VAT and income tax

VAT

Local authorities pay VAT on goods and services, but the authority is entitled to a refund of the difference between the VAT on purchases and the VAT on income. Schools must be aware of the VAT rules. The correct treatment of VAT is important as penalties can be incurred if errors are made. If Customs and Excise make an assessment due to VAT errors, the school is liable for the cost.

Treatment of VAT in schools

• VAT manual (PDF, 530.5 KB)
• VAT package (PDF, 176.5 KB)
• Procedure note 56 - to change default VAT codes on delegated budget income codes (PDF, 101.6 KB)
• The construction industry scheme (PDF, 20.4 KB)
• Processing Value Added Tax (VAT) (PDF, 264.0 KB)
• Processing Income Tax and Benefits in Kind (PDF, 55.9 KB)

VAT control code reconciliation

• VAT control check procedure note (DOC, 43.5 KB)
• VAT control code reconciliation spreadsheet (XLS, 31.5 KB)

VAT automation

Schools export their VAT returns and send them electronically to the Schools Financial Services for payment through the Advances system.

Please find below two links for FMS6 procedure notes for the completion of the VAT Automation process. You will require your DfE number and a S2S password to complete this:

• Procedure note 42 - VAT automation for FMS6 schools (PDF, 522.2 KB)
• Procedure note 43 - VAT tolerances correction (PDF, 131.0 KB)

For any queries on the above please contact Schools Financial Services on 03301 651 001.

Income Tax - contact us

Because income tax legislation is often ambiguous and changes regularly, it is essential that schools seek guidance wherever necessary. The Income Tax manual (PDF, 351.9 KB) explains the tax treatment of benefits and expenses. If you have any enquiries, please contact:

Chief Accountant's Team
Telephone: 03000 42 14 47
Email: CATenquiriesKCC@kent.gov.uk

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