The University of Sheffield
Finance

Materials for sales orders and sales invoices

The University has a legal obligation to correctly report on:

The raising of a sales invoice ensures that the University can meet these legal obligations and have accurate data to underpin funding and budgeting decisions and initiate procedures to ensure that any outstanding debt to the University is recovered.

The University of Sheffield On-line Store should be used wherever possible for sales of: Conferences, Short Courses, Ticketed Graduation Events, Field Trips, Products (books, course packs, merchandise), and Events. For all sales items, the uBASE system is used to process Sales Orders and generate Sales Invoices to external customers and the applying of VAT to the income is included in this process.  Access to uBASE is restricted by profile to authorised users who have been trained to use the system.  The profile required to invoice external customers is ‘Sales – External and Internal Sales Processing’.

It is also important to recognise that the production of invoices for research income is carried out by Research Finance within the Department of Finance, and there are no circumstances where departments need to undertake this function.

The first stage of the process is to create a Sales Order.  This contains all the information necessary to create the Sales Invoice.  No VAT code is selected by the user but the system determines the VAT status of the transaction automatically from the information entered on the Sales Order.

The sales material is critical in determining both the VAT status and the accounting status.  It is important that the appropriate sales material is selected so that the income is recorded accurately for both tax and accounting purposes.  Within uBASE configuration is a complex matrix which compares the chosen material with the status and location of the customer to determine the appropriate VAT treatment.

It is very important to correctly account for VAT on our income as failure to do so can result in investigations by HMRC leading to potential penalties and damage to the University’s reputation.  As HMRC are entitled to audit the University at any time it is critical that materials are chosen with care.

Please note that deliberately selecting an inappropriate material to avoid having to charge VAT to a customer could be viewed as VAT evasion by HM Revenue & Customs, with potentially serious consequences for both the University and any staff concerned.

This list of sales materials is intended to provide guidance on selecting the appropriate material to use and also explains the rationale behind the VAT treatment which will then be applied.  If you are in any doubt as to which sales material to choose in a particular situation then please contact the Tax section for advice before completing your documentation.

The list of sales materials covers:

Sales of academic or consultancy services, testing or analysis (incl Contributions to University expenses from external organisations)

Material name Material code When to use this material VAT and income treatment Allowable Project Type(s)

Consultancy or license income

900013

Use when invoicing for supplies of consultancy and other advisory services provided to external customers.

If the University carries out simply testing or analytical services without then interpreting the results or giving advice then this is not consultancy and the material ‘Testing & Analytical Services’ should be used.

License income will arise only under the terms of a licensing agreement.

Consultancy is VATable when supplied to a UK customer (regardless of whether the customer is a charity/university).

For customers outside the EU such supplies are outside the scope of VAT (no VAT charged).

For customers in other EU countries consultancy is VATable unless the customer has provided us with their overseas VAT registration number – in such cases the same treatment applies as for non-EU clients.

Income is posted to Income General Ledger code 50310 - Services Rendered.

XJ “Patents and Licences”

XN “Consultancy”

Testing & analytical services

900016

Use when invoicing for the provision of the results of examination and testing services.

Note that, if there is also interpretation of the results of the analysis (i.e. an application of expert knowledge), this service should be classed as ‘consultancy’.

Whether a service is ‘consultancy’ or ‘analytical services’ is relevant to the VAT treatment where the customer is outside the UK.

From 1st January 2011 Testing Services are treated as supplied where the customer belongs.

If the customer is UK based then UK VAT is charged unless the recipient is another eligible body (UK University, College, Charity or similar non-profit making body) AND they are supplying the service to their students as a part of their education or a VAT exempt research project. If you believe the supply is VAT exempt you will need to contact the tax team.

If the customer is in the EU then no UK VAT will be charged, providing the customer set up has their EU VAT number. Income office will add this if you obtain the number.

If the customer is O/S the EU then no UK VAT is chargable and no VAT reference number is required.

Income is posted to general ledger code 50310 – Services Rendered.

XT “Testing accounts”

General services rendered

900023

Use for other ad hoc services provided by the University to external customers.

VAT will be applied to the charge.

This is effectively the catch all for miscellaneous services which do not fit into any of the categories above. As we cannot set a VAT rule to cover all eventualities, this material is set to be VATable regardless of the status and location of the customer.

If you believe that your particular service is not subject to VAT then contact the Tax section for advice and guidance before completing your documentation.

Income is posted to Income General Ledger code 50310 - Services Rendered.

XG “General Services Rendered

XL “Minor facilities”

XM “Major facilities”

Contributions to University expenses from external organisations

900900

An external organisation may provide an agreed contribution (in full or in part) to the University’s expenses. This will typically be a contribution towards the travel and subsistence costs of a member of staff attending a conference, seminar or meeting.

Sales Material code 900023 MUST be used if contributions from an external organisation include income for:

  • expenditure other than travel and subsistence (eg consumables, staff costs), OR
  • a piece of work or service which is being undertaken for the external organisation

This does NOT apply if the reimbursement is received from EITHER a member of University staff OR their partner/spouse for their personal travel / subsistence costs or other expenses. See here for guidance in these cases.

So long as the contribution is for Travel/Subsistence costs ONLY, then this is not a VATable supply.

Income is posted to general ledger code 50310 – Services Rendered

XG "General Services Rendered"

Sales of services related to medical activities

Material name Material code When to use this material VAT and income treatment Allowable Project Type(s)

Medical diagnostic services

900290

To be used only where analytical services have been carried out by a registered medical professional in the course of diagnosis or treatment of a patient.

Healthcare services such as this are exempt from VAT.

Income is posted to Income General Ledger code 50310 - Services Rendered.

XG “General Services Rendered”

Sale of medical goods to a charity

900323

Like the University, other charities are able to purchase certain equipment without VAT for use in medical research. In such cases, where the University is supplying such goods, this material should be used.

Note that the supplier (ourselves) MUST issue a certificate of eligibility before we use this material, which must be retained for audit purposes.
If in doubt as to whether to give the customer VAT relief by using this material, contact the Tax Section for advice.

If in doubt about using this sales material then contact the Tax section for advice and guidance before completing your documentation.

The sale of relevant equipment to a charity for use in medical research is zero-rated for VAT.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Pathology reports

900320

This material is for use by the medical departments in situations where medical reports are produced, by registered medical professionals, relating to the healthcare of individuals.

It is not to be used for ‘expert witness’ type services which might be provided for insurance or legal purposes as such services are not considered to be ‘healthcare’.

Supplies of healthcare services by registered medical professionals are exempt from VAT.

Income is posted to Income General Ledger code 50310 - Services Rendered.

XG “General Services Rendered”
University Health Service – nursing services 900430 This material should only be used by University Health Services.

Healthcare services such as this are exempt from VAT.

Income is posted to Income General Ledger code 50340 – Other Operating Income.

XG “General Services Rendered”

Conferences, events and teaching activities

Material name Material code When to use this material VAT and income treatment Allowable Project Type(s)

Academic conferences

900010

Use when invoicing delegates attending an academic conference hosted by the University. Most conferences run by academic departments will fall within this category, provided the purpose is educational.

This sales material excludes supplies related to a conference which are not classed as educational – for example, invoicing commercial sponsors and exhibitors for the use of trade stands.

Academic conferences are treated as supplies of education by the University to the delegates attending.

Supplies of education are exempt from VAT when made by a university.

Income is posted to Income General Ledger code 50141 - RTSG and Other Fees.

XC “Conference accounts”

Non-academic events

900011

As above but where the event is not educational. For example, invoicing exhibitors for a place at a trade fair.

As these types of event are not educational then VAT exemption does not apply.

The supply is VATable, regardless of the status or location of the customer.

Income is posted to Income General Ledger code 50141 - RTSG and Other Fees.

XC “Conference accounts”

Short courses

900012

Use when invoicing delegates or organisations for their attendance at educational events such as seminars, workshops and other short, instructor-lead courses that are organised by the University.

Supplies of education are exempt from VAT when made by a university.

Income is posted to Income General Ledger code 50141 - RTSG and Other Fees.

XS “Short Course accounts”

Other teaching activities

900092

This material should be used for teaching activities which are neither conferences, nor short courses, but still involve the delivery of education or training in return for payment. Examples might include;

  • Speaker Fees / Honoraria
  • Field Trips
  • Examination services
  • Fees for research supervision

Any education provided by the University in return for payment is exempt from VAT.

Income is posted to Income General Ledger code 50310 - Services Rendered.

XG “General Services Rendered”

Sales or hire of goods or facilities

Material name Material code When to use this material VAT and income treatment Allowable Project Type(s)

Course material sales

900015

Use for sales of materials to students where the materials are directly for use in class (e.g. laboratory PPE, course books).

This material must not be used for materials which are not essential to the course such as stationery, blank CDs, blank paper, etc.

Materials which are essential to the course of study are treated as ancillary to the supply of the education itself and are therefore exempt from VAT.

Note that this exemption only extends to materials which are essential to the course and to sales to the students themselves.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Room/pitch hire (VATable)

900018

Room and pitch hire can be VATable or not dependent upon the building in question and status of the customer.

Contact the Tax section for advice and guidance before completing your documentation.

VATable.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Room/pitch hire (non-VATable)

900019

Room and pitch hire can be VATable or not dependent upon the building in question and status of the customer.

Contact the Tax section for advice and guidance before completing your documentation.

VAT exempt.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Catering (non-ACS)

900021

Use when invoicing for meals, teas and coffees provided in isolation from any other services being provided at the same time (when catering is provided as part of a conference fee, there is no need to charge separately using this material).

A supply of catering services, in isolation is VATable.
If the catering is provided as part of a larger supply of services (e.g. a supply of conference services) then the VAT treatment of the larger supply applies to the catering also.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Sale or hire of equipment

900022

Use when University property is either being sold or otherwise made available for use by a third party for payment (note that sales of goods for export from the UK have a separate material).

The place of such a sale/hire is the UK and the supply is therefore VATable, regardless of the status of the customer or their location.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Sale or hire of books

900090

Use when charging for a sale or hire of books. Whether to students or non students.

The sale or hire of books is zero-rated for VAT (the status or location of the client is not relevant).

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Printing (books, leaflets & journals)

900091

This material is to be used for printed matter which is intended to convey information such as;

  • Books, brochures and pamphlets
  • Leaflets
  • Journals

It is not to be used for VATable printed matter such as letterheads, business cards, posters and application forms.

The sale of printed matter which is a means to convey information is zero-rated for VAT.

Income is posted to Income General Ledger code 50310 - Services Rendered.

XG “General Services Rendered”

Domestic UK sales of goods

900324

This material should be used where there is a sale of goods which are neither (see above):

  • exported from the UK; nor
  • eligible for VAT relief as being sold to a charity for use in medical research; nor
  • eligible for zero-rating as books or other printed matter

For sales of goods which are not otherwise eligible for VAT relief, the supply is VATable.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Sponsorship, advertising, donations, grants and fines

Material name Material code When to use this material VAT and income treatment Allowable Project Type(s)

Donations

900014

Use when receiving donations; note that, to be classed as a donation there must be no obligation upon the University to do anything for the donor in return for the payment.

Where an event is given financial support by a third party, HM Revenue & Customs accept that a mere thank you placed in an event programme does not amount to a supply to the donor.

If in doubt about using this sales material then contact the Tax section for advice and guidance before completing your documentation.

Donations are outside the scope of VAT (no VAT charged).

Income is posted to Income General Ledger code 50349 - Donations.

XD “Donation accounts”

Fines

900020

Use for fines imposed for damage caused to University property or other similar penalties.

This material should not be used where the payment is made in return for something.

Fines are outside the scope of VAT (no VAT charged).

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Grant income (non-research)

900244

Grants are effectively gifts of money where nothing is provided to the sponsor in return for the payment of the grant.

Although there will usually be conditions attached to the grant, provided no ‘benefit’ arises to the sponsor, the payment can be classed as a grant.

If the sponsor receives a benefit (eg knowledge, rights to results and intellectual property) then there is a supply of something to them and the payment is not a grant.

Grants are outside the scope of VAT (no VAT charged).

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

XH “HEFCE funds – non core”

XC “Conference accounts”

Advertising/event sponsorship

900325

This material is to be used where, in return for payment, a customer is provided with some form of advertising. This may be buying space in a University publication or having their name associated with an event.

Charities are entitled to claim relief from VAT on such purchases. Note however, that in such cases the customer MUST issue a certificate claiming eligibility for the relief which the supplier (ourselves) must retain for audit purposes.

If in doubt about using this sales material then contact the Tax section for advice and guidance before completing your documentation.

Advertising services are VATable to UK customers other than UK charities which can claim VAT relief.

For customers outside the EU such supplies are outside the scope of VAT (no VAT charged).

For customers in other EU countries consultancy is VATable unless the customer has provided us with their overseas VAT registration number – in such cases the same treatment applies as for non-EU clients.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

XC “Conference accounts”

Sales of goods for permanent export from the UK

Material name Material code When to use this material VAT and income treatment Allowable Project Type(s)

Goods for export

900201

When goods are sold which are to be permanently physically removed from the UK.

Note that evidence of the physical removal of the goods must be retained for audit by HM Revenue & Customs.

If in doubt about the evidence required then contact the Tax section for advice and guidance before completing your documentation.

This material is NOT to be used where goods are sold to an overseas customer but are not actually removed from the UK.

The export of goods from the EU is zero-rated for VAT.
The export of goods to another EU member state is zero-rated ONLY if the customer provides their overseas VAT registration number and we quote this on the invoice.

If in doubt about using this sales material then contact the Tax section for advice and guidance before completing your documentation.

Income is posted to Income General Ledger code 50340 - Other Operating Income.

XO “Other”

Sales undertaken outside the UK

Material name Material code When to use this material VAT and income treatment Allowable Project Type(s)

Services undertaken outside the UK

900440

This sales material should be used for services such as one-off lectures or training courses which are physically delivered in an overseas country.

It is NOT for use where services are undertaken here in the UK on behalf of foreign customers (eg consultancy or analytical services).

For services undertaken in the UK, select the appropriate sales material as you would for a UK customer.

Services which are physically performed or undertaken outside the UK are outside the scope of UK VAT.

Such services may create a tax liability in the country where they are undertaken.

Before using this sales material on your documentation you should contact the Tax section for guidance.

Income is posted to Income General Ledger code 50310 – Services Rendered.

XG “General Services Rendered”

 

Need help or more information?

Who to contact
If you are in any doubt about whether income is subject to VAT or which sales material to choose when creating a sales invoice contact the Tax section for advice and guidance before completing your documentation.

For guidance on handling your income, setting up new project accounts and raising Sales Invoices contact the Finance Manager for your Academic Department or Professional Services Department.