Queries on Accounting for VAT on Purchase Orders

VAT Coding

There are various rules for the coding of VAT on orders and it should be borne in mind also that the coding of VAT on an order may not be the same for each of the goods/services being purchased. For example, a piece of laboratory equipment may be zero-rateable, but the delivery charges on it will be VATable.

If in doubt, always check with the supplier when obtaining prices.

The following are examples of VAT Queries in relation to Corporate Hospitality, Printing, Book-binding, Vehicle Hire, Hotel Accommodation and Conferences/Courses.

Corporate Hospitality

Orders for corporate hospitality (eg to a restaurant) should be coded 'W' as VAT on corporate hospitality is not reclaimable. Because of the University's expenses regulations, all invoices which relate to corporate hospitality must be accompanied by a list of those individuals (name, position, organisation, etc) who attended the meal, etc.

Printing

eg. leaflets, fliers, labels, etc.

The general rule is that printing is a VATable expense, ie, VAT is payable at the standard rate and the order should therefore be coded as such (eg 'S' on orders to UK suppliers).

eg. booklets, etc.

However, if the printing work is to be bound together in "booklet" form, it is construed as a book which is zero-rated and should therefore be coded appropriately (eg 'Z' on orders to UK suppliers). Various rules apply as to the type of binding, etc, so if in doubt about whether your printing is VATable, check with the supplier.

Book-binding

As books are zero-rated, the first re-bind of a book is considered as part of the book itself and is therefore zero-rated also (eg 'Z' on orders to UK suppliers of binding). However, if the book requires subsequent re-binding, this is a VATable expense and should be coded appropriately (eg 'S' on orders to UK suppliers). Remember that binding is a service so the code used will also depend on the country where the binding service itself is performed.

Car Hire

Both the hire and the re-fuelling of self-drive vehicles in the United Kingdom are VATable expenses and should therefore be accounted for at the standard rate. Therefore, VAT on the order for both the hire and any re-fuelling should be coded with an 'S'. However, as it is a service, when outside the UK, self-drive vehicle hire is taxable at the local rate which applies in the country it is performed. Hence, hire in the European Union should be coded 'EW' and in the rest of the world 'RW'.

For self-drive vehicles hired in the UK which are construed as agricultural vehicles, eg, tractors, which use agricultural (red) diesel, the fuel in these cases is deemed to be a utility and therefore VATable at the relevant utility rate. The hire itself should therefore be coded 'S' and the fuel coded 'U'.

Coach Hire

Coach (and other vehicle) hire where a driver is provided is zero-ratable and therefore should be coded as appropriate (eg 'Z' on orders to UK suppliers). Equivalent codes will be 'EZ' for European Union coach hire and 'RW' for rest of world, depending on where the hire takes place.

Hotel Accommodation

There are various rules for hotel accommodation, depending on, eg, the location of the provider, whether they are VAT registered, etc. The general rule is that there is VAT on the accommodation itself but not, eg, on the hire of a conference room. Also, for food/drink from the hotel bar/restaurant, VAT may be handled differently. Hence, this should be clarified when seeking prices from, or booking accommodation with, the provider.

Conference/Courses

There are various rules for conferences and courses, again, depending on the provider and the circumstances of the individual(s) attending. Check the booking/conference registration form before coding the order.