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University B. At present, the supply University B makes to University A is exempt from VAT but after the exemption is withdrawn it will be taxable (20% VAT).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/