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VAT and income tax

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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
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VAT control code reconciliation
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VAT automation
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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:

For any queries on the above please contact Schools Financial Services on 03000 41 54 15.

Income Tax - contact us
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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

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