Q. What happens if a collaborator transfers to another institution part way through the project?
HMRC has confirmed that research bodies added to or substituted in a collaborative research project once it has commenced (and so are not mentioned in the original funding contract) would still be seen as parties to the collaborative project so their funding remains outside the scope of VAT, provided there is evidence to prove the research with the substituted body is a collaboration.
Q. What happens if a PI transfers to another institution but leaves part of the research team behind to continue the work?
Normal procedure is that the grant will be transferred formally by the funder and the two institutions will agree a research contract to flow back some of the funds. As above, even though we as the collaborator may not be recognised as such on the application we'd expect HMRC to accept that the funds are outside scope.
Q. What happens if, for good reason, a collaborator changes during the course of the project?
The course of research may easily change direction in unpredicted ways and one collaborator's input may prove less relevant once work starts. See answer to What happens if a collaborator transfers to another institution part way through the project? above.
Q. Where it applies, can VAT be charged to the funder?
In theory, yes, although most funders will prefer to limit their VAT liability and expect us to benefit from the exemption by identifying collaborators clearly.
Q. What if we are working with an institution who we regard as providing a service (e.g. DNA sequencing) but they insist the relationship to be collaborative and thus outside the scope of VAT?
Research funders may question the description of such work as collaborative if described that way in a research proposal but even if they don't raise queries, HMRC might. In order to protect our position, we should ensure contracts state "inclusive of VAT where applicable"
Q. Is medical exemption a Get out of Jail Free card?
No. Medical exemption applies only to relevant goods purchased for medical and veterinary research, not to the overall supply of research.
Q. What about Research Centres where tranches of funding are awarded by the funder with the expectation that we go and seek collaborators on yet-to-be-devised projects under the auspices of the Research Centre, and hence cannot name them in advance?
The whole idea is that these are flexible and we pull in partners. See answer to What happens if a collaborator transfers to another institution part way through the project? above.
Q. Does a 'Participating Site Agreement' used in clinical studies constitute a collaboration or service?
If the participating sites are named in the source grant application as being a collaborator of research then the money passed to them is outside the scope of VAT. However, often there is a supply of services (e.g. collection of samples from a particular patient group recruited by the Participating Site) which is subject to VAT. Any VAT applicable must therefore be costed into the application.
Q. What about EC grants?
The EC has very specific rules about what does and does not constitute sub-contracting and funding can be put at risk if the wrong decision is made and incorrect paperwork put in place. Either way, the EC does not currently pay VAT so any VAT that applies will be a liability to the departments as normal.
Q. Will HMRC be monitoring this?
It is likely that HMRC will take a 'light approach' in the first year but as there an increased risk of missed VAT liability this is an area which is likely to attract attention in future years.