Research and vocational training

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Research and vocational training
  • Research
  • VAT treatment
  • Supplies to the European Commission
  • Vocational training
  • Government approved vocational training
  • Advanced Learner Loans and training credit vouchers
  • Subcontractors
  • Work placement providers
  • VAT recovery
  • Single Work Programme / Steps to Work
  • Career services or counselling paid for by the ESFA
  • Government business support and enterprise scheme
  • University subsidiary training companies

This guidance note provides an overview of the VAT treatment of supplies of research and vocational training.

2006/112/EC , Articles 131, 132(i), (j), 133, 134; VATA 1994, Sch 9, Group 6; Notice 701/30 

This should be read in conjunction with the following guidance notes:

  • Supplies of education
  • Supplies of goods and services closely related to education

HMRC regards research as including the following from a VAT perspective:

  • original investigative work undertaken in order to gain, expand or advance knowledge and understanding
  • developing a particular software programme intended to assist with a particular research project before the main body of the research commences

De Voil Indirect Tax Service V16.1016 (subscription sensitive); VATA 1994 Sch 9, Group 6; VATEDU37000

VAT treatment

If the research is wholly funded by grants, then it will be treated as a non-business activity and the grant money will be outside the scope of VAT.

VATEDU30000; De Voil Indirect Tax Service V16.935 (subscription sensitive)

Prior to 1 August 2013, research undertaken as a business activity was exempt from VAT if it has been undertaken for an eligible body. The UK received a notification from the European Commission that the VAT exemption for business supplies of research between eligible bodies (mainly government departments, schools, universities, charities and other public bodies) does not comply with EU law. As a result of this notification, HMRC withdrew the exemption with effect from 1 August 2013. However, there was a transitional arrangement for supplies of business research where the written contract was entered into before 1 August 2013; whether or not work has already commenced, the

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