VAT incurred on costs relating directly and solely to a non-business research project is not recoverable. It is a cost to the department.
VAT incurred on costs relating directly to a business research project is recoverable in full. It is not a cost to the department.
If your business research funder is overseas, we will not charge them VAT on our invoices (see link to Business research - overseas customers). However, any VAT incurred on directly related costs is still recoverable in full.
Goods. You are obliged to account for acquisition VAT on the receipt of goods from EU suppliers and to pay import VAT on the receipt of goods from non-EU suppliers, unless one of the specific VAT reliefs applies (e.g. equipment for medical research).
Services. You must also account for UK reverse charge VAT on most services received from overseas suppliers.
For a non-business research contract, this VAT is not recoverable and is a cost to the department. However, for a business research contract the VAT is recoverable in full and is not a cost to the department.