Published on 10.10.19

VAT Update No.49 - September

VAT Update No. 49 – September 2019

 

Welcome to our education sector VAT update.  This update covers a number of topics.

 

VAT “reverse charge” accounting for intermediate building and construction supply chain services

 

The Government is introducing a change to the way VAT is declared by construction contractors.  The change happens 1 October 2019.  These changes, however, do not affect contractors’ sales invoices when they relate to supplies to Colleges and Universities or their subsidiary companies as the end user/consumer.

 

It is possible your organisation may be contacted by building contractors (and allied building trades) to ask the question:- are you the final user?  Being the final user will normally be the case, but please though take advice if you are selling construction services to another party.  If you recharge construction services to a collaborating connected party, such as a subsidiary or vice versa this still counts as an end user situation.

 

HMRC guidance recommends that end user customers of construction businesses reply to questions from building contractors in the following terms:-

 

“We are an end user for the purposes of Section 55A, VAT Act 1994 reverse charge for building and construction services.  Please issue us with a normal VAT invoice, with VAT charged at the appropriate rate.  We will not account for the reverse charge.”

 

JISC & Further Education College Subscription Fees

 

JISC is introducing new fees to FE Colleges for the 2019/20 financial year.  The JISC fees are normally liable to standard-rate VAT.  JISC has just confirmed to us that the subscription charge for use of its IT infrastructure will NOT be covered by the cost sharing exemption it operates for some of its other services to members.

 

Sale of Totum Reward Cards

 

Some institutions sell to their students a discount/reward card product called Totum (previously called NUS Extra).  These cards give the holder a right to discounts in shops and restaurants.  The sale of these cards is VAT standard-rated.

 

The operation of Totum card sales has recently moved from the NUS to Onevoice Digital Ltd.  Onevoice is asking institutions that sell the cards to sign a self-billing agreement.  Onevoice will then send out a document that becomes your sales invoice and will give detail of output VAT to declare to HMRC.  There shouldn’t be an issue in signing up to self-billing, but you must put in place a procedure to ensure any output VAT reported by Onevoice to your organisation is included in your VAT sales figures and the output VAT declared and paid to HMRC.

 

EORI Number for EU Trading

 

The Economic Operator Registration and Identification (EROI) number is used by HMRC for processing imports and exports.  The EROI is based on your organisation’s VAT number.  HMRC recommends your register it to obtain an EROI number before 31 October 2019.  Go to get an EORI number:-  https://www.gov.uk/eori

 

Once you have an EROI it should be quoted to suppliers and import agents when buying goods from abroad.

 

HMRC updated VAT guidance on education

 

HMRC’s VAT guidance to Colleges and Universities has recently been updated.  Go to:-

 

https://www.gov.uk/guidance/vat-on-education-and-vocational-training-notice-70130

 

HMRC consults on simplification changes to Partial Exemption

HMRC is consulting on whether to make changes to procedures for agreeing a new partial exemption method, the monetary limits for partial exemption and the Capital Goods Scheme.  You are not obliged to reply to what is a lengthy and complex consultation document.  The HMRC review might lead to changes during the next few years.

 

Making Tax (VAT) Digital

 

A reminder to diary a note to sign up your institution for MTD on or after 13 December 2019.

Go to:- https://www.gov.uk/government/publications/making-tax-digital/overview-of-making-tax-digital

 

A useful summary of an MTD spreadsheet link is here

 

https://www.pwc.co.uk/ux23/products-and-services/pwc-making-tax-digital-VAT-efile.html

 

Further Information

 

Please let us know if you have any questions on the foregoing!

 

Please contact the following Davies Mayers VAT advisers for further information:-

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