In order that the correct amount of VAT is paid to HMRC, and all the statistical information required to be entered on our VAT Return is completed accurately; every external transaction that the University carries out needs a VAT code (also called a tax code).
Coda, Proactis and the other financial programmes use these VAT codes to post the VAT to the relevant account and to summarise information for the VAT Return.
That is why it is so important to use the correct code as any mistakes directly affect the University’s VAT Return, can be difficult to remedy afterwards, and can lead to substantial penalties from HMRC.
All payment and purchases need a VAT code prefixed with the letter ‘P’.
Please contact the Finance Office if you are unsure as to which code to use. Email:firstname.lastname@example.org or telephone: 46076.
Do not guess as mistakes can be very expensive for Budget Centres.
Use this code for purchases from VAT Registered Suppliers, showing the standard rate of VAT of 20%. The input VAT will be posted to the system and posted to your account together with the cost of the goods or service.
Certain Budget Centres given special 7 digit codes starting PSR**** for tunnelled areas should carry on using their codes.
Most Budget Centres can use the following codes to recover directly attributable input VAT on expenditure incurred in making Vatable supplies (sales):
- PSR1150 for Vatable Research (Element 3 MUST begin ‘RU’, ‘RW’ or ‘RX’)
- PSR1155 for Commercial Contracts (Element 3 MUST begin ‘OCC’ or ‘OCS’)
However, input VAT on the following types of expenditure can NEVER be reclaimed and code ‘PSR’ should be used:
- Car Hire
- Mobile or other telephones
- Food, alcohol and beverages
- Stationery and other consumables
As the lower rate of VAT only applies to domestic fuel and some specialised property refurbishments, most Budget Centres will never need to use this code.
However, any purchase invoices from VAT registered suppliers showing the lower rate of VAT of 5% need to be coded with ‘PLR’.
Purchase invoices from VAT registered suppliers showing a zero rate of VAT or 0% need VAT code ‘PZR’.
Please note that the zero rate is still a rate of VAT, albeit nil. Do not confuse with the exempt code PXT.
The following are zero rated:
- Books and publications including subscriptions to publications. Please note that the zero rating only applies to hard copies. All electronic and downloaded publications are vatable at the standard rate.
- Food for human consumption including milk, tea and coffee, but not confectionery, biscuits and soft drinks (which are standard rated).
- Water and sewerage
- Grass seed
- Sea, coach, train and air travel, but not taxis which are always standard rated.
- Medical equipment and medicinal substances purchased for medical treatment or medical research, following the submission of a zero rating certificate. See Section 4.4 for more details.
- Charity advertising following submission of a zero rating certificate. See Section 4.2 for more details.
Purchase invoices that are exempt from VAT need code ‘PXT’.
Examples of items exempt from VAT are:
Education and research supplied by an eligible body (ie. University, Local Authority, Health Trust, Government Agency, and some charities).
Insurance, bank charges, statutory fees and charges.
Conference facilities provided by other eligible bodies for our own students.
Purchase invoices from the EU or Overseas must be dealt with through the Foreign Payments System, even if the payment is to be made in Sterling in the UK. VAT codes are not required.
Goods and services from the EU and Overseas are still subject to UK VAT at the relevant rate.
Goods and services from the EU will have VAT levied by the Finance Office (called Reverse Charge) via our Monthly Intrastat Return.
Goods purchased from outside the EU will be charged VAT and duty by the carrier on behalf of HMRC at the port or airport of entry. This must be paid before the goods will be released.