Research

Research for VAT purposes

Research for VAT purposes is described as “original investigation undertaken in order to gain, advance or expand knowledge and understanding.”

Research does not include:

• confirming existing knowledge or understanding
• consultancy
• business efficiency advice
• collecting and recording statistics without also collating, analysing or interpreting them
• market research
• opinion polling
• writing computer programmes
• routine testing and analysis of materials, components and processes

When research is funded by the public or charitable sectors for wider public benefit it is deemed to be “non business” and therefore outside the scope so VAT isn’t charged.

VAT charged by suppliers on associated expenditure is also irrecoverable.

VAT Charges on Research (Supply)

For research to be considered a supply for VAT purposes there has to be a direct link between the payment received by the University and the services provided by the University.

Indications that VAT would apply to a research activity include:

• The recipient having access to the results before a commercial competitor.
• The funder being granted first option to use any IP that may be developed from the project (i.e. granted a licence to use Foreground IP for evaluation purposes).
• The funder having publication rights and constraints
• The sponsor providing funding in return for research which it may be able to exploit commercially in the future, albeit under a separate contract.
• When a research service attracts VAT, the VAT is also recoverable on associated expenditure. Expenditure should be budgeted net of VAT.