18 April 2019 
Andrea Marshall, Tax Specialist
A recent CJEU case provides another reminder of the importance of ensuring that contracts and agreements include a clause stating that the values are exclusive of any VAT chargeable - while this does not mean you will charge VAT it gives you the contractual right to do so, should it later transpire that the payments should be subject to VAT. Otherwise, you can be left seriously out of pocket if you have to deduct VAT from the money received.
The PSM 'K' decision, regarding Polish bailiff services, confirms that if there is no mention of VAT then any consideration is treated as VAT-inclusive should VAT become due - in this case, the Polish authorities had incorrectly viewed the activities of court enforcement officers as being outside the scope of VAT (as bodies governed by public law). Polish law also sets bailiffs’ charges at 15% of the debt enforced, but does not mention VAT. The outside the scope treatment was incorrect, and as there was no mention of VAT in relation to the charges, they had to be treated as VAT-inclusive..
It's good practice to ensure that all contracts and agreements relating to your university receiving money include standard clauses stating that the values are exclusive of any VAT. If you haven't ever discussed this with your legal department (or research department, or others who may agree contracts relating to income and funding) it could be worth checking with them…
