Raising sales invoices
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 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 is 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. Be careful not to pick the material for ‘grant income’ if you are invoicing for ‘consultancy services’ which you have provided.
For more information see the full list of sales materials which includes guidance on when to use each one, or check out these quick tips on the common three queries:
- ‘General services rendered’ is effectively a catch-all for any service for which there isn’t a specific material. The VAT rule is that VAT will be charged in all cases.
- There are no materials for ‘postage’, ‘travel costs’ and similar costs as the University does not sell these services. If you need to recharge expenses as part of a project, or as part of a delivery of a service such as consultancy, then these additional expenses are simply part of the main service and the same material should be chosen for the recharged expenses as for the service itself. This helps to ensure that the correct VAT treatment is applied to the full charge for the service.
- If you are reclaiming expenses from a third party, and there is no related service being provided, then you should question whether an invoice is necessary at all. Ideally in such cases the third party should be provided with a copy of the invoice you have paid and should reimburse us based on this document alone.
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.
Contact the Income Office for advice and guidance on paying in income.
Contact your Faculty Finance team, Professional Services Finance team or Research Finance for queries on whether your income is really income, using a non-research project account, raising sales invoices or WBS codes.