Opiniomics

bioinformatics, genomes, biology etc. "I don't mean to sound angry and cynical, but I am, so that's how it comes across"

Are you ready for the 20% cut in your sequencing budget?

Well, I’m sorry, I wanted to start a debate on VAT, but even if you think this is boring, please, please read on.

Basically, the rules on VAT for research are changing in the UK.  If you want to read the consultation document, it is here.

However, I summarise the key paragraph here:

Examples of how VAT will now apply
1). A charity grant funds University A to carry out some research. The supply 
University A makes to the charity is outside the scope of VAT. However, 
University A needs to subcontract part of the research to University B. At 
present, the supply University B makes to University A is exempt from VAT but 
after the exemption is withdrawn it will be taxable (20% VAT). This will not 
affect the supply University A makes to the charity which will remain outside 
the scope of VAT.

In this scenario, University A’s costs increase by the VAT charged by 
University B.

All of the UK academic sequencing facilities are in the same boat, and the consensus opinion appears to be that, after August 1st, we will need to start charging VAT on sequencing for academic researchers outside of our own universities.

The VAT of course goes straight back to the treasury.

Let me spell this out to you.  Let’s say you have a grant, with a £100k sequencing budget, and you were planning on using an external sequencing provider.  On July 31st, you will have £100k to spend.  The next day, you will effectively have significantly less, because the price just went up by 20%.

It doesn’t matter if you have a VAT exemption certificate.  It doesn’t matter if you have a collaboration agreement.

You might think “Oh, well we’ll just use a provider outside of the UK”.  If you do that, then you are liable to pay the VAT, direct to the treasury.  Which is actually more complicated than paying it direct to the sequencing provider.

Let me say this again – the VAT goes directly back to the treasury.  This is effectively a stealth cut in the research budget by the UK government.

Is anyone happy about this?! 

Write to your MP: http://www.writetothem.com/

4 Comments

  1. > This is effectively a stealth cut in the research budget by the UK government.

    Or a stealth payment to finance industry 🙂

    Ultimately it is a power struggle within a zero sum game, and no matter how many letters you write to your MP, you are going to lose. Ultimately, this is where you guys are heading to –

    http://homolog.us/Social/our-vision-for-biology-during-21st-century/

  2. Jonathan Coxhead

    13th April 2013 at 11:02 am

    Nice one as usual Mick. I’ve been bemoaning the whole VAT thing from both sides of the fence for as long as NGS services have been around, but it does level the playing field. SMEs will be happy. I’ve been back in accademia for a year now, still having VAT conversations on a regular basis re: sequencing. When I was in an SME providing a NGS service I remember being particularly depressed when VAT increased to 20%, that made us that little less competitive against academic service providers overnight. A sequencing facility, if run well is a big undertaking and the bigger academic players will be operating some sort of business development strategy, this shouldn’t phase them. It’s a bad state of affairs, but at least there’ll be some consensus. Irrespective of VAT, I still think academics should be sending their sequencing work to the “professionals” and focussing resources on data analysis and functional studies (for now).

  3. Hi Jonathan

    I’m glad you liked the post 🙂 I thought this issue would come up, so thanks for that 🙂

    First off, we benchmark our prices against commercial suppliers, and I have to say, our costs are often more than 50% cheaper than the commercial suppliers – so they have have never competed with us on price, VAT or no VAT.

    Secondly, the reason academic facilities exist is numerous: i) we provide a better deal to the tax payer – we are cheaper as we don’t have to generate a profit, or pay dividends to share holders; ii) there isn’t really a decent UK NGS commercial supplier: LGC and GATC are German, BGI are Chinese etc – should UK tax payers’ money for research go into the profits of foreign companies? Or be put into UK academic infrastructure?; iii) we generally offer better science. I’m sorry, but we do! I am a publishing scientist, as is Mark Blaxter, as is Neil Hall, as is Aziz Aboobaker etc etc We all run or ran UK academic facilities. We know what it takes to get things published, it’s experience that often the likes of LGC / GATC etc don’t have.

    I could rant about LGC also – it stands for “Laboratory of the Government Chemist” – a UK government department, privatised, sold to investors who set up NGS facilities in Germany that compete with UK academia (funded by the UK government). Well done UK government, great job, you managed to create jobs in Germany that threaten jobs in the UK 😉

  4. Jonathan Coxhead

    13th April 2013 at 2:52 pm

    “professionals” that means Liverpool, ARK Genomics etc etc 😉
    “there isn’t really a decent UK NGS commercial supplier” – start one, we’ll clear up, I’ll drop my cv off 😉

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