HM Revenue and Customs Brief 18/14 - VAT exemption for education
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Issued 22 April 2014
VAT: outcome of review to consider extending the VAT
exemption for education to for-profit providers of Higher and Further
1. Purpose of this brief
To announce the outcome of the review to consider extending
the VAT exemption to for-profit providers of Higher Education (HE) and
Further Education (FE).
2. Who should read this brief
All providers of HE and FE whether they are for-profit,
publicly funded or not-for-profit.
In September 2012, the Government issued a consultation
entitled 'VAT: Consideration of the case to extend the
education exemption to for-profit providers of Higher Education'
which invited comments on options that would enable for-profit
providers of HE to exempt their supplies of HE where they exclusively
provide this type of education. This followed an announcement at Budget
The number of responses was low, especially from
for-profit providers, or potential providers, of HE. Overall, there was
no overwhelming support for either of the options put forward. It was
clear from the responses that businesses would prefer a solution that
exempted both HE and FE training from VAT, and that there should, if at
all possible, be a uniform basis of recognition of a commercial body as
an eligible body, for both HE and FE.
In 2013, HM Revenue & Customs and the Department for
Business, Innovation & Skills looked at alternative options and
held a consultative workshop with interested parties.
No solution was found that was acceptable to the majority of
the for-profit education sector, and which also met Government
objectives. The Government has therefore decided not to make any
changes at the present time.
Some businesses would clearly benefit from an extension to the
exemption, but on balance, the reasons not to extend the VAT exemption
for education to for-profit providers weighed more heavily. These
- a lack of evidence that the change would bring more
providers into the market, or increase price competition within the
- the impact on commercial providers who would need to
exempt their education supplies and not be able to recover input tax,
and also the impact on businesses purchasing training who would no
longer be able to recover the VAT charged on training, and would likely
be faced with higher costs
- recognition that a few commercial HE providers have
achieved university status, and therefore benefit from the VAT exemption
- extending the exemption would be to create a number of
winners and losers, and may not create an entirely level playing field
- the cost to the Exchequer of extending the exemption
The Government recognises that this news will be disappointing
to some providers in the sector although others will be pleased to
maintain the status quo.
5. Who can I contact for further information?
For further information please contact the VAT Helpline on
telephone: 0300 200 3700.
The Helpline is available from 8.00 am to 6.00 pm, Monday to
If you have hearing difficulties, please ring the Textphone
service on telephone: 0300 200 3719.
About the Author
© Crown Copyright 2014.
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.
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Article Published/Sorted/Amended on Scopulus 2014-04-25 10:14:32 in Tax Articles