Purchasing goods and services from non-UK suppliers

The uBASE system is used to purchase goods and services. Access to uBASE is restricted by profile to authorised users who have been trained to use the system. The profile required to process a purchase requisition and create the purchase order is ‘Orderer’.

Every purchase order created must have a VAT code. This code is referred to as a Tax Code in uBASE and is used by the Tax section each quarter to produce the VAT return which is submitted to HM Revenue and Customs (HMRC). The VAT code also helps the tax team to understand where VAT costs are being incurred across the University so that we can target our efforts in minimising these costs.

When the University buys goods or services from outside the UK different VAT rules can often apply. This ensures that the purchases don’t escape from the VAT regime altogether, and avoids double taxation. The VAT treatment is determined first of all, by whether the supplier is in another European Union (EU) member state or is based outside the EU. The rules are complex, but the basic principles are:

Goods from outside the EU (eg USA, Far East, Norway, Switzerland)

When we buy goods from suppliers outside the EU, they will NOT charge VAT. The goods will be taxed at the point of entry to the UK. The VAT is usually paid by the freight agent transporting the goods. You can read more about importing goods where you will find more detailed advice on which VAT code to use for purchases from outside the EU.

When we buy goods from suppliers from other EU countries they should not charge us the VAT for their country if we provide them with our VAT number (GB 648 2388 08).

However, this does not mean that the purchase escapes from VAT altogether, as we have to ‘self-charge’ UK VAT, if the same purchase would be VATable in the UK. The self-charging is done by means of the Tax Code in uBASE and ensures that it is neither cheaper nor more expensive (as a result of VAT) to buy goods from any EU member state.

You should use the following Tax Codes for purchases of goods from other EU countries:

  • R0 if the same purchase in the UK wouldn’t have VAT charged (eg books and journals)
  • R1 if the purchase is for qualifying medical research equipment (which would be zero rated in the UK by certificate)
  • R2 if VAT would be chargeable in the UK but would be fully recoverable
  • R3 if VAT would be chargeable in the UK but would be non-recoverable
  • R4 if VAT would be chargeable in the UK but would be part-recoverable

More information about recoverable VAT is available in explaining the differences between recoverable, part- and non-recoverable VAT.

Services from outside the UK

The University must ‘self-charge’ VAT on the purchase of these types of service:

  • consultancy
  • research
  • licences and royalty fees for the granting of rights
  • staff secondments
  • downloadable software and other information provided electronically

The self-charging is done by means of the Tax Code in uBASE and ensures that it is neither cheaper nor more expensive (as a result of VAT) to buy goods from any EU member state.

You should use the following Tax Codes for purchases of services from other EU countries:

  • R5 if VAT would be chargeable in the UK but would be fully recoverable
  • R6 if VAT would be chargeable in the UK but would be non-recoverable
  • R7 if VAT would be chargeable in the UK but would be part-recoverable
  • XX if you are purchasing any other types of service from a non-UK supplier than those specified above

More information about recoverable VAT is available in explaining the differences between recoverable, part- and non-recoverable VAT.

 

Need help or more information?

Who to contact
If you need advice or guidance on the VAT codes for purchasing goods or services from non-UK suppliers then contact the Tax section before making your purchase.