VAT on Oracle R12

Note: For R12 systems support

Please contact the Financial Systems Support Centre

Telephone: 01865 (2) 84800
Email: financials@admin.ox.ac.uk

 
VAT ON ORACLE R12

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In R12, the VAT result is driven by a combination of who we are paying, the project or GL account string and the tax classification code used (TCC) (1-7).

A list of TCC codes:

TCC 

 Description

When to use

GB SUPPLIER - NO VAT

Invoice/receipt from a UK supplier which does not bear any VAT

2

GB SUPPLIER - STD RATE

Invoice/receipt from a UK supplier which reflects standard VAT being charged, or if under £250 states that standard VAT is included in the value charged

3

GB SUPPLIER – REDUCED RATE

As above, but at the reduced rate of VAT, currently 5%

4

OVERSEAS SUPPLIER SRVCS

A purchase of services from a supplier outside of the UK, such as hotel accommodation or catering/meals

5

OVERSEAS SUPPLIER GOODS

A purchase of goods from a supplier outside of the UK

6

OVERSEAS VAT

To separate overseas VAT as reflected on your receipt or invoice, such as a hotel in France

7

OTHER TAXES (NOT VAT)

* DO NOT USE UNLESS INSTRUCTED BY THE TAX TEAM*

 

The TCC code can be selected from the dropdown list if completing an expense form on-line, or TCC code 1 – 7 can be written on the form if completing manually (you do not need to write the full description).

TCC 1 can be used if you incur a cost including UK VAT, but the cost centre or project is set up as irrecoverable for VAT purposes.

If a staff member incurs a travel type expense overseas (accommodation, meals etc) there is a rule within R12 that knows reverse charge VAT is not applicable on those purchases (for more information on reverse charge VAT see:  ‘Services received from overseas’). To ensure the VAT accounting on those type of transaction is correct the GL natural account selected should be in the ’8’ range of accounts or if on a project account string ‘Travel expenses’ should be selected for expenditure type.

If an external consultant makes a claim via expenses in addition to any invoice they submit, this should be coded to TCC 4, as this is still considered a further purchase of their services, regardless of what the cost we are reimbursing is, for example this could be a hotel cost in the UK.

TCC 6 should be used for overseas VAT only (not UK). This is currently for reporting use only as we are unable to recover VAT incurred overseas.

TCC 7 should only be used where the purpose has been first discussed and agreed with the Tax Team.

The UO VAT Report - Costs and the UO VAT Report - Income can be found in the Reports Library. These reports are unchanged and should be run after AP and AR modules have closed each month. However, the guides to using these reports have been updated to make better use of them, and what types of errors cannot be corrected by journals.

Please use a new single VAT error reporting form (XLS) as the means to report all VAT errors. This is built on the format of a journal to be posted centrally, subject to verification. Return the form to vatenquiries@admin.ox.ac.uk by Working Day 12 of each month following the month reviewed. All valid corrections will be posted from these reports as a single exercise before the end of the following month.

Activity

R12 Tax Code

Default Nat Acc

When to Use/What's Included:

When Not to Use/What's Excluded:

         

Accommodation Fees

GB VAT EXEMPT

49560

Fees for student accommodation, including provided to students of other colleges/universities

Fees from non-students for accommodation (even in student residence blocks, e.g. summer lets) – use ‘Sales – Taxable’; Domestic/residential rent – use ‘Property rental – Res’; Student Canteen/Catering income – use ‘Educational Activities’; Non-student canteen/catering income – use ‘Catering/Vending/Bar’

Catering/Vending/Bar GB VAT STANDARD 48210/25 Catering income for hot food or food eaten on the premises from non-students; bar and vending machine income from anyone Cold, takeaway food – use ‘Sales - non taxable’; Student Canteen/Catering income – use ‘Educational Activities’
Deposits GB OUT OF SCOPE NO RECOVERY 22400 Refundable deposits for keys, equipment, room hire, damage etc. Non-refundable deposits for room hire – use ‘Property rental - Comm‘ – Other non-refundable deposits - use ‘Sales – Taxable’
 
Donations/Gifts GB OUT OF SCOPE NO RECOVERY 47110 Donations or gifts of money where the donor receives nothing in return other than a minor token of acknowledgement (including naming a chair or a building) Sponsorship income, displaying the donor’s logo, or income where the donor receives a benefit in return e.g. attending an event or dinner – use ‘Sales – Taxable’
EC Advances GB OUT OF SCOPE NO RECOVERY 26800    
Educational Activities GB VAT EXEMPT 49630 Fees for educational activities such as training, workshops, symposia, lectures etc. which are non-trading activities, using Activity 00 Conference fees  in Activity 00– use ‘Fees – Conference’, Course fees in Activity 00 – use ‘Fees – Course’; Degree fees in Activity 00 – use ‘Fees - Degree’; Fees for educational activities such as training, workshops, conferences, courses, workshops, symposia, lectures etc. which are ‘closed’ courses or trading activities using Activity 25 – use ‘Sales – Taxable’; Sales of accommodation and catering to non-delegates (guests ) - use ‘Sales – Taxable’; Photocopying charges – use  ‘Sales – Taxable’
 
Fees - Academic GB VAT EXEMPT 43900   Fees using Activity 25 - use  ‘Sales – Taxable’
Fees - Certificates GB VAT EXEMPT 43980   Fees using Activity 25 - use  ‘Sales – Taxable’
Fees - College GB VAT EXEMPT 43910   Fees using Activity 25 - use  ‘Sales – Taxable’
Fees - Conference GB VAT EXEMPT 48240/40   Fees using Activity 25 - use  ‘Sales – Taxable’
Fees - Course GB VAT EXEMPT 43920   Fees using Activity 25 - use  ‘Sales – Taxable’
Fees - Degree GB VAT EXEMPT 43970   Fees using Activity 25 - use  ‘Sales – Taxable’
Fines GB OUT OF SCOPE NO RECOVERY      
Grants/Claims (non-Res) GB OUT OF SCOPE NO RECOVERY      
Miscellaneous GB VAT STANDARD      
Property rental - Res GB VAT EXEMPT 49520 Domestic/residential property rental Student accommodation – use ‘Accommodation Fees ‘; Short term accommodation in student residence blocks being used by non-students (e.g. summer lets) – use  ‘Sales – Taxable’; Commercial/non-domestic rent – use ‘Property rental – Comm’
Property rental - Comm GB VAT EXEMPT 49530 Commercial/non-domestic property rental Domestic/residential property rental – use ‘Property rental - Res ‘; Student accommodation – use ‘Accommodation Fees ‘; Short term accommodation in student residence blocks being used by non-students (e.g. summer lets) – use  ‘Sales – Taxable’
Property related GB VAT STANDARD 48210/25    
Refunds/reimbursements GB OUT OF SCOPE NO RECOVERY 61110 Refunds or reimbursement of costs where the ‘customer’ did NOT receive any benefit in relation to the purpose of the refund /reimbursement Refunds or reimbursement of costs where the ‘customer’ DID receive any benefit in relation to the purpose of the refund  reimbursement e.g. reimbursement of travel expenses incurred in order to give a lecture for an organisation/company/other university etc. – use ‘Educational Activities’; reimbursement of travel expenses incurred in order to provide advice to a company – use ‘Sales – Taxable’
Royalties GB VAT STANDARD 49800 Royalty and rights income  
Sales - taxable GB VAT STANDARD 48210/25 All income not covered by other Activities e.g. CDs, DVDs Income covered by other Activities
Sales - non taxable GB VAT ZERO 48210/25 Books, maps (not wall posters), children’s clothing Room hire – use ‘Property rental – Comm’
Services GB VAT STANDARD 48210/25 Income for services e.g. photocopying charges, income from ‘closed’ courses, or education/training which is trading (Activity 25), delivery charges

 

PURCHASING AND ACCOUNTS PAYABLE

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This section offers guidance on how to select the most appropriate purchasing category and choose an item’s ‘intended use’ if applicable. Both of these factors are driving elements for the correct functioning of the tax engine. It also details the procedure to make sure tax is actually calculated during the requisition process.

Purchase Order VAT Reference Table
The Purchase Order VAT Reference Table (DOC) provides details of the VAT references and associated footnotes found on R12 purchase order print outs.

Purchasing category guidance is provided to departments to look up the correct category when creating a non-catalogue requisition. This category is related to the kind of goods or services you want to buy. It is important that you get this correct as this is one of the pieces of information the tax engine uses to determine what VAT to put on your requisition.

The VAT rate for certain purchases is partly determined by the intended use of the items. When raising the requisition you can select the item's specific use.  You do not need to complete anything in this field if none of these intended uses is relevant to your purchase.

  • For project purchases, a relevant intended use for medical or veterinary research should be set up on the project itself and will therefore default into the ‘Intended Use’ field on the requisition.  Finance Preparers can check this when they go to ‘Edit Lines – Billing’ to run the ‘Calculate Tax’ process before approving a requisition.
  • For non-project related purchases, this field should be completed by Finance Preparers before approving a requisition.

Not all of the intended uses are relevant to departments.

The list is as follows:

Intended Use

For Departments?

When to Use

Domestic or Non-Business

Rarely

When purchasing fuel and power where at least 60% of the fuel or power is for qualifying use. Qualifying use is restricted to non-business activities (e.g. non-business/non-commercial research, NOT teaching, which is a ‘business’ activity)
or domestic use.

Essential to Student Education

YES

When purchasing items which are to be used directly by students/pupils/conference delegates (where a charge has been made for the education provided) and the item is necessary for delivering their education.

Estates Only RRP RCP

Never

Not to be used by departments.

Med/Vet Care

YES

When purchasing items which are to be used in medical or veterinary care of patients.

Med/Vet Research

YES

When purchasing items which are to be used in medical or veterinary research.  Please note that this intended use should default in for project purchases where the project has been deemed to be a medical or veterinary project at setup.

Med/Vet Training

YES

When purchasing items which are to be used in medical or veterinary training.*  

 NONE

 YES

Any requisition for which the intended uses set out above do not apply – OPTIONAL (field CAN be left blank instead).

* ‘Medical or veterinary training’ must be professional vocational training. It is the process of bringing a person to an agreed standard of proficiency by practice or instruction. It does not include general preparatory scientific studies that are required before professional training can commence, for example biology or chemistry. Also, if the course is 100% theoretical, it will not qualify as medical training but if it is at least partly practical, it will qualify. HMRC consider that medical training is limited to health professionals who are or seek to be listed on an extant statutory register (e.g. doctors, nurses, surgeons, pharmacists). The tax team can provide further detail on the types of health professional that qualify, if required.

This section contains essential guidance on Tax Classification Codes to be used in 3 different scenarios: non PO-matched documents to be posted by the AP team, non PO-matched documents posted by departments and guidance on how to correct the VAT rate on PO-matched invoices.

Tax Classification Codes should be used as follows:

TCC

When to use

When NOT to use

1 – GB SUPPLIER - NO VAT

Invoice/Receipt from UK supplier which

  • either includes no VAT (e.g. the invoice/receipt does not show a UK VAT number), or
  • there may be VAT included in the invoice amount, but you do not wish to claim it.

Invoices/receipts from overseas suppliers (e.g. overseas hotel bills, overseas travel costs, invoices for purchases of goods or services from overseas being claimed on expenses) – use TCC 4 or 5 instead.

2 – GB SUPPLIER - STD RATE

  • Invoice/Receipt shows Standard Rate UK VAT (20%) as a separate amount, or
  • Receipt indicates that Standard Rate UK VAT (20%) has been included in the amount and shows a UK VAT number (begins with GB) – this should only apply to invoices <£250.

(Note – if VAT is not shown separately and if your cost centre does not allow VAT recovery, or you are not concerned with VAT recovery you can use TCC 1 instead)

Invoices/receipts showing foreign VAT (i.e. the invoice/receipt does not show a UK VAT number, which would begin with GB). 

If foreign VAT is charged on an invoice you should use TCC 4 or 5 instead and may use them in conjunction with TCC 6 if you wish to record the overseas VAT separately.

 

2 – GB SUPPLIER – REDUCED RATE

Invoice shows Reduced Rate UK VAT (5%)

Invoices with no VAT

Invoices with 20% VAT

Overseas invoices

4 – OVERSEAS SUPPLIER SRVCS

Invoice/Receipt from an Overseas Supplier for Services.  Services are intangible items such as travel, hotel accommodation, catering, downloaded software or other downloaded data or services, consultancy, training, etc.

You should use this TCC even if there is no VAT shown on the invoice.

UK invoices

Overseas invoices for supplies of Goods.  (Goods are tangible items such books, computers, stationery etc.)

5 – OVERSEAS SUPPLIER GOODS

Invoice/Receipt from an Overseas Supplier for Goods. Goods are tangible items such books, computers, stationery, etc.

You should use this TCC even if there is no VAT shown on the invoice.

UK invoices

Overseas invoices for supplies of Services.  (Services are intangible items such as travel, hotel accommodation, catering, downloaded software or other downloaded data or services, consultancy, training, etc.).

6 – OVERSEAS VAT

Overseas VAT – to be recorded separately.  This TCC is for the VAT element of the invoice only – the net, VAT exclusive amount on the invoice should be posted to TCC 4 or 5.

This should be used on EU Commission funded Framework 7 Programme expenses, and any other expenses where you wish to be able to identify overseas VAT.

For FP7 expenses, this line should be coded to a departmental account rather than the FP7 project. 

It is helpful for the VAT team to be able to record this amount centrally so it can be assessed whether there is any merit in making reclaims for overseas VAT. The team cannot do this if the VAT is not separately recorded.

Overseas invoices with no VAT charged.

Other taxes other than VAT (please note that VAT may have other names in other countries.

Overseas VAT that you do not wish to identify separately (e.g. for EU FP7/NIH projects or in order to have it considered for recovery) does not need to be separately recorded. You can simply include it in the TCCs 4 or 5 above as appropriate.

7 – OTHER TAXES (NOT VAT)

Other taxes other than VAT, e.g. Customs Duty, Airport Passenger Duty, other overseas taxes such as Hotel Tax.

This should be used on EU Commission funded Framework 7 Programme expenses, and any other expenses where you wish to be able to identify other taxes (whether UK or overseas taxes).

For FP7 expenses, this line should be coded to a departmental account rather than the FP7 project. 

UK or foreign VAT.

Other taxes that you do not wish to identify separately (e.g. for EU FP7/NIH projects or in order to have it considered for recovery) does not need to be separately recorded. You can simply include it in the relevant TCC above as appropriate.

Names of VAT in other EU Member States can be found in EU Member States    (PDF)


1. Expenses

VAT-inclusive invoices/receipts
Invoices or receipts for less than £250 can be issued without showing the VAT amount separately. However, the supplier MUST:

  • show their VAT number on the invoice/receipt, and

  • indicate the rate of VAT applicable.

If you wish to claim any VAT from a VAT-inclusive invoice/receipt (which will also depend on the cost centre the expenses are posted to) you will need to calculate the VAT element. For standard-rated VAT at 20%, you can calculate this as 1/6 of the total invoice or line amount:
£120 x 1/6 = £20
The net amount can be calculated as 5/6 of the total invoice amount:
£120 x 5/6 = £100

Tax Classification Codes
A ‘Tax Classification Code’ (‘TCC’) must be attributed to each line on the expenses form.  There is a drop-down list on the electronic version of the expenses form, and if you are completing the form by hand you only need to include the number of the TCC, rather than the full name. The codes are listed in full in Section 9 of the form.

2. Barclaycard Statements

You should code each line on your Barclaycard statement for the Payments Team to be able to process the VAT using the TCCs as set out above.

If any lines on the Barclaycard statement relate to invoices you hold from suppliers which show foreign VAT, you should split the line on the Barclaycard statement and record the foreign VAT as TCC 6 if the purchase was for an EU FP7 project.  You can use this same process for any other foreign VAT if you wish to identify it separately in your costs and on reports, or if you wish it to be taken into account when considering whether the University can/should make reclaims for overseas VAT incurred. However, see the note regarding TCC's 6 and 7 in the Table above.

3. Payment Request Forms (PRFs)

You should code your PRFs using the 7 TCCs as set out above.
We do not expect any foreign VAT to be included in PRFs, but if it is, please use the process outlined under TCC 6 if you wish to identify it separately or need to record it separately.

4. VAT Recovery

You do not need to indicate the recovery rate for any VAT incurred on expenses, PRFs or on Barclaycard purchases as this will be automatically defaulted from the cost centre or project number that the item is posted to.

If the VAT rate shown on the invoice received from the supplier does not match the VAT rate on the PO you are matching it to, you should follow the instructions in the guide in order to amend the VAT rate on the transaction and match the invoice.

VAT AND RECEIVABLES

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For guidance on Sales Items, including when to use it, please refer to the below document. If you have any questions regarding this, please contact the Tax Team via vatenquiries@admin.ox.ac.uk

When should you complete the VAT Relief Certificate field?

If you hold a VAT relief certificate provided by your customer, you should complete the VAT Relief Certificate field on the AR Invoice Lines form.  If you do not have a certificate from your customer, you should just leave this field blank.

Customers may provide you with certificates or declarations requesting relief from VAT for the following reasons:

  • The customer is a charity purchasing advertising services or advertising space/time and is entitled to zero-rating on the sale.
  • The customer is an eligible body for education and is purchasing something which will be directly used by their students/pupils/delegates and is necessary for their education.
  • The customer is a research body purchasing or hiring medical, scientific, laboratory, refrigeration, sterilising or video equipment to be used in medical or veterinary research, training or care; or is purchasing drugs, chemicals or gases to be used in medical or veterinary research.

What value should you enter in the VAT Relief Certificate field?

To search for the only 3 relevant items in the list of values for the VAT Relief Certificate field type ‘A%’ into the field and tab.  This will bring up only 3 items for you to choose from.  (None of the other values in the longer List of Values will have any effect on the invoice if you enter them in this field).

 

VAT Relief Certificate value

When to use

A1 CERT RECEIVED MED ITEM

Certificate received requesting zero-rating on the purchase or hire of equipment to be used in medical or veterinary research, training or care.

A2 CERT RECVD CHARITY ADVRT

Certificate received from a charity requesting zero-rating on the purchase of advertising services/space/time.

A3 CERT RECVD ELIGIBLE BODY ED

Certificate/declaration received from another eligible body (for the VAT education exemption) requesting exemption for the purchase of goods or services to be used in supplies of education made by the customer and will be directly used by their students/pupils/delegates and is necessary for their education.

Validity of certificates

You should not accept certificates that do not appear to be valid but should check into this and/or ask the customer about this before using the ‘VAT Relief Certificate’ field on the invoice. For example, if you have received a charity advertising certificate from a limited company, you may wish to check the name of the company on the Charity Commissioners website, and if you can’t find it there, ask the customer – they may have submitted the purchase order in the wrong company name. If, after investigation, you are still unsure if the certificate is valid, contact the Tax Team.

In most cases, however, it should be clear that a certificate is valid (e.g. you know that your customer is a charity, or you know that your customer is a college or university etc).

VAT AND PROJECTS IN R12

Oracle R12 will evidence that payments to collaborators have been correctly treated as being outside the scope of VAT by only applying this treatment to payments made to collaborators set up against the Organisation 71 accounting procedure.

This will apply to payments to both UK and overseas collaborators, i.e. payments to overseas bodies/persons will generate reverse charge VAT unless the body/person is set up as an Organisation 71 collaborator on the project.
This is a robust way to demonstrate that VAT should not be payable, as the Organisation 71 accounting treatment is not decided for VAT purposes but to record research statistics.

If you think there are collaborators on some of your department’s projects which should be set up under Organisation 71, but you are not sure if they have been, get in touch with your usual Research Accounts contact.

Contact Us


 : Finance Division
       University of Oxford
       23-38 Hythe Bridge Street
       Oxford OX1 2JD

  : vatenquiries@admin.ox.ac.uk

  : 01865 (6) 16215

Reference


Tax Glossary

 
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