FAQ's about VAT on Purchases
How will I know which tax code to use?
- Check with the suppler. Certain products and services can have different VAT liabilities depending on different situations. The easiest solution if you have regular supplier is to check a past invoice.
- Contact the Finance Directorate – firstname.lastname@example.org with full written details of the query.
- Input the requisition at the default (ie without changing the VAT Treatment field). Then once the invoice has been received, the liability will be checked. If the VAT liability of the invoice is different to that placed on the order, the invoice will be placed “on hold” in Accounts Payable and you will be asked to authorise any amendment before the invoice is released for payment. You would expect the supply of most goods and commercial services to be Vatable at the standard rate if provided by a UK based supplier.
Which tax code should be used for Foods?
- Normally, basic essential food items such as milk, fruit and bread are zero-rated so select the VAT Treatment category CU ZERO OTHER. Luxury items such as confectionery, alcohol, bottled and prepared drinks, hot take away food and catering (external) are all standard rated, so no change required to the VAT Treatment field when ordering these. However, food is a complex area and generalised guidelines cannot be given. The easiest way to find the liability is to check the suppliers VAT receipt/invoice.
Which tax code should be used for travel, trains, planes and taxis?
- Public transport is zero rated (CU ZERO OTHER). Taxi drivers may or may not be VAT registered. The only way you can tell if VAT has been charged on a taxi fare is if a VAT receipt is obtained. If no VAT receipt is obtained, it should be assumed that the taxi driver/company is not registered.
Which tax code applies to hotel/guest house accommodation?
- Hotels which are VAT registered will usually quote a room price which is inclusive of VAT. When placing a requisition you must calculate the net value of the room and enter that onto the requisition. Oracle will add the appropriate VAT element.
- E.g. Room price quoted as £90 per night
Nett cost of room per night = £76.60 (£90 x 40/47)
Oracle will add VAT @ 17.5% of £13.40 to make the total amount due £90
- There is no need to amend the VAT Treatment. If you are unsure of the hotel’s registration status, please check at the time of booking.
- Where a hotel/guest house is NOT registered for VAT, the price you enter into the requisition should be the total amount e.g. £90. There is no need to amend the VAT Treatment.
What about Purchasing Card transactions?
- A VAT receipt / electronic invoice should be provided by the supplier at the point of sale. The VAT liability should be taken from this.
Some invoices may contain lines on them with different VAT liabilities e.g, the purchase of a standard rated CD along with a zero-rated book. How do I input electronic requisitions or purchase orders to show this?
- Record this as an electronic requisition or purchase order as two separate lines and amend the VAT Treatment fields accordingly e.g. the VAT Treatment for the CD line would be unmarked (default will apply) while the book line VAT Treatment field should be CU ZERO OTHER.
How can I raise a requisition with different tax codes?
- From the ‘Checkout’ screen, either click on ‘Edit lines’. Click onto ‘Billing’ tab and then amend the ‘VAT TREATMENT’ field on the appropriate lines. Click Enter. This will take you back to the ‘Checkout’ screen. Continue with the requisition in the usual way, either by clicking ‘Next’ or the shortcut ‘Submit’.
- It is important to remember that where a Zero rated certificate is applicable, this must relate to EACH of the lines on the requisition. If any lines do not qualify for the certificate, a separate requisition must be made.
Where can I get information on whether my requisition is eligible for a Medical Zero Rating Certificate?
- Copies of the Zero Rate Certificates applicable to School purchases are available from the FINCE website. The relevant legislation referenced in those documents should be reviewed for compliance.
- Your School Finance Manager should be approached in the first instance as they may have experience of purchasing the same goods/services for the same activity previously.
- Please note, your CU CHARITY ADS ZERO option is NOT applicable for medical equipment/reagent purchases. It should only be used for appropriate advertising SERVICES requisitions.
How do I ensure the VAT on my project code is reclaimed from HMRC rather than being charged to the project?
- The relevant Intended Use Category should be selected (see below)
- This will ensure the VAT element is posted against the central VAT code and reclaimed from HMRC in the quarterly VAT return.
- For screen views of this process, please see the “VAT Guidance- How to” document available from the website.
Guidance on relevant VAT treatment will be available in the VAT GUIDANCE – VAT Rates document available from the FINCE website.