
Capital expenditure
3.4.1.
Capital expenditure refers to the purchase or construction of assets which
will be used by the school on an ongoing basis. This includes buildings,
internal fixtures and fittings and IT equipment.
3.4.2.
The basic principles of partial exemption apply in most cases and the
School will be able to recover none or only a limited amount of the input
VAT incurred.
3.4.3.
There are however special concessions which may apply, particularly with
respect to construction and property transactions.
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3.5.
Imports of goods and services to the School from overseas
3.5.1.
The general place of supply rule is that business to business supplies are
deemed to take place where the customer is. For imported goods and
services from overseas, the School is the customer and so the place of
supply is normally in the UK. 1
3.5.2.
Imported goods and services will therefore generally be subject to VAT at
the relevant UK rate. This is done to avoid disadvantaging UK suppliers of
the same goods and services, and prevent consumer VAT avoidance by
sourcing goods and services from countries that do not charge VAT.
3.5.3.
The VAT charge will either be made by HMRC at the point of entry to the
UK or by the School through the ‘Reverse Charge’, whereby the School
effectively charges itself VAT.
3.5.4.
For goods and services it is necessary to consider the potential VAT liability
together with the purchase cost quoted by the supplier. For goods imported
from outside of the EU, Import Duty costs may also be payable.
3.5.5.
For public research grant funded projects, no VAT can be reclaimed from
HMRC. For projects where we charge a funder VAT for contract research or
consultancy, the full amount of reverse charge VAT may be recoverable
from HMRC.
3.5.6.
The main imported goods purchased by the School are books and
publications. Since books etc are zero rated when supplied in the UK there
is no VAT cost to SOAS.
3.5.7.
Examples of common areas where reverse charging is necessary:

Overseas student recruitment agency fees.

Overseas consultancy or legal services.

Overseas fees charged by the agent for arranging accommodation and
travel.

Overseas research services not provided by an eligible body such as a
university or charity. For example, research services purchased from
an individual acting for their own profit and effectively self employed,
would be subject to a reverse charge. Note that even where an
overseas business would be below the VAT registration limit in the UK,
a reverse charge would be applicable.

E-books and electronic services (including subscriptions) – these are
standard rated in the UK unlike printed books.

There is little or no discretion on the VAT treatment of the items listed
as eligible for reverse charge above so it is strongly recommended that
1
Even though the School performs both business and non-business activity (e.g. publically
funded research), the School as a whole is deemed to be in business.
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VAT at 20% is added to the basic cost of the project or activity where it
is intended to recover the costs from a third party (unless of course
VAT is chargeable on the service provided to the funder/customer and
SOAS is able to reclaim the VAT).
3.5.8.
3.5.9.
Potential mitigation strategies might include:

Sourcing research services from overseas eligible bodies such as
universities and charities.

Identifying where an overseas third party is acting as our agent for
purchasing of services and where the nature of the supply is either not
normally subject to VAT or belongs for VAT purposes where physically
supplied i.e. when a third party is paying for travel on our behalf. This
can be treated as a disbursement and no VAT reverse charge would
apply. However a third party’s own travel and admin expenses will be
subject to a reverse charge, including any costs they incur in the
process of delivering the service to the School. Please note that it is
not always possible to treat items as disbursements and this depends
on the nature of the contract with the third party. Normally there would
be a clause identifying items where the third party is acting as agent.
Please contact the Senior Financial Accountant for a full list of HMRC’s
requirements.
There are some potential exemptions that allow the place of supply to be
overseas and not subject to UK VAT. These are listed below in summary
but further details are available from the Senior Financial Accountant and
HMRC VAT notice 741A.

Supply of services that relate to land or property - the place of supply
of those services is where the land itself is located not the customer.
Examples of such services include hotel accommodation.

Short-term hiring of means of transport (such as cars) are supplied
where the means of transport is put at the disposal of the hiree. The
exact meaning of ‘short-term’ is subject to a number of rules found in
HMRC VAT notice 741A.

Supplies of services in respect of admission to cultural, artistic,
sporting, scientific, educational, entertainment or similar events
(including fairs and exhibitions) take place where the event is. If this is
overseas, no VAT reverse charge is applicable.
3.5.10. The full VAT rules regarding reverse charging are very complex and it is
recommended that staff planning projects consult with the Senior Financial
Accountant and the Research and Enterprise Office at an early stage to
allow appropriate VAT planning to take place.
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3.6. Import VAT and EORI Numbers (formerly TURNS)
3.6.1.
Import VAT is the transaction tax levied on imported goods. Subject to the
normal rules, you can claim as input tax any import VAT you pay on goods,
provided those goods are imported for the purpose of your business. To
recover VAT as input tax, you must have official evidence of VAT paid on
the imported goods. The normal evidence is the monthly certificate, known
as Form C79, which bears the trader's VAT registration number, plus a
three-digit suffix. The whole number is known as the Economic Operator
Registration and Identification or EORI (formerly Trader Unique Reference
Number (TURN)). An EORI is required for the clearance of commercial
import and export entries through the Customs Handling of Import and
Export Freight (CHIEF) system. The School’s EORI is 233674657 000.
3.6.2.
In months where activity occurs, EORI C79 certificates will be issued to the
School showing the transactions for that month. These should be retained
to support the School’s claim for input tax where the goods bought were
used for onward VATable business.
3.6.3.
Staff must take care to use the correct EORI. If not, the VAT paid may not
appear on the School’s certificate and may even end up on another
person’s certificate.
3.6.4.
Negative amounts may appear on the EORI certificate. These are either
repayments of import VAT or corrections of errors.
3.7. University museums that provide free entry to collections (Section 33A
relief)
3.7.1.
There is a special concession for University museums that provide free
entry to their collections. This extra-statutory concession aims to ensure
that the museums and galleries specified in an Order made under Section
33A (9) of the VAT Act 1994 are not required to repay input tax, properly
recovered at the time on goods and services used in connection with
taxable supplies of admitting the public for payment, solely on account of
the move to free admission.
3.7.2.
The Percival David Collection is now housed at the British Museum but
negotiations are underway in respect of the Foyle Special Collections
Gallery.
_top
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4. VAT on Agresso
4.1. General
4.1.1.
Postings onto the Agresso system must include a tax code. The coding is
used to prepare the School’s VAT returns and to calculate the amount
recoverable or payable to Customs.
4.1.2.
Default tax coding has been built into Agresso, and should be followed in
most circumstances. The default coding will automatically populate the tax
code field when posting invoices or raising sales or purchase orders,
usually based on the combination of a particular account code and
department attribute.
4.1.3.
All Finance Department staff are responsible for ensuring that VAT data on
Agresso is accurate, complete, and supported by a full audit trail back to a
valid VAT invoice.
4.1.4.
It is important to note that there are many transactions entered onto
Agresso that have no VAT significance, and for which the 0 tax code should
be used (see point 4.4).
4.2. Accounts payable (AP)
4.2.1.
The tax coding used in AP serves a number of purposes: To record the level of VAT whether 20.0%, 5% or none.
 To determine the figure accounted for in the general ledger expense
account.
 Where a ‘fully recoverable’ tax code is used the VAT element of the
invoice is posted to a balance sheet VAT recovery account and the net
figure only is reflected as an expense. For ‘non recoverable’ and
‘partially recoverable codes’ the gross amount is shown as the expense.
 To identify the VAT status of the transaction.
 For example, to distinguish between a zero rate and exempt rated supply.
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4.2.2.
Standard AP tax codes
Code
Rate
Description
Z
0.00
Inputs at zero rate VAT
The Z code should only be used where the supply is taxed at a zero rate.
This will be shown on the invoice, and will generally only apply to
advertising, printed material, domestic travel and unprepared food.
E
0.00
Inputs exempt from VAT
Tax code E should be used for invoices which refer to exempt VAT, or
invoices and payments with no reference to VAT.
SF
20.00%
Standard rate fully recoverable input tax
SP
20.00%
Standard rate partially recoverable
SN
20.00%
Standard rate non recoverable
Tax codes SF, SP and SN are used where standard rated VAT of 20.00% is
charged on an invoice. Postings to the S codes must be supported by a
valid VAT invoice.
The relevant tax code will be pulled up automatically within Agresso,
generally based upon the type of expenditure and relevant purchasing
department.
LF
5.0%
Low rate fully recoverable input tax
LP
5.0%
Low rate partially recoverable
LN
5.0%
Low rate non recoverable input tax
Tax codes LF, LP and LN are used on the rare occasion where reduced
rate of VAT of 5% is charged on an invoice. Postings to the L codes must
be supported by a valid VAT invoice.
For SOAS the reduced rate applies primarily for supplies of light and heat
for residential or non-business charitable purposes.
Insurance Premium Tax (IPT) of 5% should not be confused with the
reduced rate of VAT. The total invoice amount including IPT should be
posted using the E tax code.
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X
0.00%
Inputs at export VAT rate
Tax code X is used for foreign payments
4.2.3.
Exceptions to default tax coding
There are a number of occasions where the default tax coding should be
overridden
Catering invoices:
These self billing invoices include a combination of standard and exempt
rated outputs, and standard and zero rated inputs.
A posting schedule is prepared for such invoices setting out the relevant
VAT coding.
Advertising and recruitment:
All School advertising should be zero rated therefore the account (3005)
defaults to Z.
Recruitment expenses however will usually be standard rated. Use code
SN for appointments within academic departments, code SP if from
administrative departments.
Purchase card purchases:
At present all purchases are being coded to 0 – the code used for journal
postings and non-VATable transactions. This is done to simplify the posting
and analysis of purchase card transaction and as there is currently very
little potentially recoverable VAT (the cards being generally used for
overseas travel and book purchases).
4.3. Accounts Receivable
4.3.1.
Coding Overview
The tax coding to be used for transactions will generally follow the default
settings on Agresso or will follow the advice from the relevant department
raising the invoice request (Conferencing, Enterprise etc).
Tax coding which is not consistent with the guidelines for SOAS activities
(as summarised above in section 2) or involves a change in the default tax
code should be queried with the department involved and brought to the
attention of the Senior Financial Accountant.
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4.3.2.
Standard AR tax codes
Code
Rate
Description
EO
0.00% Outputs exempt from VAT
Tax code EO is used where a supply is exempt from VAT. For SOAS
exempt supplies will generally relate to a supply of education.
SO
20.00%
Standard rate output tax
Tax code SO is used where a supply is subject to standard rate VAT.
Standard rated supplies tend to be those business activities which do not
directly relate to education, such as the provision of most conference
facilities and non student catering.
SG
20.00%
Standard rate output tax (gross)
Tax code SG is used to calculate the VAT element on the gross amount.
For example, an application fee may be received at £60 gross. If tax code
SG is used, Agresso will automatically calculate the net amount as £50 and
the VAT amount as £10.
ZO
0.00%
Zero rate VAT outputs
Zero rated sales for the School are connected with the supply of books and
printed materials, either provided through library services or through actual
publication sales.
4.3.3.
Bad debts
VAT charged on an invoice that it subsequently treated as a bad debt is
recoverable from HMRC. To claim this relief it is necessary for the debt to
be over 6 months old and to have been written off in our accounts.
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Before an invoice is written off it is therefore essential that any VAT
component is identified and the details passed on to the Senior Financial
Accountant.
Student fee invoices are exempt from VAT and as no VAT was originally
charged, there is no scope to recover VAT on student bad debt write offs.
4.4. Non VAT transactions
4.4.1.
VAT only applies to the supply of goods and services, either received by the
School or made by it.
4.4.2.
There are therefore many postings made to Agresso that have no VAT
significance, and as such do not require VAT analysis.
In these
circumstances 0 should be used in the tax code field.
4.4.3.
Such transactions include payroll postings, journal adjustments such as the
recharge of costs within the School.
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Appendix I: Glossary of terms
Net
Gross
Standard rated
supply
Exempt supply
Zero rated supply
Reduced rate supply
Input VAT
Output VAT
Outside the scope of
VAT
Eligible body
HMRC
Partial exemption
Option to tax
The VAT exclusive purchase or sales price
The VAT inclusive purchase or sales price
A supply of goods or services on which VAT is charged
at the standard rate of 20.00%
A supply of goods or services on which VAT is not
charged
A supply of goods or services on which VAT is charged
at the rate of zero %
A supply of goods or services on which VAT is charged
at the reduced rate of 5%
VAT paid on purchases
VAT charged on sales
A transaction that does not represent the supply of
goods and services as defined in VAT law
An organisation as defined in the 1994 VAT Act that can
supply education and certain research exempt from
VAT.
Eligible bodies include universities, government
departments and non-profit making organisations such
as charities.
The government department responsible for the
collection and administration of VAT and other taxes.
The situation where an organisation makes a
combination of taxable and exempt supplies.
Recovery of input VAT is restricted to that incurred in
connection with making taxable supplies, and a
proportion of the VAT incurred on general overheads as
calculated on the basis of the mix of taxable and exempt
supplies.
The voluntary decision to treat a generally exempt
supply as standard rated. The option to tax is limited to
certain property transactions.
School of Oriental and African Studies
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Appendix II: Basic VAT model
This simple example is based on a four stage retail cycle from manufacturer to consumer:
Manufacturer
Wholesaler
Retailer
Consumer
-
(10.00)
(2.00)
(16.00)
(3.20)
(27.50)
(5.50)
10.00
16.00
27.50
2.00
3.20
5.50
VAT paid /
(recovered)
(2.00)
(1.20)
(2.30)
-
Net income / (cost)
10.00
6.00
11.50
(33.00)
Purchase Price
Input VAT suffered
Sale price
Output VAT
charged
Total
(5.50)
Note:
VAT paid to HMRC in the three instalments from manufacturer, wholesaler and retailer is
equal to VAT ultimately suffered by the consumer.

VAT has no impact on the profits generated by the manufacturer, wholesaler and
retailer.
School of Oriental and African Studies
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Appendix III: Consultancy definition
Consultancy can be broadly defined as:
Work of a professional nature, undertaken by School staff in their field of
expertise, for clients outside the institution, and for which consideration is paid,
either to the University or directly to a member of staff;

Producing some form of contracted output (such as a report) which, in general,
would be partly or wholly owned by the client.
Consultancy activities are distinct from the School’s primary objects of education and
research. Supplies of education and certain types of research are exempt from VAT
due to the University’s eligible body status. As no such exemption exists for
consultancy it may be further classified as an activity which does not meet the
definitions of education and research as used for VAT purposes:
Education is a course, class or lesson of instruction or study in any subject. It
includes (but is not limited to) lectures, educational seminars, conferences,
symposia and distant learning. No restriction is placed on the subject of the
education, or the location or time of its delivery.

Research is original investigation undertaken in order to gain, advance or
expand knowledge and understanding. This may be either publicly funded by
grant or be directly contracted with a third party.
Contract research is similar to consultancy in that it generally represents a supply to
a third party for consideration. As such, with the exception of the supply of research
between two eligible bodies, both are subject to standard rate VAT.
Consultancy differs in that it is usually short term in nature, does not have as its
primary purpose the transfer of new knowledge or intellectual property, and is
undertaken by existing members of staff rather than by staff specifically recruited to
undertake the work.
School of Oriental and African Studies
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Appendix IV: Conference VAT Exemption Declaration Template
VAT EXEMPTION DECLARATION
SUPPLIES OF EDUCATION AND CLOSELY RELATED GOODS AND SERVICES
Contract between the School of Oriental and African Studies and
Name and Address of Organization:
............................................................................................................................................
............................................................................................................................................
..................................................................................................
Function
Title: ..............................................................................................................................
Date of Function: ....../....../............ to ....../....../............
In order to determine if the charges resulting from this contract are exempt from Value
Added Tax we need to know whether or not your organisation is an eligible body and if
so, whether the goods and services to be provided by the School of Oriental and African
Studies are closely related to supplies of exempt education provided to your
students, delegates, trainees, etc.
You are an eligible body if you are a:
1. School;
2. UK University, and any college, institution, school or hall of such a University;
3. Further and Higher Education Institution (as defined under legislation governing
such bodies);
4. Public body, for example a Government Department, Executive Agency, Local
Authority and Health Authority;
5. Body which:
a) is precluded from distributing and does not distribute any profit it makes;
and,
b) applies any profits made from supplies of education towards the
continuance or improvement of such supplies.
6. Body not falling within categories 1,2,3,4, or 5 which provides the teaching of
English as a foreign language but only in so far as the provision relates to the
teaching of English as a foreign language;
Education is broadly defined as:
A course or lesson of instruction or study in any subject whether or not that subject is
normally taught in schools, colleges or universities and regardless of where and when it
takes place. It includes lectures, educational seminars, conferences and symposia.
For there to be a supply of education you must be charging fees to the attendees.
Goods and services closely related to supplies of exempt education
These are goods and services that are for the direct use of students, trainees,
conference attendees, etc. and that are necessary for delivering the exempt education
to such people. These include accommodation and catering.
School of Oriental and African Studies
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Declaration:
I/We declare that:
Part A:
*1) This organisation is not an eligible body.
*2) This organisation is an eligible body under category ...... detailed above.
*please delete as applicable
Part B (please complete only if your organisation is an eligible body)
*1) The goods and services to be provided by School of Oriental and African Studies
under this contract are closely related to supplies of exempt education and are for the
direct use of our students, trainees, conference attendees, etc.
*2) The goods and services to be provided by School of Oriental and African Studies
under this contract are not closely related to supplies of exempt education and are not
for the direct use of our students, trainees, conference attendees, etc.
*Please delete as applicable
SIGNED:...................................................................
POSITION HELD:....................................................
DATE:.......................................................................
This statement and declaration reflects information contained in Schedule 9, Group 6 of
the VAT Act 1994. Subsequent changes in the law may affect the tax status of our
supply to you.
School of Oriental and African Studies will review all available evidence to check the
validity of your declaration. Should we disagree with the basis of your declaration we
reserve the right to charge VAT at standard rate on the relevant supplies.
School of Oriental and African Studies
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Appendix V: Zero Rate VAT Certificate for Advertising
School of Oriental and African Studies
Zero Rate VAT Certificate for Advertising
I, Richard Lucus, the Senior Financial Accountant at
The School of Oriental and African Studies (SOAS)
Thornhaugh Street
Russell Square
London WC1H 0XG
declare that the above named charity is buying from:
[Full name and address]
the following which are eligible for relief from VAT under item
8 or 8A 8B or 8C of Zero Rate Group 15:

Advertising services
.............................................................................(Signature and date)
School of Oriental and African Studies
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