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HM Revenue and Customs Brief 09/10


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Issued on 11 March 2010

This Revenue & Customs Brief announces our revised policy with regard to the supply of education by a university subsidiary trading company. VAT Information Sheet 03/10 provides further detail.


Following developments in VAT case law and in methods by which education is delivered by universities, we have reviewed our policy on the treatment of supplies of education delivered by companies that are owned or controlled by a university. This review has identified a need for a change in policy, and as a result the VAT liability of supplies of education will change in certain circumstances. The new policy applies to supplies made on or after the date of this Brief subject to transitional arrangements (see below).

Who should read this?

This Brief should be read by any university owned company that delivers education and any university owning such a company.


Supplies of education are exempt from VAT when provided by a UK university and any college, institution, school or hall of a university. (Note (1)(b), Group 6, Schedule 9, VAT Act 1994). Following the review, we have concluded that, in many cases where a university trading company provides education, they are acting as a 'college, institution, school or hall of a university.' As a consequence it is an 'eligible body' for the purposes of Group 6 Schedule 9 VATA 1994. This means that any education or training provided by the university subsidiary trading company is an exempt supply of education. Please see VAT Information Sheet 03/10 for further detail.


This policy change is limited to those companies that

  • are owned/controlled by a university
  • provide university level education leading to a qualification awarded by a university or a nationally recognised body
  • have close academic links with their parent university; for example, where students on the company's courses are registered/enrolled with the parent university, subject to its rules and regulations and awarded qualifications by it

Please see VAT Information Sheet 03/10 for further detail.

Once a university subsidiary company is regarded as an eligible body within Note (1)(b):

  • a) All supplies of education and vocational training provided by that company are exempt from VAT.
  • b) Any supplies which fall within Group 6 of Schedule 9 VATA 94 should be treated as an exempt supply. (For example supplies of goods which are closely related to the supply of education under item 4.)

Other supplies, in particular consultancy services, provided by a subsidiary company of a university remain subject to VAT at the standard rate.

Transitional arrangements

The policy change comes into effect formally from the date of this Brief. An affected company may also apply it with retrospective effect and make the relevant adjustments to its VAT accounting, subject to the statutory time limits.

However we recognise that many university companies have budgeted on the basis that their supplies would be taxed. Therefore, as a transitional measure, affected companies may continue to apply the old policy (that is taxation at the standard rate) to supplies, which are to be delivered before 1 August 2010.

If a tax point is created for courses (including closely related supplies) to be delivered both before and after 1 August 2010, only that part of the supply which comprises courses which are delivered before 1 August 2010 may be subjected to the previous policy that is taxed.

This transitional measure will not apply if used for tax avoidance purposes, including any attempts to forestall the impact of the policy change. In addition, any pre-invoicing and/or prepayments which have been made in anticipation of the issue of this Brief and which do not comprise the normal commercial practice of the company that is the company is attempting to create a tax point in anticipation of this formal announcement of the policy change will be considered to be tax avoidance and we will apply the policy change to any supplies covered by such pre-invoicing and/or prepayments delivered after 1 August 2010.

Capital Goods Scheme

VAT Information Sheet 03/10 gives guidance on what, if any, impact this change of policy will have on capital items used by university owned or controlled companies in delivering university education.

About the Author

Crown Copyright 2010.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.

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Article Published/Sorted/Amended on Scopulus 2010-03-14 16:11:05 in Tax Articles

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