Financial Guidance for Schools

Financial Guidance for Schools iPost Document Title: Financial Guidance – VAT Manual Subject: VAT Manual Document ID: IPOSTID-2-2699 Service Group: Education Financial Services Contact Details: Tel: Helpline (01823) 359984 - press ‘4’ for Finance Fax:(01823) 356109 Email: ‘Somerset Direct - Education Finance’ from the internal address book or [email protected] Address: Education Financial Services, Somerset County Council, PP B3N 1, County Hall, TAUNTON, TA1 4DY

Whilst Somerset County Council makes every effort to ensure accuracy of content, it cannot accept liability for claim, loss or damage howsoever arising from the reliance on or use of this information.

This document is available upon request in larger print sizes, Braille and other languages. Please use the contact details above for further information.

This document is 41 pages including cover, contents and index pages.

To request this document in an alternative format please contact the Education Finance Helpline on (01823) 359984 – option 4.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, transmitted in any form or by means, electronic, mechanical, photostatic, recording or otherwise, without the permission of the copyright holder. VAT Manual

Financial Guidance for Schools

Produced as part of the Base Package

June 2012

Making the money work for Children and Young People CONTENTS

Pages Section 1 Introduction to the VAT System 1 Business and Non-Business 2 Registration for VAT 3 - 5

Section 2 VAT on Expenditure (INPUT TAX) 6 - 10 Vat on Capital works – VA Schools 8 Petty Cash Expenditure (Imprest) 10

Section 3 VAT on Income (OUTPUT TAX) 11 - 15 Income from Lettings 16 - 18

Section 4 School Visits 19 - 20

Section 5 Food and Drink 21 - 22

Section 6 Recording VAT on SIMS 23 - 24

Section 7 Penalties 25

Appendices: - A - 'Reduced' Rating of Fuel & Power Supplies 26 - 28 B - Children's Clothing and Footwear 29 - 30 C - Agents 31 D - Musical Instruments - Assisted Purchase Scheme 32 E - An example VAT Income Invoice 33 F - Providing Printing and Photocopying 34 - 36

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Section Point Page A Admissions 3 12 Agents - see Appendix C B Betting 1 2(d) 1 Blazer badges 3 11 Books 1 2(b) 1 Book Bags 3 11 Business Entertaining 2 7 C Capital Expenditure – VA School 2 7 Calendars (School) 3 12 Categories 1 1 Catering 3 14 Catering (Supply) 5 21-22 Classroom (Lettings) 3 16 Clothing (Children) - also see Appendix B 1 2(b) 1 Clothing (Sports) 3 11 Concerts 3 12 Courses 3 14 Criminal Record Bureau 1 2(e) 1 D Deposits 3 15 Donations 2 6 Donations (Gifts) 3 14 DVDs 3 12 E EC Country Purchases 2 7 Educational Visits 4 19 Electrical Goods 1 2(a) 1 Equipment (Lettings) 3 16 Equipment (Sale/Hire) 3 11 Exam Fees 3 14 Exchange Students 2 7 Exempt - VAT Category 1 2(d) 1 Expenses 2 7 F Financial Services 1 2(d) 1 Food 1 2(b) 1 Food & Drink 5 21-22 Fuel - also see Appendix A 1 2(c) 1 Furniture (Sale/Hire) 3 11 G Gift Vouchers 6 23 Governors Meetings 2 7

D:\Docs\2018-01-09\0e5d3494341d2e48f96d156cb86d429d.doc Section Point Page I Imprest Account 2 11 Input Tax (Expenditure) 2 6 Insurance 1 2(d) 1 Invoices (Purchases) 2 10 IT Suite – Letting 3 18 L Lettings 1 2(d) 1 Lettings (Income) 3 16-18 Lower Rated (VAT Category) 1 2(c) 1 M Mileage Allowance 2 (b) 7 Milk 3 14 Mini-bus Hire 3 15 Motor Vehicles 2 6 Motor Vehicles (Income) 3 12 Music Tuition 3 14 Musical Instruments 3 11 & 15 Musical Instruments (Assisted Purchase Scheme) - see Appendix D N Newspapers 1 2(b) 1 Non Business - VAT Category 1 2(e) 1 Non Business 1 1 & 2 O Output Tax (Income) 3 11 P Parents Meetings 2 7 Parking (School premises) 3 12 Petrol 1 2(a) 1 Petty Cash 2 10 Photocopying - also see Appendix F 3 11 Photographs 3 11 Postal Services 1 2(d) 1 Printing - see Appendix F Productions (refreshments) 2 7 Productions (admission) 3 12 Productions (programmes) 3 14 PTA 1 3 R Registration 1 3 Repairs & Maintenance (VA Schools) 2 7

D:\Docs\2018-01-09\0e5d3494341d2e48f96d156cb86d429d.doc Section Point Page S Sale of Goods to Pupils 3 12 Sale of Educational Equipment 3 14 Sale of Work to Pupils 3 12 School Hall (Lettings) 3 16 School Visits (Educational & Recreational) 4 19- 20 SIMS - VAT Codes 6 23 Sponsorship 3 12 Sports Facilities (Lettings) 3 16 Standard Rated - VAT Category 1 1 Subsistence 2 2(a) 7 Swimming Certificates & Badges 3 14 T Tea Towels - School 3 12 Telephones 1 2(a) 1 Telephones (Income) 3 11 Training 1 2(d) 1 Transport Fares 1 2(b) 1 Transport Fares (Income) 3 14 Tuck Shop (Income) 5 21 TV Licences 6 23 U Uniform - also see Appendix B 3 11 Unofficial Funds 1 3 Unofficial Funds (Income) 3 12 Unofficial Funds (School Visits) 4 20 V VAT Penalties 7 25 Vending Machine (Income) 3 11

W Water 1 2(b) 1 Wood Pellets 6 23 Y Youth Club Subscriptions 3 14 Z Zero Rated - VAT Category 1 2(b) 1

D:\Docs\2018-01-09\0e5d3494341d2e48f96d156cb86d429d.doc SECTION 1 – Introduction to the VAT System

1. VAT was introduced in to the UK on 1 April 1973, as a result of EU legislation. It is a tax on consumer expenditure and is levied on the supply of most goods and services in the UK. The body that administers the tax is HM Revenue & Customs.

2. There are currently 3 rates of VAT and goods and services fall into 5 main categories:

(a) Standard Rated

This is charged on the provision of most goods and services and includes the majority of supplies, such as telephone, petrol, and electrical goods. The current rate in the UK is 20%.

(b) Zero Rated

This category includes books, newspapers, most food (except catering), most children's clothes, transport fares and water. The goods in this group are liable to VAT but the current rate is 0% as it is government policy that these items should not be taxed.

(c) Lower Rated

This category is for domestic and "small" supplies of fuel. The current rate is 5%. (Refer to Appendix A for definition of "small" supply.)

Standard, Lower and Zero rated items are known as TAXABLE SUPPLIES, but the VAT rate differs between the categories.

(d) Exempt

This category includes insurance, financial services, postal services, betting, many lettings and certain education and training supplies and services. These items are NON TAXABLE SUPPLIES as they are not liable to VAT.

NB: The tax now levied on insurance premiums is NOT VAT.

(e) Non-Business

As applied to local authorities, this category includes goods and services provided free of charge, transactions within the same local authority, business rates, criminal record bureau charges, and purchases from a supplier who is not registered for VAT. (Refer to section on page 2). Non-Business transactions are outside the scope of VAT, so no tax is charged.

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1 Business and Non Business

For VAT purposes, "business" has a very wide meaning. In general, "business" means any activity concerned with providing goods or services at a price. Clubs, charities and non- profit-making bodies can still make "business" supplies even though they are not businesses in the normal sense. Schools can make "business" supplies.

For local authorities, of which schools' public funds are part, "business" activities are generally those where a supply of goods or services is made which is comparable with, and/or in competition with, supplies made by the private sector e.g. photocopying, telephone, lettings, and some sales of goods.

Non-business activities include:

 supplies made over which the authority has a statutory monopoly;

 services provided out of council tax funds;

 goods and services provided free eg education (non-fee paying) and many activities associated with it e.g. school meals, milk, educational trips;

 purchases from a supplier not registered for VAT;

 intra-authority transactions eg school purchases from SCC support services, (excluding services provided by South West One), Somerset Advertising, SCS, other Somerset LA schools, Community Education, Youth Service etc;

 services (not goods) provided by one local authority to another, where provided under a statutory obligation and not in competition with the private sector eg business rates. Other services are now treated as business supplies.

NB: Local authorities include County, District and Parish councils.

Non-business activities are outside the scope of VAT - no VAT is charged if a non-business supply is made.

Normally, where a body makes non-business supplies, the input VAT paid on purchases relating to these supplies cannot be reclaimed. However, local authorities have a special dispensation in that they can reclaim the input VAT relating to both business and non-business activities. This means that schools can reclaim virtually all their input VAT, providing certain rules are followed (refer to Section 2).

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2 Registration for VAT

Where an individual or organisation has made taxable supplies (i.e. of standard and/or lower/zero rated goods or services) exceeding £77,000 in the previous 12 months, it MUST register with HMR&C. However, if it can be shown that taxable supplies in the next 12 months will not exceed £75,000, registration can be avoided. The de-registration threshold is £75,000.

NB: When considering the above, the period of review is the 12 months ending/beginning in the current month and not a financial year, school year or calendar year. The level of taxable supplies must therefore be continuously monitored…..

e.g. at the end of July 2011, consider period August 2010 - July 2011; at the end of August 2011 consider period September 2010 - August 2011.

If any individual or organisation makes taxable supplies (i.e. sells standard, lower or zero rated goods/services) exceeding specified limits, they MUST register with HMR&C. This means that they must charge VAT to their customers and pay this over to HMR&C. They can also, however, reclaim from Customs the VAT which they themselves have had to pay on goods purchased for use in their business.

An individual/organisation which is not registered does not have to charge VAT on any of its income, but neither can it reclaim the VAT on its purchases i.e. it must bear the full cost inclusive of VAT.

LA schools (official funds only) are treated as part of the County Council for VAT purposes - the Council is registered for VAT, and so schools must charge output VAT on sales where appropriate and can reclaim most of the input VAT on purchases. The VAT is dealt with centrally on the County Council's monthly VAT return - schools' VAT information feeds into this via the creditors interface/petty cash claims/income paying in books/VAT returns from Local Payment schools.

However, any unofficial funds, such as the PTA or school fund, do not come under this umbrella registration, so the above rules are important here. In larger schools it is possible that unofficial funds may have to register in their own right. It is vital in this context to distinguish between zero rated and exempt supplies: zero rated must be included when calculating taxable turnover; exempt must be excluded.

NB: Different types of unofficial funds may normally be seen as separate individual entities for registration purposes, but Customs have sometimes directed that two or more bodies be treated as a single entity. The important point is that each fund should have a separate legal status if it is to be treated individually.

Note that it is the taxable turnover which must be considered i.e. the actual amount charged to the customer and not the profit made. e.g.

Sale of sport equipment £50 Cost of buying equipment £40 Profit £10 Back to Contents

3 Here, £50 is included as part of taxable turnover, not £10. The only exception to this rule is school trips, where only the PROFIT element (if any) counts as taxable turnover.

How the VAT collection system works

Consider a simple series of transactions to see how the system works, with a standard rated item (refer to table on page 6). This is based on the current rate of 20%.

Producer

 he sells timber to the furniture maker for, say, £100;

 if he is registered for VAT purposes, he must charge VAT on top of the basic price i.e. 20% x 100 = £20.00;

 he therefore charges a total of £120.00, of which he keeps £100 and pays £20.00 to HMR&C;

 this is known as output VAT, since it is VAT charged on his outputs or sales.

Furniture Maker

 similarly, he sells the finished item of furniture to a retailer for say £250;

 again, if he is registered he must charge VAT on top of this at 20.00% i.e. £50.00;

 the total selling price is, therefore, £300.00, of which he keeps £250 and pays over £50.00 to Customs. This is his output VAT;

 however, we saw that he paid £20.00 VAT when he purchased the original timber, and he can reclaim this from Customs. This is his input VAT as it is VAT paid on his inputs or purchases;

 the net effect is that the furniture maker pays over £50.00 - £20.00 to Customs i.e. £30.00.

Retailer

 the same principles apply here (the retailer decides to sell the item at £375.00 plus VAT @20% = £450.00).

Customer

 if the customer is not registered for VAT, he cannot reclaim the input VAT he has had to pay on the goods and the cost to him is the full £450.00.

As stated earlier, VAT is a tax on the consumer, and the example illustrates this. The businesses in the production and selling chain are really only collecting agents for Customs. They collect VAT from their customers and pay this over to Customs, but they can reclaim any VAT they incur on their purchases. The total VAT paid over to Customs in the example is £20.00 + £30.00 + £25.00 = £75.00. This is the VAT paid by the consumer at the end of the chain, which cannot be recovered i.e. the consumer has borne the VAT.

4 All through the rest of the chain, VAT paid over by one business is reclaimed by the next. This process only ends when the goods are finally sold to a non-registered body, since the VAT cannot be reclaimed. Back to Contents

5 HOW THE VAT SYSTEM WORKS

Registered for VAT Registered for VAT Registered for VAT Not Registered purposes purposes purposes

Producer Processor Retailer Customer

eg timber eg furniture maker eg furniture shop Member of the public (not a business)

sells @ say £100 + VAT sells @ say £250 + VAT sells @ say £375 + VAT @ 20% @ 20% @ 20 %

= £120.00 = £300.00 = £450,00 6 Output VAT 20.00 Output VAT 50.00 Output VAT 75.00 Output VAT -

Less: Input VAT - Input VAT 20.00 Input VAT 30.00 Input VAT 75.00

Paid over to Customs 20.00 Paid over to Customs 30.00 Paid over to Customs 25.00 Paid over to Customs -

NB The input VAT cannot be reclaimed as the customer is not a registered body.

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6 SECTION 2 – VAT on Expenditure (Input Tax)

If input VAT is to be reclaimed, then the following basic rules must be followed:

 the goods or services must be supplied direct to the County Council (which includes school's official funds), i.e. the local authority places the order, receives the goods, receives a tax invoice addressed to it and makes payment from its funds;

 a proper tax invoice must be received and retained (refer to `Invoices and Record Keeping').

Under no circumstances should goods be purchased on behalf of a body or individual that is not part of the local authority, or for personal use by an individual.

Purchases Made With Donations

If the local authority receives a donation for example from the PTA or school fund, VAT can be reclaimed on purchases made from this money, provided:

 the above rules are followed;

 the local authority retains ownership of the goods and uses them for non- business purposes i.e. the goods are not sold/given to a third party;

 the donor receives no benefits in return for the gift.

Motor Vehicles

Input VAT can be reclaimed on the purchase of a car, but only if it is to be used wholly for County Council activities and it can be demonstrated that it is unavailable for private use. `Car' includes a passenger vehicle that can carry 2-11 people (inclusive), i.e. this could include a small minibus.

Input VAT is fully reclaimable on the purchase of vehicles that are not cars, eg minibus carrying 12+ people.

Where a ‘car’ is leased and wholly used for County Council activities, the input VAT on the leasing costs may be fully recovered. However, if there is some private usage 50% of the VAT may be recovered.

Educational Visits

The guidelines relating to school visits and trips are dealt with in the section called ‘Educational Visits’ later in this manual.

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7 Expenses

(a) Subsistence and Travel Where subsistence and/or travel expenses are reimbursed to interviewees no VAT can be reclaimed, irrespective of whether they are successful. Revenue & Customs take the view that these expenses are incurred by the interviewee and not the employer.

(b) Mileage Allowances Where an employee or school governor is paid a mileage allowance, part of the VAT may be recovered (the petrol element). This is done automatically for payments that go through Payroll. Where payments are made by cheque (eg governors who are not SCC employees) contact Payroll for details of the amount of VAT that can be reclaimed. Where a flat rate allowance is paid, regardless of mileage, no VAT may be reclaimed.

“Business” Entertaining

Input VAT cannot be reclaimed on business entertainment, i.e. “the provision of hospitality or entertainment for anyone who is not your employee”. Therefore, in general, unless the hospitality is for another SCC employee, VAT cannot be reclaimed. However, Revenue & Customs have advised that where schools provide free refreshments/ catering in the following circumstances, these qualify as non-business, and input VAT is therefore reclaimable on the purchase of the refreshments:

 governors'/parents' meetings.  entertainment of visiting students on exchange visits.  school events such as plays and concerts.

Purchases from a VAT registered supplier in an EC Country

Ensure that you provide the company with the SCC VAT registration number GB 131 2544 12. No EC VAT will then be charged. However, if the item is vatable in this country, you will need to contact County Treasurers x5214 in order that the VAT can be accounted for correctly (this is known as the ‘destination system’) on the next Somerset County Council VAT claim.

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VAT Recovery on Capital Works at VA Schools 8 The governing body of a VA school is responsible for capital expenditure in relation to the school premises, with the exception of playing fields and related buildings.

This includes:

 The existing buildings (internal and external)  Those buildings previously known as “excepted” (Kitchens, dining areas, medical/dental rooms, swimming pools, caretakers’ dwelling houses)  Perimeter walls and fences, even if around the playing fields  Playgrounds  Furniture, fixtures and fittings – including ICT infrastructure and equipment  Other capital items (which can include capital work to boilers or other services)

Therefore when incurring this type of expenditure the governing body is not acting as the agent of the LA and cannot recover any VAT charged.

This rule applies to: a) Expenditure funded by grants such as DFCG, lottery, Sport England, LA Coordinated VA Programme, as the grant is awarded to the governing body for work that is its responsibility even where it is administered through the LA. The grant should include an amount to cover the VAT element.

b) Expenditure met from the governing body’s private fund.

c) Expenditure met from the school’s delegated budget (eg where this is being used to fund the governors’ 10% contribution), as the work is still the responsibility of the governing body.

d) Expenditure where the LA is contributing towards/subsidising a governing body’s capital expenditure.

In scenario (d) above, VAT recovery had been allowed by HM Revenue and Customs prior to September 2009, but this rule has now been tightened up and it has now been made clear that this is no longer possible. For projects commencing after 1 September 2009 where funding was calculated based on the previous policy, cases will be considered on an individual basis.

VAT recovery is only possible where the LA is spending its own centrally held funds by placing an order directly with the supplier, ie procuring the goods/services and receiving the supply.

If bills are for convenience processed through official LA funds on behalf of the governors, VAT should not be coded out and the non business rate should be used.

9 INVOICES AND RECORD KEEPING

In order to reclaim the input VAT on your purchases, you must ensure that you have adequate supporting documentation.

There are a number of specified requirements that must be met before an invoice is deemed to be valid for VAT purposes.

The general rule is that an invoice must show:

 an identifying number (i.e. an invoice number);

 the date of the supply (i.e. tax point);

 the name, address and VAT registration number of the supplier;

 the name and address of the purchaser;

 a description sufficient to identify the goods or services supplied;

 Unit price of the goods or services supplied;

 Quantity of goods or extent or services, rate of tax and amount payable;

 Gross amount payable excluding tax;

 Rate of cash discount, if offered;

 Total amount of tax (in sterling).

Modified Invoices

Obviously it is not practicable for this information to be shown where sales are being made direct to the general public eg in a shop. Where this is the case, certain concessions are made:

 a VAT invoice need only be issued if requested by the customer. The supplier is legally obliged to provide this where requested.

 if the total amount charged, including VAT, is £250 or less, only the following details are needed:

- the date of the supply;

- the name, address and registration number of the supplier;

- a description of the goods or services which indicates that VAT has been incurred;

- the total charge, including VAT; NB: It has been agreed with local Revenue & Customs that the rate of VAT does not have to be present.

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10 You should always check your invoices, including petty cash vouchers, against this list. If the requirements are not met, try to obtain a proper invoice, but if this is not possible do not reclaim the input VAT i.e. code the full amount to the relevant SIMS FMS expenditure code rather than separating the VAT element to the VAT code.

It is the responsibility of the supplier to work out the VAT on his invoices, but if you do notice a significant error you should inform him.

In particular, look out for invoices marked "PROFORMA" or "THIS IS NOT A TAX INVOICE" - these are not valid for VAT purposes. Ask the supplier for a proper tax invoice. If you need to pay the invoice urgently, do not code out the VAT initially; then later, when you have received a proper tax invoice, process a credit note against your first invoice and process the new invoice as usual, coding out the VAT.

Also note that photocopies are not sufficient for VAT purposes.

It is important that the above rules are observed as penalties can be imposed. Whether using the central payment or local payment scheme schools will retain invoices on their premises. It is possible that HMR&C could inspect these at a later date.

You should retain your purchase invoices and any income slips you produce for a period of 6 years. If you make a purchase from another European Union country, you should:

 keep records of the goods received and all documentation,  inform the Corporate Finance Section in Treasurers.

IMPREST ACCOUNTS (PETTY CASH)

VAT may be reclaimed on expenditure from the imprest account provided you have a valid VAT receipt.

In most cases (i.e. retail sales under £250.00 in value) the modified VAT invoice/receipt previously described is acceptable. To recap, the required details are:

(i) the date of the supply;

(ii) the name, address and VAT registration number of the supplier;

(iii) a description of the goods or services which indicates that input VAT has been incurred;

(iv) the total charge, including VAT;

Some schools use unofficial funds for small petty cash type purchases. They are missing out on the opportunity to recover VAT on those purchases. All school purchases should be made through official funds; a donation from unofficial funds can be made if necessary.

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11 SECTION 3 – VAT on Income (Output Tax)

DO NOT FORGET: THIS SECTION RELATES TO OFFICIAL FORMULA FUNDS/SCHOOL BUDGET

The tax that is charged on sales and collected from customers is known as OUTPUT TAX.

As a general principle, if there is any doubt about the status of a sale, VAT should be charged.

INCOME WHICH IS SUBJECT TO VAT (this includes ‘donations’ made for use of these facilities)

 Private telephone call income - includes money collected from call boxes

 Private photocopying income - not related to the normal school curriculum.

 Some printed material is also standard rated – refer to Appendix F for details

 Catering (school dinners, sandwiches, pies, pastries, salads, tea, soup, hot takeaway etc) or taxable foods (confectionery, biscuits, crisps, soft drinks etc) sold to staff/visitors or if sold to students at a profit is standard rated - at or below costs to students is non-business

 Charges made to operators of vending machines is now standard rate, this includes 'commissions' (previously exempt licence)

 Sale of vehicles where input VAT has been reclaimed on the purchase

 Sale/hire of equipment, and furniture, excluding the sale of musical instruments and sports equipment used in school etc and no profit is made (non-business)

 Sale of school photographs (on total sale proceeds if sold direct by school; on the commission element only received by the school if sold by photographer)

 Sale of book bags (Customs and Excise state that these are not essential for teaching to take place and hence should be treated as a taxable supply).

 Sale of school uniform and sports clothing (larger sizes) - there are special rules for primary and middle schools for items bearing the school logo identifying them as part of a uniform - these are zero rated irrespective of size as long as the school is catering for pupils under 14 exclusively, even if sold at a profit.

Refer to Appendix B for further guidance

NB: Sale of school blazer badges is standard rate

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12  Goods purchased/produced and sold on to parents etc if standard-rated items eg tea towels, calendars, dvds

 Loan charges for dvds, records etc (not books)

 Income received where a benefit must be provided in return eg sponsorship from a company in return for advertising the company (no benefit – non- business)

 Admissions made to school premises for an event such as a pantomime or concert. Where a voluntary collection is made instead of charging an admission price, then the income is non VATable (classed as a donation and therefore outside the scope of VAT). Charges for parking on school premises are standard rated.

 Sale of standard rated goods to pupils where the amount charged exceeds the cost of the item.

 Sale of work from classes where the amount charged exceeds the cost of the materials.

 Hire of a minibus without a driver - this is classed as hire of equipment.

 Some lettings - the guidelines relating to income from letting can be complicated. Refer to the section on `Lettings’ (pages 16 - 18).

 Non-educational trips (on profit element only). Refer to the section on school trips (Section 4).

NB: It is very important that official and unofficial funds are not mixed. Income and expenditure relating to the same activity/transaction must both be processed through the same fund - you must not pay expenditure through official funds to claim back the input VAT and then pay income into unofficial funds to avoid charging output VAT.

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13 PROCESSING VAT ON INCOME

The VAT element collected should be separately coded out on your bank paying in slip in the box provided, and this will be passed over to Revenue & Customs rather than credited to the school's budget.

Calculation of VAT (this is based on the current rate of 20%)

The VAT element is 20% of the net charge eg £100 charge + VAT £20.00 = £120.00 total charge.

If you are collecting in a sum of money that already includes the VAT element (eg money for telephone calls), the VAT element is calculated as below:

For example, if total income of £120.00 is collected and includes VAT, the amount of VAT is calculated by dividing by amount collected by 6. e.g Income of £120.00 ÷ 6 = £20.00 VAT

Where the school is raising an invoice, it must ensure that the correct details are included (refer to Appendix E). The County Council VAT Registration number is GB 131254412.

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14 INCOME WHICH IS NOT SUBJECT TO VAT  Income from other bodies which are part of Somerset County Council, eg, other LA schools, central SCC departments, Community Education, Youth Service etc (non-business).  Sale of goods/materials incidental to the provision of education and part of the normal school curriculum, (other than clothing) providing these are used at school and are not sold at a profit. E.g. pencils, calculator, instruments/tools, sports equipment (non-business). NB: 1. To calculate whether above or below cost – this can include the total cost of provision/administering. 2. To qualify as being for curricular use, the items must be brought to school at least once per week (Supplies made for extra-curricular use are taxable)  Sale of work from classes at cost or below - (non-business)  Sale of programmes, as long as these are not securing admission to the event (zero rated)  Sale of milk to pupils (non-business)  Supplies of catering to pupils at or below cost (non-business)  Catering profit donations (non-business)  Examination fees collected from pupils/parents (non-business)  Reimbursements/contributions to costs, e.g. charging a child for a broken window (non-business)  Recovery of bus/train fares/transport arranged by the school from pupils/parents (non-business)  Parent donations towards school transport (non-business)  Charges for loaned, lost or damaged text books (non-business)  Educational/Vocational training course fees (Non-Business if no charge and Exempt if a charge is made). This includes sporting/recreational courses, exercise classes, and music tuition for pupils NB: If there is a charge for lunches this will also be exempt  Selling of swimming certificates and badges as part of a course, including any admin. Charge (exempt)  Booklets for Adult classes (incidental to the provision of Education) (exempt)  All Educational visits - refer to section 4 on School Trips  Some lettings - refer to section on Lettings (pages 18 - 20)  Donations: i.e. gifts to the school or sponsorship from which the donor receives no benefit (non-business)  Youth club subscriptions (non-business)

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15  Deposits taken as security for the safe return of goods hired out, and which will be refunded when the goods are returned, or forfeited if they are not returned. (non-business)  Hire of a minibus (10+ seats) WITH A DRIVER (zero rated).  Musical Instruments sold under the Assisted Purchase Scheme (refer to Appendix D).  School uniform (including school ties) with the school logo are zero rated as long as the school are catering for pupils under 14 exclusively, i.e. Primary and Middle Schools.  School uniform/sports clothing labelled under age 14 or within the body/garment sizes is zero rated (refer to Appendix B for further guidance).

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16 INCOME FROM LETTINGS

The granting of a licence to occupy land (eg a letting) is normally exempt, as long as:

 it relates primarily to occupation of the land/building rather than use of the facilities it may offer

 it gives the occupier the exclusive use of a clearly defined area or site.

General Purpose School Hall/Classroom/Room etc

1. A school hall is a general purpose hall which may nevertheless have floor markings for sports activities. A classroom or other general purpose room is treated in the same way.

2. The hire of a school hall, with or without kitchen and any other 'in situ' facilities, to a hirer who has exclusive use is a licence to occupy and is exempt. The fact that the hirer may buy in other supplies such as bar/caterers who would use the facilities does not change your liability, which is the hire of the hall. If the school provides the catering or bar, it must account for VAT as appropriate on the food and drink sold, but the room hire is still exempt from VAT.

3. If any equipment, such as an overhead projector, computers or television is hired out, and a separate charge made, then the charge for that equipment should include VAT. If the hirer is sent one bill for the hire of a room and the equipment inclusive, then the whole let is exempt.

NB: A Performance Enhancement Centre is exempt provided that it is not designed or adapted for playing sport etc

Facilities for Sport and Physical Recreation

4. Premises count as sports facilities if they are designed or adapted for playing any sport or taking part in physical recreation.

Such facilities include:

 swimming pools (NB: If a swimming pool is on County Council land, it belongs to the County Council even if the PTA funded its construction. Income should therefore be paid into official funds)

 tennis/badminton/squash courts

 gymnasia/sports hall

 cricket/football pitches etc

 dance studios

or other specially designed, adapted or equipped land or premises eg nets set up, mirrors/bars in dance studio.

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17 General purpose halls, which merely have floor markings so that they may, say, be used for badminton, are not classed as sports facilities and the let is exempt even if the hall is used for playing sport.

The letting of such facilities is normally standard rated, but can be exempt from VAT if:

(a) the letting is for over 24 hours and the hirer has exclusive use

(b) there is a series of lettings to the same person and ALL the following conditions are satisfied.

(i) ten or more sessions of the same activity in the same place with an interval between sessions of not less than one day and no more than 14 days;

(ii) the hirer is a school, club, association or organisation of affiliated clubs or associations i.e. a non-profit making voluntary body;

(iii) the hirer has exclusive use of the facilities for each session;

(iv) the series is invoiced as a whole, with no refund being made for any sessions missed by the hirer. If the hall is unavailable through unforeseen circumstances and the school has to cancel the letting, then a refund can be made;

NB: The actual cash payment need not be made in one lump sum, but there must be a written commitment to a whole series of lets, rather than hiring on an ad hoc basis.

(v) written evidence is available to confirm that these conditions have been met. A formal invoice raised by the school or letter from the school to the hirer is sufficient.

If the lessee (hirer) alters the terms of the agreement at a later date, the following rules apply:

● if the duration of one or more of the lets is increased, the extra time will be liable to VAT

● if the duration of one or more of the lets is decreased, the series of lets is still exempt as long as no refund is given

● if an extra session is booked, this will be liable to VAT.

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18 5. Other points to note:

● the letting of such premises for other purposes is exempt

e.g. sports hall for a political meeting or as a polling station playing field for camping, fireworks display or car boot sale

● ancillary supplies

- where changing rooms, floodlights etc are included in a letting, they are regarded as incidental to the letting and have the same VAT category

- if optional extra equipment/services are provided (eg staff) these must be considered separately when determining their VAT category.

Summary

Income is exempt from VAT where either:

(a) the general purpose school hall/classrooms etc are let; or

(b) a sports facility is let satisfying all the conditions detailed above.

Income is standard rate where:

(a) an IT Suite is let for the use of the computers

(b) a sport let does not meet the criteria in point 4 above

(c) Equipment is hired or bar/catering is provided

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19 SECTION 4 – School Visits (Processed through official funds)

School visits are usually organised in one of two ways:

(a) the school buys in or provides the various elements of a visit and charges for them either singly or more commonly as a package, or

(b) the school arranges for a travel agent to supply the visit, and recovers the cost of the trip from the pupils.

School Providing Visit Directly

(a) Educational - where the visit is for the benefit of the pupils and it is either educational or for a broadly educational reason and furthering the aims of the wider curriculum. It may be treated as a non-business activity, whether provided below, at, or above cost.

Input VAT on expenditure may therefore be reclaimed, and no output VAT is chargeable to pupils.

(b) Recreational - where the visit is not related to an agreed curriculum it falls under the Tour Operators Margin Scheme (TOMS). Input VAT is not recoverable, and output VAT is chargeable on any margin (profit) made.

It is much easier to process such visits through unofficial funds, (as long as not registered for VAT), as TOMS is very complex.

School Arranging Visit Through A Travel Agent

When the school uses a travel agent to arrange a visit the school is acting merely as a booking agent - arranging a supply between the two other parties (i.e. the travel agent and the pupils).

If the school recovers the cost (or less) from the pupils and pays the full sum to the travel agent, then no output tax is due on the income.

If the school charges the pupils more than the cost, (i.e. the amount due to the travel agent), then the profit element (or commission) is subject to VAT.

Input tax on invoices from the travel agent is not recoverable - if the agent is operating under TOMS, there should be no VAT shown on his invoices anyway.

NB: Generally this will only affect accommodation costs as transport costs are normally zero rated.

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20 ORGANISED SCHOOL VISITS PROCESSED THROUGH UNOFFICIAL FUNDS

School Providing Visit Directly

The taxable turnover for VAT registration purposes is the difference between the buying price and the selling price (i.e. the margin).

Therefore, if the trips are offered at or below cost then the margin is nil and does not count towards the taxable turnover.

However, if a profit is made on the trips then this must be counted towards taxable turnover. (See Section 1 "Registration for VAT").

As long as the unofficial fund is not registered, no output VAT need be charged to children, and no input tax can be reclaimed on the expenditure.

School Arranging Visit Through a Travel Agent

In this situation the school fund is acting as the 'booking agent' (i.e. the supply is between the travel agent and the pupils/parents).

If the school recharges the parents at or below the charge made by the travel agent then the income can be classed as a reimbursement. As reimbursements are outside the scope of VAT (i.e. Non-Business) this does not count towards taxable turnover.

However, where the school recharges the parents above the cost then the income does not satisfy the conditions of a reimbursement. The 'profit' element (or commission) represents a taxable supply and must be taken into account when assessing taxable turnover.

NB: If the school buys elements of an educational tip via a tour operator they may treat the visit as 'non business' and reclaim the VAT providing both the income and expenditure go through the school budget and a valid VAT receipt is received. If the whole trip is arranged via a tour operator any VAT is not recoverable as detailed above.

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21 SECTION 5 – Food and Drink

Most food and drink is zero rated.

Exceptions are:

(i) Catering (eg school dinners, prepared snacks, sandwiches, pies, pastries, pizzas, salads, soup, tea, coffee, buns, cakes, hot takeaway etc).

(ii) Taxable foods i.e. confectionery, soft drinks, crisps, ice cream, chocolate biscuits, nuts etc.

These are normally standard rated, BUT

Special rules apply to catering and taxable foods if the supply is made by an LA or its agent (see (3.) for details on independent bodies such as trusts or school fund). (Refer to Appendix C for guidance on determining who is an agent.)

1. Supply by LA/Agent to Own Students

Catering

(i) All catering is treated as incidental to provision of education and is non-business when provided at or below cost, whether supplied in a canteen, snack bar, tuck shop or other similar food outlet. If it is provided above cost, it is standard rated. ‘Cost’ means the fully overhead - inclusive cost of providing the meals, and can include the cost of free school meals, energy costs and admin.

(ii) Taxable Foods

Supplies of taxable foods may be treated as non-business provided that the sale of all food and drink to pupils is at or below cost, taking into account all sales outlets in the school (i.e., vending machines, tuck shops, canteens, kiosks, etc). This can be reviewed on an annual basis.

Where this is not the case, Customs will accept a separate calculation for each outlet - in those outlets where food and drink is supplied above cost, VAT is due on the total income.

NB: 1. All sales of alcohol are standard rated, wherever supplied.

2. Charges made to operators of vending machines is now standard rate, this includes 'commissions' (previously exempt licence)

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22 2. Supply by LA or Agent to Staff/Visitors and the General Public

VAT should be charged on the supply of all catering and taxable foods to staff and visitors. Where supplies cannot be separately identified from sales to pupils, a reasonable apportionment must be used.

3. Supply by Independent Body eg Catering Trust, School Fund

The special rules on VAT for the LA or its agent DO NOT apply to an independent body or Principal. Therefore ... All sales of catering and taxable foods count as taxable turnover for registration purposes. If the supplier is registered for VAT, (s)he must charge VAT. This applies even if all the profits are donated to the school.

4. Supply by a Catering Contract or direct to Pupils (acting as a principal)

Meals supplied directly by a catering contractor will be liable to VAT, as the special rules for LAs and their agents do not apply to someone who acts as a principal.

NB: 1. Profits donated back to the school are non-business

2. If the school charges the supplier for the use of facilities, it must charge VAT at 20%. The only exemption would be for fuel if a ‘small’ supply is made and the school also qualifies as a “domestic” user. In this case, VAT need only be charged at 5%. See Appendix A for definition of a ‘small’ supply.

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23 SECTION 6 – VAT and SIMS FMS

1. Invoices, Petty Cash, Non-Order Invoices

When you process an invoice or non-order invoice or input some petty cash on SIMS FMS you will need to use one of 5 VAT codes:

VAT Codes

Standard Rate 20.0% VAT 1

Zero Rate 0.0% VAT 2

Lower Rate (Fuel) 5.0% VAT F

Exempt 0.0% VAT 3

Non-Business 0.0% VAT 4

NB: In FMS, ledger codes have a default VAT code attached to them, but this can be altered if necessary.

NB: When completing your petty cash reimbursement claim coding, ensure you use County VAT codes

V0 = Exempt V1 = 20% V6 = 5% V9 = 15% VN = Non-Business VZ = Zero Rated

Examples of different sorts of expenditure

Standard Rate items which do not fall into the other categories. Usually 20% VAT will be charged on the invoice you are processing.

Zero Rate children's clothing, water and sewerage, books, transport.

Lower Rate Wood Pellets, when sold for use as fuel, "small" supplies of fuel - invoice will show VAT at 5%.

Exempt postal services, insurance.

Non-Business goods/services from Somerset County Council to your school and from other Somerset LA schools/services, suppliers not registered for VAT, gift vouchers, software & TV licences, and criminal record bureau charges.

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24 2. Income

When inputting income on SIMS FMS you will also need to select from one of 5 VAT indicator codes.

Standard Rate VAT 5 Zero Rate VAT 6 Lower Rate (Fuel) VAT L Exempt VAT 7 Non-Business VAT 8

Examples of different sorts of income: (refer to Income section of VAT Manual)

Standard Rate - private photocopying, private telephone calls, admission fees, some lettings, some food and drink, hire of equipment, some sales of goods, etc.

Zero Rate - some school uniform (refer to Appendix B), book sales.

Lower Rate - some fuel recharges (refer to Appendix A).

Exempt - many lettings, adult education/training provided at a charge.

Non-Business - educational trips, income from the County to schools, milk, most items incidental to education, donations, school meals.

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25 SECTION 7 – How the penalty system works

There are 3 main types of penalty. The penalty is payable IN ADDITION TO THE VAT due.

● Failure to notify liability for registration

● this will only apply to unofficial funds such as the PTA and school funds, should their taxable supplies exceed the limits described earlier and they fail to register;

● the penalty is the VAT due from the date when registration should have applied.

● Penalty for late submission of VAT returns/late payment of VAT

● again this will only apply to unofficial funds, if registered or liable to register;

● the penalty is a % of the VAT due - 0% for first offence, 2% if second offence within 12 month period, 5 - 15% for subsequent offences.

● Misdeclaration Penalties (Apply where input VAT is incorrectly reclaimed, or output VAT not charged on income where it should be)

 Varies according to the levity of the misdeclaration.

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26 APPENDIX A "REDUCED" RATING OF FUEL AND POWER SUPPLIES

Some supplies of fuel and power are only liable to VAT at the reduced (lower) rate. These are as follows. Please note that supplies made at the reduced rate are not liable to the Climate Change Levy, so if you qualify for reduced rate this will save you money. 1. Fuel and power for domestic use (this includes boarding school accommodation) 2. Fuel and power for charity non-business use (this category includes VA, VC, Foundation and Academy schools). Where the fuel/power is for a mixture of non business/business use then the following rule applies:

 if at least 60% is for non business use, the whole supply is treated as qualifying for reduced rate VAT.

 if less than 60% is for non business use, VAT at the standard rate is due on the proportion which is for business use. The proportion for non business use is still at the reduced rate.

In order for the reduced rate to apply, you should issue your supplier with a certificate declaring your entitlement (any kind of written declaration is acceptable - see example on following page). 3. Fuel and power where the amount supplied does not exceed the small quantities de minimis limits (see below for details) The relevant de minimis limits for “small” supplies are set out below. A "supply" for this purpose is the amount delivered.

a) Gas ● Piped gas not more than 5 therms per day (150 therms per month) or 4397 kwh per month, to one customer at any one of his premises

● LPG in cylinders < 50 kg net weight (no more than 20 cylinders)

● LPG not in cylinders, if tank capacity 2 tonnes or less

b)Electricity – supplies of not more than 33 kwh per day (1000 kwh per month) to one customer at any one of his premises

c) Oil - supplies of fuel oil, gas oil or kerosene of not more than 2300 litres

d)Solid Fuel - supplies of not more than 1 tonne

27 APPENDIX A cont’d FUEL/POWER RECHARGES For recharges of fuel/power to establishments outside the Local Authority (eg, FE colleges, academies, independent schools) the position is as follows: VAT should be charged at the standard rate unless the fuel/power qualifies for reduced rate under one of the three scenarios described above (ie domestic, charity non business, or small supply).

If the supply is partly for a qualifying use the same rule applies as described in (2) above.

If for charity non business use, the charity should issue you with a certificate declaring their entitlement to the reduced rate.

For further information please refer to HM Revenue & Customs Reference: Notice 701/19 (2002).

COMPLETION OF CERTIFICATES FOR ENERGY SUPPLIERS

Please read the following guidance before completing the certificate.

If a supply of fuel and power is for a “qualifying use”, VAT can be charged at the reduced rate (currently 5%). This will also mean that climate change levy (CCL) will not be added to the charge, resulting in a saving to the customer.

What is qualifying use? Qualifying use” means:

. domestic use (including certain residential accommodation); or

. use by a charity for its non-business activities Which schools are charities? The following types of school all have charitable status for this purpose:

. foundation schools

. voluntary aided schools

. voluntary controlled schools NB these are not registered charities, so if asked for your registered charity number please state that you are a charity exempt from registration and do not have a number. Community schools do not have charitable status and CANNOT claim this relief, so should not complete the certificate.

28 How do I know which activities are business and which are non business? An activity is “business” if it:

. is mainly concerned with making supplies to other persons for any form of payment or “consideration”, in money or otherwise; and

. continues over a period of time with some degree of frequency and scale. NB An activity can still be “business” even if no profit is made. LEA Funded schools provide their education free of charge so this is non business. However, schools may also have “business” activities; e.g. a sports hall that is regularly made available to the wider community for a charge (even if not for profit). Therefore you will need to consider if any of the fuel/power supplies you receive are used for a business activity and work out the proportion used in this way. Record the % of qualifying (non business) use on your certificate where indicated. What if some of my useage is business and therefore not “qualifying”? If the fuel or power is only partly for a qualifying use the following rule applies:

 if at least 60% is for a qualifying use then the whole supply can be treated as qualifying

 if less than 60% is for a qualifying use then the supply needs to be apportioned between qualifying and non qualifying – so the reduced VAT/CCL would only be applied to the qualifying portion.

EXAMPLE OF A CUSTOMER DECLARATION

CERTIFICATE TO A SUPPLIER IN RESPECT OF PREMISES QUALIFYING FOR REDUCED RATE SUPPLIES OF FUEL AND POWER

1. Address of qualifying premises.

2. Name of business or organisation (if applicable), and VAT registration number if registered. (SCC VAT Registration No. 131 2544 12)

3. Percentage used for a qualifying use (see VAT Notice 701/19).

4. Full name of signatory and (where appropriate) status held.

I certify that the information given above is correct and complete. I undertake to inform (name of supplier) if there is any significant change in the circumstances. I understand that any incorrect statement may make me liable to a financial penalty under the VAT Act 1994, as amended.

Signed Dated

29 APPENDIX B CHILDREN'S CLOTHING AND FOOTWEAR General Articles designed for "young" children (i.e.: under 14 years old!) and not suitable for older persons, are zero rated (whether sold or hired). "Clothing" includes hats, belts, scarves, garments designed primarily as safety aids (eg, lifejackets (max body weight 52 kg (114 lbs)), reflective tops) as well as all the obvious garments. It does not include accessories sold separately such as buckles, zips, badges, patches, shoelaces, etc. "Footwear" includes specially designed items, eg, football boots, and sizes are zero rated for up to and including Adult size 3, unless a ‘court’ shoe or the shoe has a sole of more than 4 cms. Garments can be zero-rated if the design and suitability tests below are both met. a) Design Test A garment falls within certain maximum sizes and footwear satisfies certain size/ styling criteria. However, the maximum garment sizes can be ignored, where it can be shown that the garment has been designed to fit the body size of a ‘young’ child i.e. i) Body Sizes

BOYS GIRLS Height 163 [64"] 161 [63"] Chest 84 [33"] 85 [33.5"] Waist 70 [27.5"] 69 [27"] Hips 85 [33.5"] 90 [35.5"] Arm (shoulder to wrist 59 [23"] 57 [22.5"] Inside leg 77 [30"] 76 [30"]

ii) Maximum Garment Sizes

BOYS GIRLS Chest Waist Chest Waist Body dimension 84 [33"] 70 [27.5] 85 [33.5"] 69 [27"] Shirts 104 [41"] 105 [41.5"] Knitwear 104 [41"] 105 [41.5"] Jackets/waistcoats 109 [43"] 110 [43.5"] Top coats/outerwear 114 44.5"] 115 [45"] Dresses 98 [39.5"] Skirts 71 [28"] Trousers/shorts 72 [28.5"] 71 [28"] Underwear/swimwear 88 [34.5"] 72 [28.5"] 89 [35"] 71 [28"] Nightwear 105 41.5"] 73 [29"] 106 [42"] 72 [28.5"] Leotards/swimsuits, etc Shoulder to crutch 70 cm (27.5")

APPENDIX B cont’d

30 b) Suitability Test:

This can be met by labelling the garments or ensuring the garments/footwear are held out for sale only to “young children”.

However if a garment is intended for children under 14 and exceeds the body/garment sizes above, it may still be able to be zero rated if the supplier can demonstrate to Revenue & Customs that the intended market is restricted to children under 14.

Headgear

● This can still be zero-rated, even if it would fit an adult, as long as it is clearly designed only for young children, eg, school hats, cub scout hats.

● Cycle helmets may be zero-rated up to a maximum size of 59 cm diameter, provided they are designed and marketed exclusively for young children.

School Uniform

This is generally subject to the normal rules for children's clothes. However, garments (including school ties) bearing a prominent badge/logo identifying them as part of the official uniform may be zero-rated irrespective of size as long as the school caters exclusively for pupils under 14 years. This includes school ties that are of the school colours. (Same applies for youth organisations for under 14s, eg, Brownies, Beavers etc.)

Plain skirts, trousers, blazers etc are subject to the normal body dimensions/maximum garment size rules, even if bearing a stripe or piping in the school's colours.

NB: School Blazer badges are standard rate.

For further guidance on the above please refer to HM Revenue & Customs Reference: Notice 714 (June 2011).

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31 APPENDIX C

AGENTS

An agent is someone who acts for, or represents, someone else (his principal) in arranging supplies of goods or services. Supplies are arranged by the agent, but are made by or to the principal.

Whether or not a person is an agent depends upon the contractual relationship in force. Agreement may be written, oral or merely inferred from the general way that business is conducted, but the following conditions must be satisfied:

● it must always be clear that the agent is arranging the transactions for his principal, rather than trading on his own account

● the agent will never be the owner of the goods bought or sold for the principal

● the agent will not alter the nature or value of any supplies made between the principal and third parties.

The agent will charge a fee to his principal for his services.

An agent will often issue or receive invoices in his own name for supplies arranged on behalf of his principal. He may reclaim input tax on purchases and must charge output tax when he recharges the cost on to his principal, but the nature and value of the supply must be unchanged.

HM Revenue & Customs have issued a special “Memorandum” covering catering contractors. Catering contractors may operate as principals, agents or a mixture of the two.

The types of factors that are taken into account are:

● control over pricing

● control over premises

● control and ownership of stock

Detailed guidance has been sent to all contractors working in Somerset LA schools, and to those schools involved.

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32 APPENDIX D

MUSICAL INSTRUMENTS - ASSISTED PURCHASE SCHEME

The sale of musical instruments to children will be standard rate for VAT UNLESS the conditions of the “assisted purchase scheme” are met, in which case the sale is non-business. The school orders the instrument and pays for it, reclaiming the VAT as normal. The instrument can then be sold on to the pupil without charging VAT.

The criteria that must be met are as follows:

(a) The pupil is in full-time education at an LA school.

(b) The pupil is taught by an SCC appointed teacher and receives tuition on a regular basis as part of his/her normal school curriculum, i.e. the child has weekly lessons from a teacher appointed by the school or Somerset Music.

A ‘GCSE’ or ‘A’ level music student may also qualify for the scheme even if having private lessons, provided the instrument is used weekly in school as part of their music curriculum.

(c) The instrument is suitable for that pupil’s needs/level of attainment - a beginner violinist cannot have a “Stradivarius” unless they are a genius!

(d) The instrument is handed over in the teaching room, i.e. you cannot set up a shop to sell instruments.

(e) The instrument is sold AT OR BELOW COST (net of VAT).

NB: ● The instrument can be taken home for practice, etc.

● Provided the above conditions exist at the time of sale, it would not matter if the child later left, changed teachers, etc.

● The HIRE of an instrument by the school, to a pupil whose music tuition it is also providing, is EXEMPT from VAT.

● The above rules will also apply for a pupil who has private lessons but is actively involved and use their instrument in the school for band/concerts, etc, and the other conditions of the scheme are met.

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33 APPENDIX E

An example VAT Income Invoice:-

xxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxx (School Name and Address)

VAT REGISTRATION No 131 2544 12

Invoice reference (this should be xxxxxxxxxxxx sequentially numbered)

Contact xxxxxxxxxxxxx Tel No xxxxxxxxxxxxx

Invoice/Tax date xxxxxxxxxxx

Customer xxxxxxxxxx (name and xxxxxxxxx address) xxxxxxxxxxxx

INVOICE

£/ Qty Total unit £ xxxxxxxxxxxxxxxxxxxxxx (Description of xxxxxxxxxxxxxxxxxxxxxx goods/service) X (net amount)

VAT @ 20% X (VAT if applicable)

TOTAL XX

Please make cheques payable to Somerset County Council and return to the above address together with the attached remittance advice slip.

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34 APPENDIX F PROVIDING PRINTING & PHOTOCOPYING Whether printed matter can be zero rated depends on its physical characteristics, function and content. Supplies of the following are zero rated: ● books & booklets However, products that are essentially stationery items for example diaries and address books are standard rated. ● brochures/ pamphlets/ leaflets However, if more than 25% of their total area consists of areas blank and available for completion or parts to be detached and returned then they are standard rated. NB: Items made of laminated paper are not leaflets. ● children's picture/ painting books Unless the article is essentially a toy, i.e. books consisting of models for cutting out or items where the ‘pages’ are boards for games. ● journals/periodicals ● leaflets ● music Apart from music rolls and manuscript which are standard rated. ● newspapers ● maps, charts and topographical plans Unless plans, drawings, decorative maps, posters, pictorial wall charts, aerial photographs, globes which are standard rated. STANDARD RATED ITEMS ● Posters for public display ● Letters ● Stationery items ● Incomplete publications eg parts of books, unbound pages etc Unless work designed to go into a zero rated book, card based continuity series publications are zero rated. ● Generally photocopies of zero rated items are always standard rated Unless the copies can be properly described as books, booklets, brochures etc.

For further guidance on this subject see HM Revenue & Customs Reference: Notice 701/10 (October 2010). Back to Contents

35 These are examples which are zero-rated in most circumstances. A

However, you should not determine liability by referring only to this Appendix. E

- Accounts (fully printed) - Hydrographical charts - Topographical plans

- Advertising leaflets - Hymn books - Tracts c

- Agendas (fully printed) - Instruction manuals - Trade catalogues n

- Almanacs - Journals - Travel brochures '

- Amendments (loose-leaf) - Leaflets - Trade directories ) - Annuals - Loose - leaf books - Antique books - Magazines - Antique maps - Mail order catalogues - Articles of association - Manuals (complete in booklet form) - Maps - Astronomical charts - Memoranda of association - Atlases (completed in booklet form) - Autograph books (completed) - Missals - Bibliographies - Monographs - Bills of quantity (completed) - Music - Books - Music scores - Booklets - Newspapers - Brochures - Orders of Service - Bulletins - Painting books (children’s) - Catalogues - Pamphlets - Charts (geographical or - Periodicals topographical) - Picture books - Circulars - Poster magazines - Colouring books (children’s) - Prayer books - Comics - Price lists (fully printed leaflets - Company accounts and reports or brochures) - Crossword books - Programmes - Diaries (completed) - Rag books - Dictionaries - Recipe books - Road maps - Directories (completed) - Scrap books (completed) - Election addresses - Ships’ logs (completed) - Encyclopaedias - Sports programmes - Football programmes - Staff journals - Geological maps - Text books - Handbills - Theses - Holidays and tourist guides - Timetables (in book or leaflet form) Back to Contents

LIABILITY OF SOME COMMON ITEMS OF PRINTED MATTER P

These are examples of standard-rated items. You should not assume that N

an article is zero-rated just because it is not in this list. I

- Acceptance cards - Delivery notes - Microfiche n

- Account books - Diaries (unused) - Microfilm '

- Address books - Dividend warrants - Microform copies - Stationery ) - Albums - Dressmaking patterns - Music rolls - Stationery books - Amendment slips - Engineers’ plans - Note books, pads and paper - Stickers - Announcement cards - Envelopes - Order books and forms - Swatch cards - Appointment cards - Exercise books - Paper, unprinted - Swatch books - Autograph albums (uncompleted) - Fashion drawings - Parts of books - Sweepstake tickets - Badges - Flash cards - Pattern cards - Tags - Bags, paper - Folders - Photographs - Temperature charts - Ballot papers - Form letters - Photograph albums - Tickets - Bankers’ drafts - Forms - Plans - Time cards and sheets - Billheads - Football pool coupons - Playing cards - Tokens - Bills of lading - Framed decorative maps - Poll cards - Toys - Bills of quantity (blank) - Games - Pools coupons - Transcripts - Binders - Globes - Postcards (whether completed or not) - Transfers - Bingo cards - Graph paper - Posters - Transparencies - Biorhythm charts - Greeting cards - Price cards and tags - Visiting cards - Blotters - Index cards - Printed pictures - Vouchers - Book covers - Inlay cards for cassette, CD or - Questionnaires - Wall charts - Book marks video - Receipt books and forms - Waste paper - Book tokens - Insurance cover notes - Record books - Wills - Bookmakers’ tickets - Invitation cards - Record sleeves - Winding cards - Business cards - Invoices - Record labels - Wrapping paper - Calendars - Labels - Registers - Wreath cards - Certificates - Letter headings - Rent books - Cheques and cheque books - Letters (hand-written) - Reply-paid coupons and envelopes - Cigarette cards - Log books (blank) - Reproduction of paintings - Cloakroom tickets - Lottery tickets and cards - Score cards - Colour cards - Manuscript paper - Scrap books (blank) - Compliment slips - Manuscripts - Scrolls (hand-written) - Copy books - Medical records - Seals - Correspondence cards - Membership cards - Shade cards (unless they contain - Coupons - Memo pads substantial printed text) - Coupon books - Memorial cards - Share certificates Back to Contents - Credit cards - Menu cards (with space for - Stamp albums (whether completion) completed or not)