Value Added Tax (VAT) is a tax charged on most goods or services sold within the UK, imported into the UK, or acquired from the EU.
The Union is a VAT registered organisation, this includes the activities of Clubs, Societies & Projects. When any part of the Union sells a product to a consumer (for example to your Club, Society, or Project members), it must charge the appropriate amount of VAT. When the Union purchases goods or services from another VAT registered organisation, it pays VAT on those purchases, known as Input Tax. This is recoverable from the HMRC provided you retain a VAT receipt or invoice - the Union can reclaim VAT for your Club, Society, or Project providing it has the correct receipts (with the exception of Sports Clubs).
Gross & Net Amounts
- Gross Amount: an item's price including VAT (the price displayed on products in all high street shops in the UK includes VAT)
- Net Amount: the price excluding VAT
The relationship between gross and net amounts is demonstrated in the example below:
Net (Gross/1.2) £100.00
20% VAT (Gross*0.2/1.2) £20.00
You Pay (Gross) £120.00
Different rates of VAT apply to different products – you should always ask for a receipt showing clearly the VAT rates and amounts charged if the supplier is VAT registered.
In order to recover the VAT on our expenditure, we must have evidence that we have paid VAT. There are different requirements depending on the amount.
For expenditure less than £250.00 the receipt/invoice must show the following:
- Name and address of the supplier
- Date of supply
- VAT registration number of the supplier
- Description of goods/services purchased
- VAT charged amounts and total amount paid
For expenditure greater than £250 we need a full VAT invoice which, in addition to the above, must also show:
- Customer address/invoiced to must be Imperial College Union, Beit Quadrangle, Prince Consort Road, London, SW7 2BB
- Invoice number and date
- For each good/service: unit price, quantity, VAT rate/code A Separate net, VAT and gross totals
Some companies do not produce VAT receipts automatically. If one is not provided you should always request one.