Posting the message by Charles about Innovate UK VAT Confirmation from HMRC for future reference

Dear Members,

Some of you may have been asked by Innovate UK to get a letter from HMRC confirming that the VAT claimed on a research grant cannot be recovered. HMRC are reluctant to confirm this on a specific award as without an audit they cannot evidence it themselves.

There is however guidance on the HMRC website from the National Audit Office about this although I accept that it is not as clear as one would hope.

https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/vatsc06311

“We commonly understand a grant to be a freely given payment in return for which no specific services (or goods) are received. Such a payment is therefore not a supply for VAT purposes.

A grant is money that a government body, or other organisation, give to another body or person to carry out a particular purpose, the National Audit Office define a grant as ‘a permanent transfer of funding for a specific purpose and used in accordance with a set of terms and conditions”

Having spoken to a number of individuals at Innovate UK I can now confirm that for HEI’s we should no longer be getting this request. I include a quote from Innovate UK here as confirmation.

Please take this as authority that we (Innovate UK) will no longer be asking for University Participants to write to HMRC, for each grant they are in receipt of, for their justification on irrecoverable VAT. I have informed our teams of this process, and have copied our Claims Team in for clarification, and you may inform your wider community.

Please do not hesitate to contact me if this is unclear or if you continue to experience this issue.

Kind regards

Charles Shannon
Research Funding Assurance Manager

Imperial College London
Research Office
Sherfield Building Level 5
Exhibition Road
South Kensington
London
SW7 2AZ