Every UK higher and further education organisation has the opportunity to join Jisc's VAT-exempt cost sharing group.
Higher education organisations will save the VAT on their HE subscription.
All organisations1 will save the VAT on the following optional services:
- Certificate service
- Digimap Collections
- Penetration testing
- Financial X-ray
- Historical Texts
- Journal Archives
- Managed router service (additional connections)
The VAT-exempt cost sharing group is separate from your membership of Jisc. If you choose not to join the group you will continue to benefit from the services you receive as a member of Jisc. However, you will not be able to benefit from the savings of the group. VAT charges at the prevailing rate will apply to your Jisc subscription and any optional Jisc services to which your organisation subscribes.
Why aren't all our services in the VAT-exempt cost sharing group
Whereas the Jisc subscription and some optional services will be invoiced without VAT, there will be some services which will still attract VAT. These VAT-able services arise when the charge is totally or substantially for third party costs and where there would be a significant adverse impact on Jisc’s VAT recovery rate, and therefore our cost base, if they were invoiced within the cost sharing group. We will ensure that this approach is reviewed continually in order to provide the maximum benefit for our members.
Second Janet fibre connections
The cost of your organisation's primary Janet connection is included within the Jisc subscription. Regarding additional connections, Janet leases telecoms circuits from the relevant local commercial telecoms provider on a +VAT basis and recharges these non-pay costs, without a markup, to your organisation on a +VAT basis. There is thus no VAT advantage to either your organisation or Jisc from placing this in the cost sharing group.
Joining the group
Every UK higher and further education organisation has the opportunity to join.
From the date you are registered you will not be charged VAT on any subscription fee due and/or any optional services within the VAT-exempt cost sharing group (see list above).
Please contact [email protected] for further information, including how to apply. Unfortunately, Jisc and its officers and employees cannot give you legal, financial or tax advice. There should only be one application per organisation.
Liability and conditions
In order to join the VAT-exempt cost sharing group you will need to register as an 'institutional member' of Jisc.
Liability associated with being an 'institutional member' of Jisc
Every institutional member of Jisc will have its liability limited to £1, payable only in the event of Jisc ceasing to exist following an insolvent winding up. The £1 liability stems from the fact that Jisc is a company limited by guarantee. Jisc is registered at Companies House and with the Charity Commission.
Further information can be found in our Articles of Association (pdf).
Conditions of institutional membership of Jisc
Institutional members of Jisc will need to adhere to a set of conditions of the VAT-exempt cost sharing group. These have been set for us by HM Revenue and Customs. If the circumstances of your organisation change and you are no longer able to comply with these conditions, you must let us know immediately.
- 1. That prior to the end of each of Jisc's financial years (currently 1 August to 31 July) institutional members shall agree to purchase services from Jisc in the subsequent year and shall actually purchase services from Jisc in that year;
- 2. That institutional members shall at all times continue to carry on activities which are themselves exempt from VAT or which are not business activities for VAT purposes (the "relevant activities"); and
- 3. That either (a) institutional members’ relevant activities amount, and shall at all times amount, to at least 85% of the institutional members’ total activities or (b) those supplies of services received from Jisc shall be directly attributable to the relevant activities.
Membership of the VAT-exempt cost sharing group will be terminated automatically if an institutional member is no longer compliant with these conditions and VAT will be due at the prevailing rate on your Jisc subscription and any additional services to which your organisation subscribes from that point. Whilst automatic termination may seem stringent, it is essential in order to protect the whole cost sharing group by ensuring it continues to meet HMRC’s conditions.
Organisations with significant commercial activities
These can still join the VAT-exempt cost sharing group. Even if your organisation's exempt activities are below 85%, it remains advantageous to join. Advice we received recently from PwC is that the 85% level is a guideline and not a statutory threshold test; the 85% figure appears nowhere in European or UK legislation. The key test is that the services being received by the member are "directly necessary" for the exempt (non-business) activity of your organisation.
If there are specific commercial activities (perhaps a large conference centre) that do not consume significant amounts of the services to be supplied by the VAT-exempt cost sharing group, and removing such activities reduces the overall recovery rate to less than 15%, this presents a strong case to HMRC that the services supplied by the VAT-exempt cost sharing group should indeed be exempt of VAT.
Also, Jisc can, on request, provide your organisation with separate invoices covering:
- The portion of Jisc subscription supporting exempt activities - and which will fall in the VAT-exempt cost sharing group thus charged to you exempt of VAT.
- Another invoice relating to the portion of the Jisc subscription that support the organisation's commercial activities - this will fall outside the VAT-exempt cost sharing group so will be charged on a +VAT basis.
Similarly, Jisc can, on request, issue separate invoices for optional Jisc services supporting the exempt and non-exempt activities respectively of your organisation.
If any of the conditions above are breached, Jisc will need to seek additional VAT from your organisation.
We understand that because of when your VAT recovery rate is calculated you may not know that you did not meet the terms and conditions until 18 months after Jisc has supplied you with services. In these circumstances we will need to bill you retrospectively for the relevant VAT.
Changes to conditions of the VAT-exempt cost sharing group
The conditions are based on current legislation relating to VAT as interpreted by HM Revenue & Customs' latest guidelines. If there is a change to the applicable legislation or guidelines which requires amendments to be made to the conditions, we will notify all institutional members in writing detailing the amendments.
HM Revenue & Customs approved
We have been very careful to get approval in advance from the VAT Policy Unit at HM Revenue & Customs and Jisc will be one of the largest VAT-exempt cost sharing groups that we are aware of.
Changes to the composition of organisations e.g. mergers
Any change to the composition of your organisation should be reported to [email protected] as soon as possible to allow us to make the necessary changes to our records to ensure that you receive a seamless service.
Representation and engagement
Classes of membership
Jisc’s constitution allows for two classes of membership. One class comprises representative members, which includes Jisc’s original members and guarantors - the Association of Colleges (AoC), GuildHE and Universities UK (UUK). Each of these representative members holds 30% of the voting rights. The other class of membership comprises institutional members, which is open to all higher and further education organisations across the UK. This class holds 10% of the voting rights.
Further information can be found in our Articles of Association (pdf).
How institutional members will be represented with regard to the governance matters of Jisc
As a formal necessity, the application form asks you to nominate a representative body (either UUK, GuildHE or the AoC) as a conduit through which institutional membership matters are dealt with. We recommend that institutional members appoint the most applicable representative member of Jisc.
Your organisation will not need to join the selected representative body in order for them to act as your conduit for institutional membership matters. Please select the body which you feel is most appropriate in order to complete the application process.
The institutional membership matters being referred to are those formal company law procedures relating to your institutional membership of Jisc such as formal notice of general meetings. There is no distinct disadvantage to you (in terms of reduced voting position) by operating via a conduit and this is merely being used to save compliance and administrative costs.
Other opportunities to engage with Jisc
Jisc is committed to ensuring we have a range of effective and clear mechanisms through which to engage with all of our members. As part of our governance, Jisc has established a stakeholder forum which meets annually to which your organisation will be invited.
If you do not wish to nominate a representative member to act in this way, please contact [email protected] and we will discuss alternative arrangements with you.
Leaving the group
Cancelling your membership of the VAT-exempt cost sharing group
Membership of the group can be cancelled by giving three months’ written notice at any point within a given year.
Once membership ends, you will no longer be an institutional member of Jisc or be able to benefit from the savings of the VAT-exempt cost sharing group and VAT charges at the prevailing rate will apply to your Jisc subscription and any additional services to which your organisation subscribes.
Jisc is within its rights to cancel an organisation's membership if any subscription fee is not paid in full within three months of it falling due, or if Jisc becomes aware that an organisation no longer complies with the conditions of the VAT-exempt cost sharing group.
- 1 Including those whose subscription is paid centrally by a funding body / government department