How do I

Charitable Exemption

The University is exempt from most direct taxes by law, and to partial relief on others such as Stamp Duty Land Tax. However, this is dependent upon the otherwise assessable income relating wholly to primary purpose charitable activity.

The Finance Act 2006 introduced substantial anti avoidance legislation to prevent the abuse of such charitable exemption. This reinforces existing governance principles for the University to conduct any non-primary purpose activities under non-charitable subsidiaries, and new obligations to police the transactions with substantial donors in order to maintain its exemption from Corporation Tax.

Corporation Tax

Non-primary purpose activity might constitute either a commercially run trading activity (such as non-student lettings) or a simple cost (including 'non-qualifying' investments). Both must be excluded from the University's accounts, and it is a feature of the legislation that non-charitable costs would otherwise attract a liability to Corporation Tax in a similar manner to trading profits.

This principle relies upon demonstrable arm’s length pricing of transactions between the University and its subsidiaries to prove the accounting integrity, and which also extends to transactions with 'substantial donors'.

Foreign Tax Exempt

Explanatory note to accompany W-8EXP certificates

The University of Oxford is registered in the US as a ‘foreign tax exempt’ organisation, and routinely files annual tax returns that are published in the public domain. The W-8EXP certifies this tax status and has indefinite validity on the strength of holding a registered Taxpayer Identification Number. This level of assurance is far stronger than the US-UK [Double Tax] Treaty benefits that must otherwise be used by UK resident bodies using Form W-8BEN.

IRS Notification Letter 1990 (DOC)  
W-8EXP Form - Feb 2019 (PDF)  
Explanatory note to W-8EXP (PDF)  

Other Direct Taxes

Please contact the Payroll Team for issues concerning employment tax or the Tax Team for all other queries. 

Recoverability errors

The most common VAT errors for Accounts Payable (AP) costs occur when the recoverability rate for an invoice, payment request or expense, is different from the default setting for the cost centre. These are corrected centrally each month for all AP transactions, including those on departmental projects and research project codes, after the AP module has closed and then adjusted to your cost centre/project.

The Tax team will contact you before posting corrections where the net result to any single department or project is a cost exceeding £5,000.

Other errors

There are other potential errors to the underlying data that this adjustment cannot correct. When the AP module closes, you should run the UO Detailed VAT Report – Costs as usual for the previous month. Please review the report for any unusual transactions, which should be returned to the Tax team using the AP Error Reporting form.

Incorrect purchase category, which could result in an invalid VAT rate on a purchase order. Reverse charges for VAT on overseas goods and services – you should be certain that any of these items without an offset tax rate are correct. Research funding passed to collaborating organisations that are not recognised as Org 71 parties and which may have been wrongly subject to reverse charge VAT.

Overview

All purchases require the correct purchasing category code to ensure that R12 is able to make the correct VAT decision. It is not this alone that decides the final VAT treatment but it is an integral part of the process that will help shape the final outcome.

Catalogue Purchases

All items purchased via a catalogue supplier will already have the appropriate “Purchasing category code” assigned to it, however, input of these codes was the responsibility of the supplier and occasionally the incorrect code has been assigned. If the VAT outcome on a purchase order looks incorrect it may be possible that the wrong purchasing category code has been assigned. You can check the category code against the R12 Purchasing category code guidance. R12 Purchasing Coding Category Guidance for Non-Catalogue Requisitions.

Non-Catalogue Purchases

For non-catalogue purchases it is recommended that you use the R12 Purchasing category code guidance in order to achieve the correct VAT outcome. It is recommended that the link above is used to ensure that the most recent version of the guidance is always followed.

As a starting point, it’s worth remembering that any supply of goods or services is liable to the standard rate VAT unless the supply is liable at a lower rate of VAT (5% or 0%) or is a VAT-exempt supply.  The payment might alternatively not be treatable as consideration for a supply, in which case the transaction is outside the scope of VAT.

For further information on this, please see ‘Sales all taxable unless…’  The tax engine should correctly determine the liability.

If you are satisfied you know what the tax liability should be, and the tax engine still does not give you the result you expect, the following steps will lead you to the tax analysis:

 

  1. On the Worklist, click on the requisition line you wish to investigate.
  2. On the next screen, click on ‘View Requisition Details’ in the bottom left-hand corner.
  3. On the next screen, click on the icon under ‘Details’.
  4. On the next screen, click on ‘Show Additional Information’.
  5. In the ‘Item Information’ section of the next screen, click on ‘Click here’, next to ‘Tax Details’.
  6. In the next screen, click on ‘Additional Tax Information’.

The next screen shows a section titled ‘Tax Determining Factors for Lines’. This is where you can see the detail that the tax engine has used to classify your purchase.

  • If the product Fiscal Classification box indicates ‘Yes’, this confirms that the tax engine has been run.
  • The ‘Tax Classification’ box shows the VAT liability of the supply based on the information entered. A purchase of goods that might qualify for zero rate VAT relief would show ‘GB VAT ZERO CERT EQPT’ in this box.
  • However, for zero rate VAT to apply to the purchase when the Purchase Order is processed, it is necessary for the ‘Intended Use’ box to also be populated, e.g. Med/Vet Research.  If the ‘Intended Use’ box is blank, the purchase will be standard rated.
  • The ‘User Defined Fiscal Classification’ box indicates the extent to which any VAT charged is recoverable.  This will be set as a default according to the department or project set up.  Typically this will be ‘UO RESIDUAL’, i.e. residual recovery at the University’s rate of 12%.

University income, whether that is a sales invoice raised or miscellaneous cash banked, works on the assumption that it is taxable unless there is a particular relief or concession that states otherwise, for example zero-rated or exempt items.

Unlike the University, many businesses are in the position that they can recover any VAT they incur and a VAT charge on an invoice raised will not cause them any concern.

VAT must be accounted for where due, otherwise that may lead to the University incurring penalties and interest, which would be passed onto the offending department.

If you are in any doubt regarding the liability income you are receiving then please contact the VAT Team vatenquiries@admin.ox.ac.uk.

Contact us


VAT enquiries

Email: vatenquiries@admin.ox.ac.uk
Tel: 01865 - (6)16215

Intrastat

Email: intrastat@admin.ox.ac.uk
Tel: 01865 - (6)16215

Other Tax enquiries

Head of Tax - Sally McKinlay
Email: sally.mckinlay@admin.ox.ac.uk

VAT Manager - Bernie Hurst
Email: bernard.hurst@admin.ox.ac.uk

VAT Advisor - David Creasey
Email: david.creasey@admin.ox.ac.uk

VAT Assistant - Christie Vaughan
Email: christie.vaughan@admin.ox.ac.uk

Direct Tax Analyst - Sam Dent
Email: sam.dent@admin.ox.ac.uk