V16.959 VAT status of university trading companies: new guidelines
Information Sheet 3/10, March 2010
As announced in Revenue & Customs Brief 09/10 (RCB/9/10, Division V16.3) has revised its policy on the VAT treatment of companies owned or controlled by universities that are engaged in the delivery of university level education leading to a qualification. This Information Sheet explains the effect of the change of policy and will assist companies with determining whether or not they are eligible bodies. The guidance which follows is not intended to be prescriptive, or to provide a formula to bring a company within, or exclude it from Note (1)(b). Each case should be considered on its own merits.
Why is this policy change being introduced?
A review of the VAT treatments of supplies of university level education delivered by companies owned or controlled by universities has highlighted inconsistencies between previous policy and VAT case law. This policy change is being introduced to address this, and to ensure that similar supplies are treated in the same way by all universities.
HMRC's previous policy was to treat only those university companies that have been formally approved by the parent university as a college, institution, school or hall of the university as potentially falling within Note (1)(b) of Group 6 Sch 9 of VATA 1994. Following the review, HMRC concluded that in most cases where a university trading company is providing education it is acting as if it were a college institution, school or hall of a university. The effect