VAT codes for income

The University is VAT registered and is legally obliged to account for VAT on income it receives which is neither exempt nor zero-rated for VAT purposes.

It is very important to correctly account for VAT on our income as failure to do so can result in investigations by HM Revenue and Customs (HMRC) leading to potential penalties and damage to the University’s reputation.

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 applying 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.

More detailed advice about VAT for income is provided to get the VAT right and avoid the pitfalls … when raising sales invoices. If you are in any doubt about VAT for income then please contact the Tax section for specific advice.

Sales to other University departments

Tax Code Description and usage

ZA

Internal sales invoicing – no VAT is applied to the Sales Invoice for this Tax Code.

Use this Tax Code for:

  • Internal Trade of goods or services provided by one University department to another

Don’t use this Tax Code for:

  • sales of goods or services to any external customer
  • paying in cash (of any description)

Notes:

VAT is never charged on Internal Trade.  You can also read more about Internal Trade at the University, including which ‘University companies’ are covered by Internal Trade and advice on when one department may need to pass on the VAT charged by an external supplier to another department.

Payments to the University which are not income

Tax Code Description and usage

ZZ

Outside the scope of VAT – no VAT is applied when you use this Tax Code.

Use this Tax Code for:

  • income ‘outside the scope of VAT’ including donations or grants freely given to the University with nothing being provided in return
  • income from VAT group members
  • paying in cash which is covered by payments to the University that are not income

Don’t use this Tax Code for:

  • sales of goods and services to any external customer
  • sales of goods and services to another University department (Internal Trade)

Notes:

Read the guidance notes on dealing with income at the University and payments to the University that are not income.

Sales to UK customers

Tax Code Description and usage

Z0

Sales exempt from VAT – no VAT is applied to the Sales Invoice for this Tax Code.

Use this Tax Code for:

  • catering to students
  • accommodation for students
  • some sales to students
  • income from educational events including:
    • short courses
    • educational conferences run by the University
    • research provided to eligible bodies
  • paying in cash (of any description)

Don’t use this Tax Code for:

  • catering to non-students
  • accommodation for non-students
  • income from non-educational events (including concerts, trade fairs, exhibitions)
  • conferences run for, or on behalf of, a third party

Z7

Sales at zero-rate VAT – no VAT is applied to the Sales Invoice for this Tax Code.

Use this Tax Code for:

  • sales of books, printed periodicals and printed newsletters
  • paying in cash (of any description)

Don’t use this Tax Code for:

  • sales of services to any country
  • sales of any other types of goods to any country
  • sales of electronic books, journals or newsletters to non-UK customers

Z8

Sales at standard rate VAT – VAT is applied at 20% to the Sales Invoice for this Tax Code.

Use this Tax Code for:

  • sale of goods or services which are not eligible for VAT exemption, zero-rating or reduced-rating VAT
  • goods and services covered include:
  • catering to non-students
  • accommodation for non-students
  • income from non-educational events (including concerts, trade fairs, exhibitions)
  • conferences run for, or on behalf of, a third party
  • consultancy supplied by the University to UK customers
  • some sales to students
  • provision of research to commercial customers in the UK
  • use of databases
  • authoring and editing services
  • software development services
  • use or hire of facilities
  • testing and analysis - to UK customers only
  • charges for administrative services
  • paying in cash (of any description)

Don’t use this Tax Code for:

  • sales of services to EU or non-EU countries for:
  • research services
  • staff secondments by the University to third parties
  • consultancy supplied by the University
  • electronic services supplied by the University (eg e-journals)
  • granting of any right or license by the Univeristy (eg Intellectual Property (IP) licensing)
  • sales of University goods to be shipped to customers in EU or non-EU countries

Z2

Sales at reduced rate VAT – VAT is applied at 5% to the Sales Invoice for this Tax Code.

THIS TAX CODE IS FOR USE BY THE DEPARTMENT OF ESTATES ONLY FOR SUPPLIES SUBJECT TO THE REDUCED RATE OF VAT FOR FUELS.

Sales to overseas customers – EU countries

You can check if your customer is a member state of the European Union (EU).  If the customer is an EU member state then you must obtain their VAT registration number before you raise a Sales Order.

Tax Code Description and usage

Z3

Sale of goods to EU – no VAT is applied to the Sales Invoice for this Tax Code.

Use this Tax Code for:

  • sale of University goods to be shipped to customers registered for VAT in the EU

Don’t use this Tax Code for:

  • paying in cash (of any description)
  • sales of goods to non-EU countries
  • sales of services to any country

Notes:

The customer MUST receive a copy of a University of Sheffield Sales Invoice. You must retain the proof of shipment for this export within your department.

Z4

Sale of certain services to EU – no VAT is applied to the Sales Invoice for this Tax Code.

Use this Tax Code for:

  • sale of certain types of services to customers registered for VAT in the EU
  • services covered are:
  • research services
  • staff secondments by the University to third parties
  • consultancy supplied by the University
  • electronic services supplied by the University (eg e-journals)
  • granting of any right or license by the Univeristy (eg Intellectual Property (IP) licensing)

Don’t use this Tax Code for:

  • paying in cash (of any description)
  • sales of services to non-EU countries
  • sales of goods to any country
  • sales of other types of services to EU countries (other services, not included in the list above, are treated as supplied in the UK, even if the customer is in the EU – use the applicable UK Tax Code relating to the service you are providing)

Notes:

The customer MUST receive a copy of a University of Sheffield Sales Invoice.

Sales to overseas customers – non-EU countries

You can check if your customer is a member state of the European Union (EU). If the customer is not an EU member state then you do not require their VAT registration number before you raise a Sales Order.

Tax Code Description and usage

Z5

Sale of goods to rest of the world – no VAT is applied to the Sales Invoice for this Tax Code.

Use this Tax Code for:

  • sale of University goods to be shipped to customers outside the EU

Don’t use this Tax Code for:

  • paying in cash (of any description)
  • sales of goods to UK or EU countries
  • sales of services to any country

Notes:

The customer MUST receive a copy of a University of Sheffield Sales Invoice. You must retain the proof of shipment for this export within your department.

Z6

Sale of certain services to rest of the world – no VAT is applied to the Sales Invoice for this Tax Code.

Use this Tax Code for:

  • sale of certain types of services to customers outside the EU
  • services covered are:
  • research services
  • staff secondments by the University to third parties
  • consultancy supplied by the University
  • electronic services supplied by the University (eg e-journals)
  • granting of any right or license by the Univeristy (eg Intellectual Property (IP) licensing)

Don’t use this Tax Code for:

  • paying in cash (of any description)
  • sales of services to UK or EU countries
  • sales of goods to any country
  • sales of other types of services to rest of the world (use sales of services to UK Tax Codes)
  • sales of other types of services to rest of the world countries (other services, not included in the list above, are treated as supplied in the UK, even if the customer is not in the UK – use the applicable UK Tax Code relating to the service you are providing)

Notes:

The customer MUST receive a copy of a University of Sheffield Sales Invoice.

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Need help or more information?

Who to contact
If you need advice or guidance on VAT for income then contact the Tax section.