Washed up

My client manufactures and sells a washing product. The business sponsors a leading university which carries out research regarding skin-related issues and the effect of certain chemicals.

VAT has not been paid on these payments in the past because it has given a signed certificate to the university confirming that “the results of the research will be published in the public domain” on my client’s website.

The university is now saying it should have charged the business VAT for the past four years and will have to charge on future payments because the business is gaining a commercial benefit.

Is the university correct to do this? And if it is can our client claim input tax on the VAT that they pay to the university? My client is not partly exempt.

Query 18 306 – Dazed

Reply from Gardener

The issue is whether...