Finanical
Contribution and External Funding
(Clause 3)
Hardship Clause
In projects where any financial contribution is not based on the costs incurred, the parties may agree to include a hardship clause in Schedule 1, providing for the Sponsor meeting (or at least considering meeting) any unanticipated increases in the University overheads, such as National Insurance contributions.
VAT
In clause 3.2 "similar tax" is intended to refer to the equivalent of VAT in other countries, or any tax that might replace VAT in the UK.
The provision of research services by an "eligible body" to another "eligible body" is exempt from VAT. "Eligible body" is a term defined in the Value Added Tax Act 1994. Typically Universities and government departments (including executive agencies) are eligible bodies but a University subsidiary company, set up to carry on commercial activities, is not. A Sponsor or "partner" in the industrial sector will not be an eligible body.
The result is that the University, as a provider of services to the Sponsor, should charge the Sponsor VAT at the standard rate and deliver a VAT invoice for the financial contribution. That is not necessarily the case in relation to any external funding received; depending on the status of the funder, that may be exempt from VAT. You should contact your local VAT office if in doubt.
Interest on Late Payments
Clause 3.3 allows interest to be calculated by reference to LIBOR or the Late Payment of Debts (Interest) Act. The Late Payment of Commercial Debts Act allows interest to be charged at a rate that is about 8% over Bank of England base rate. You should choose which you wish to use. Another possibility is calculating interest by reference to the base rate of any high street bank.
