VAT & the University Sector – VAT Risks & Opportunities – Forum Review

Centurion’s Annual VAT Forums for the University sector joined the online programme this year as with our FE and Housing Association events. As the University sector across the UK becomes increasingly aware of the VAT support Centurion can offer Universities – it’s where Centurion began back in 1998 after all - it was fabulous that there were finance staff from 42 Universities on the Forum. For us that proves just how accessible our support can be to our clients across the UK.

The virtual format worked well, we were delighted to be joined by Andrea Marshall, Tax Specialist at BUFDG and Martin Scammell, THE VAT & Property specialist to ensure that the latest VAT insights could be shared with attendees.

The polls we used also helped illustrate some of the VAT risks and opportunities that the University sector has. We thought it useful to highlight some of those key aspects in this overview. From the perspective of the Centurion Education specialist team the number of attendees and the range of Universities that joined us demonstrated that access to VAT expertise is not hindered by geography – Universities joined the two hour VAT session from the North East & West of England, across Wales and South West & East of England.

What did we learn about the current Covid impact on VAT in the sector?

It was clear that Universities have been involved in supporting the NHS with a range of supplies from research services, seconded staff, provision of residential accommodation as well as other space. Goods have also been supplied and donated, particularly PPE items.

Both Andrea and Martin added their thoughts to the issues arising from change of use of buildings – it is a topic under active discussion with HMRC and whilst there is no generic guidance as yet HMRC have amended their VAT Notice 708 to inform taxpayers that where they face a change of use issue they should contact their CCM or the charities team by email.

Whilst the current working situation is a challenge, we would encourage Finance teams to have regular conversations with their Estates colleagues to identify any planned changes to property use as soon as possible. Many finance teams appear unlikely to physically return to offices before January 2021 so maintaining virtual networks internally as well as externally with advisers will be very important.

Universities are, of course, very sensitive to incurring VAT costs, so the opportunity for reducing the VAT burden with the recent zero rating for e-publications is welcome. This, when combined with the potential for retrospective claims under the Newscorp case, is certainly an area to review.

In respect of retrospective claims, 70% of delegates had submitted a protective claim or were about to, which still left 30% to consider adding this to their “to-do” list for VAT and review the position. In terms of assessing zero rating to e-publications which spanned the change there was a similar split with 33% confirming that they had yet to look at this aspect.

We raised in discussion the perceived delays that we had been seeing from HMRC on the repayment of VAT 652 claims and whilst only 9% of respondents had submitted a claim through this route in the last 3 months, nearly half of those were still unpaid so this remains a point to monitor.

In terms of cashflow more generally it was interesting to compare the use of the UK Governments VAT Deferral Scheme in the University sector to our College network. 50% of Universities responded that they had used the VAT Deferral regime compared to around 5% of the colleges polled.

There is a greater sense of financial pressure across the University sector it would appear as we move to the autumn – reflecting the reductions being seen in International Students, the fall in accommodation fees income for the summer and the additional costs created by COVID.  Any part that effective VAT management can play to remove the risks of errors, reduce the VAT burden on costs and increase access to VAT reliefs and recovery levels is clearly important. 

Our Annual VAT Forum allows us to engage and inform at a group level with our growing university network. There is interest in an Autumn Forum to continue to bring into focus the issues we started to mention again regarding Brexit and we will keep you posted on dates for that.

If you are reading this and would like to find out more about the VAT and Environmental Tax support we provide to our education clients then do get in touch with us at emailus@centurionvat.com.

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