Governance & Compliance 3: VAT Update September 2014
Posted on 4 September 2014 by Education Finance
Hi everyone from Karen, Sarah and Jane in the VAT Team.
Just a few items to bring to your attention and some general items on VAT to let you know about.
Please note VAT guidance is now only available on the Source and not accessible from the Council’s external website. We are currently reviewing and updating all the VAT information on our web-pages to make it more user friendly and will let you know when this is completed. Please bear with us in the meantime!
Zero rated, Exempt or Outside of Scope?!
We get a lot of queries about the difference between the three VAT classifications where no VAT is charged – Zero rated VAT (code 7), Exempt from VAT (code 8) and Outside the Scope of VAT (code 9). It is very important that we get the correct classifications, especially on income, as they feed into information we supply to HM Revenue and Customs. While this is not a complete guide the following should let you know the main items of expenditure and income where the “no VAT” codes are applicable:
|Expenditure examples||Income examples|
|Zero rated (code 7)||
Basic food stuffs
|Recharge of metered water to hirer of premises|
|Books, magazines, newspapers||Sale of cold lunches to staff (e.g. sandwiches and fruit, but note bottled water, juices, crisps etc. are vatable)|
|Water from utility company||All uniform sales in primary schools|
|Public transport||Uniform sales of children’s sized clothing in secondary schools (adult sized uniform is vatable)|
|Coach hire (more than 12 seats) + driver|
|Exempt (code 8)||Insurance||Hire of classrooms|
|Some sports lets (see other guidance)|
|Secondment of teaching staff to another school/university/DAPH only /examination body (all recharges of non-teaching staff are vatable, all recharges to private companies are vatable)|
|Recharges to universities for hosting one of their student teachers|
|Outside of scope (code 9)||Invoices from non-VAT registered suppliers||Grants|
|Non-domestic rates bills||School meals and vending sales sold to own pupils only|
|Any transactions within DCC e.g. to a local payment school||Classroom sales e.g. rules, pens, calculators (note bags and water bottles are vatable)|
|Donations (the school gives nothing in return)|
|Any transactions within DCC e.g. to a local payment school|
|School trips income|
|Insurance payouts and staff sickness fund receipts|
|Recharge of SEN teacher giving direct support to pupil in another school|
|Parents contributions e.g. music tuition|
If you are in any doubt as to which VAT code to use, please contact the VAT Team. In particular if you are unclear whether to add VAT to income as this is one of the main areas HMRC focus on when they visit the Council.
Meals supplied to Academy Schools or any other external organisation
If your school provides meals to any academy school then you must charge VAT on the whole cost of the service. HMRC see this as providing a catering service which is vatable. Any meals provided to another DCC school or local payment school are not subject to VAT.
Imports from outside the UK
When you make a purchase from a supplier who is outside the UK, it is important to advise the supplier of DCC’s VAT registration number at the point of order and at that stage please also email Vat Team Mailbox with details of the purchase so that we can follow the VAT audit trail.
VAT only invoices
If you receive a VAT only invoice from a supplier, could you please contact the VAT Team before processing the invoice.
For schools using Parentpay (or another similar system), you receive the income from the finance company net of their fees. Their fees are vatable, so in the same way school can reclaim other VAT charged you are able to reclaim this VAT. Please check the statement provided by the finance company to identify how much VAT you are able to reclaim and that it is valid VAT document, then contact the VAT Team and we will recover the VAT for you.
Income for “supply cover”
We see many debtor accounts (CT10 forms) raised where the only description for the charge is “supply cover”. However in order to get the VAT treatment correct, we need to understand why you are getting paid for supply cover this affects the VAT treatment. We would also ask schools to provide more narrative when filling out CT10 forms incase of queries. Some examples we have come across are:
- If it is part of an overall grant payment e.g. to free up staff to work on a grant funded project – outside of scope (code 9)
- If it is to free up teaching staff to train others (including if your teachers need to attend training in order to carry out the task and then get their costs reimbursed) – exempt (code 8)
- If it is to free up staff time to work for Babcock or any other private business – standard rated (code 6)
- If it is for a teaching member of staff to lecture or provide training to another college, university or academy school – exempt (code 8)
- If it is to free up staff time to work for the PTA – standard rated (code 6)
- If it is to free up staff time to work at another DCC (local payment school) – outside of scope (code 9)
- If it is to cover an SEN teacher to provide direct support to a pupil at a non-DCC school – outside of scope (code 9)
- If it is a to cover a teacher working for an examination body – exempt (code 8)
- If it is to free up time to attend a focus group, or other non-educational event / meeting:
- If you were not providing them with any services, but attending as a member of the community – outside of scope (code 9)
- If you were giving a talk or providing a service at the event – vatable (code 6)
This is not an exhaustive list but gives some examples. If in doubt, please contact the VAT Team before raising the invoice.
Contact the VAT Team
If you have any queries or need training or support on VAT please do not hesitate to contact us:
Email: Vat Team Mailbox
Phone: Sarah Davis 01392 382842 (Mon-Fri) or Karen Ward 01392 382410 (Th & Fri).
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