Purchases outside UK
The University has to pay VAT to HMRC on goods or services received from suppliers outside the UK. The intention is to ensure that VAT is levied at the UK rate on all purchases so that the rate of VAT is not a factor when deciding which supplier to use.
Goods imported from outside the UK
In the case of goods imported from outside the EU, VAT will be charged at the point of entry to the UK. This is usually paid by the importing agent who will then require payment from the University prior to releasing the goods.
Suppliers of goods based in the EU should issue VAT free invoices, as long as they have the University’s EORI number. Instead VAT is charged in the UK at the UK rate. This will either happen at the UK border, in which case the courier company will pay it on the University’s behalf and invoice the University later on, or if not, then the University will account for VAT when it processes the invoice.
The University’s EORI number is GB692712320000 and is included on University purchase orders.
Services imported from outside the UK
Supplies of services from outside the UK are also subject to VAT. This is known as a “reverse charge” and operates in the same manner as acquisition tax, with the University accounting for VAT at the UK rate when it processes the purchase invoice. EU suppliers will require the University’s VAT registration number before they can issue a VAT free invoice.
Common examples of services subject to reverse charges include:
- Overseas recruitment agents
- Consultancy/advisory services
- Electronic publications or journals
- Software.
In order for a reverse charge to apply the following conditions must be met:
- The supplier is outside the UK. This is defined as a supplier with an address outside the UK that does not have a UK VAT number. Some overseas suppliers have branch offices in the UK and if this is the case then they will have a UK VAT number.
- The supply is made in the UK. HMRC’s “Business to Business” rules mean that services should be treated as having been made in the UK unless they fall into certain categories as follows:
- Land
- Hire of transport
- Services linked to physical performance
- Ancillary transport services
- Restaurant and catering services
- Passenger and freight transport
- Intermediary services
- Digital Services.
- The supply is taxable. Transactions that are exempt or outside the scope of VAT do not attract a reverse charge. In practice, zero-rated supplies (including medical supplies) do not require a reverse charge.