TaxCorporate TaxUK universities face VAT threat

UK universities face VAT threat

UK universities and research institutes are among bodies likely to be hit by an EU ruling that found exempting academic bodies from VAT on commissioned research is against the law.

Last week the European Court of Justice found against German universities, where pure academic research had been exempt from VAT.

Accountants fear the ruling will now call into question the VAT status of research centres in the UK.

Grant Thornton VAT partner, Frank Hartley, said: ‘The uncertainty and disruption caused by this judgment will be unwelcome in an already threatened and underfunded sector.’

He added: ‘This is a VAT-driven tragedy. The research community and their advisers need to work closely with Customs, the Treasury and the funding councils to ensure that Britain’s world-class standing in research and innovation is not killed off by technicalities of the VAT system.’

If changes are made in the UK, universities would have to start charging VAT at 17.5% on supplies of research to other eligible bodies. The big winners would be universities doing scientific or engineering research under contracts with government departments.

However, losers may include public sector and not for profit funders as universities would have to charge them VAT, which the funding body could not recover.

Related Articles

Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

Corporate Tax Big names, little tax: Airbnb, Facebook, Kellogg’s, eBay

2m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

2m Emma Rawson, ATT Technical Officer
EU divided over radical tax reforms targeting tech giants

Corporate Tax EU divided over radical tax reforms targeting tech giants

2m Alia Shoaib, Reporter
‘Improve rather than lose’ disincorporation relief, tax body urges

Administration ‘Improve rather than lose’ disincorporation relief, tax body urges

3m Austin Clark, Reporter
How to educate your clients about tax avoidance

Corporate Tax How to educate your clients about tax avoidance

3m Clear Books | Sponsored
CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

Corporate Tax CGT clampdown nets HMRC £124m – but could lead to increase in use of avoidance schemes

3m Austin Clark, Reporter
‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
Should I incorporate my buy-to-let business?

Corporate Tax Should I incorporate my buy-to-let business?

4m Emma Rawson