Breaking news from the BBC Paper tax returns to be replaced by digital by 2020

Read more...

Chancellor George Osborne delivers his last budget before the General Election

Read more...

Tax planning for 5 April 2015

Read more...

HMRC Investigations yields record 23.9bn

Read more...

Stamp Duty what it means

Read more...

Lib Dems would stop tax cut

Read more...

Contact Us

News Items

Tax Tips

Brilliant with numbers
Great with people
Clear and precise with advice
Timely and cost effective
In touch with issues that face our clients
Mindful of our client’s long term strategic goals


Call us now on 023 8083 6900 ABDS Home

News - 15 March 2014

Education and VAT

A college in Hampshire provides teaching courses in catering & hospitality and in the performing arts. As part of the educational programme, they also run a restaurant and stage performances that are open to the public, who pay for the meals and admission to the shows.

Historically the college had paid VAT on these receipts, but they lodged a claim with HMRC on the grounds that the services provided formed a practical element to complement the theoretical aspect of the subjects being studied and should therefore have been exempt from VAT.

HMRC rejected this assertion and insisted the services were liable to VAT at the standard rate.

Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“VAT legislation is a minefield. Item 4 of Group 6 of Schedule 9 of the VAT Act 1994 permits exemption for supplies that are “closely related” to the provision of education or vocational training and this underpinned the arguments proposed by the College. The matter was appealed by the College and allowed by the First Tier Tribunal (FTT), however HMRC took it to the Upper Tier Tribunal (UTT) to appeal against this decision and finally they (the UTT) concluded that the FTT had reached the correct decision therefore HMRC’s appeal was dismissed.”

HMRC’s arguments relied on the nature of, and consumption of the supplies (i.e. the recipients) being key to determining the correct status of the transactions but the Tribunal disagreed. Their analysis of the situation favoured the concept that the provision of catering and entertainment supplies by the students (as opposed to consumption by the students) were integral to the main supply of education and the students benefitted from those supplies that acted as a means of them receiving a better education in their chosen subjects.

Tonmoy Kumar continues:
“This case provides an interesting interpretation of the scope for exemption in the area of education that concentrates on the underlying purpose and ultimate beneficiaries of the supplies rather than the more common approach of looking directly at the nature and recipient of a supply. VAT is after all generally accepted as a ‘consumption’ tax.”

If you need any help and advice with Free Schools, Academy Schools or Colleges, contact Lavinia Newman or Peter Ham now to discuss how ABDS can help bring their experience to these matters.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net

Brilliant with numbers   
Great with people  
Clear and precise with advice
Timely and cost effective 
In touch with issues that face our clients
Mindful of our client’s long term strategic goals

« Back to News