Commentary

V6.218 Liability of supplies and activities of the education sector

Part V6 Business by business

V6.218 Liability of supplies and activities of the education sector

Education

V6.218 Liability of supplies and activities of the education sector

Introduction to the education sector

The education sector can be extremely complex from a VAT perspective. Some organisations in the sector combine non-business, exempt and taxable activities. There can be difficulties both in establishing the correct liability of supplies, as well as determining how much VAT to recover. This article considers the liability of supplies and activities of the education sector and V6.219 looks at VAT recovery and other practical points for the sector.

There are a diverse range of organisations that could be classed as education providers but this article looks at general principles of relevance to the sector as a whole and specific issues for the following types of organisation:

  1.  

    •     universities and other higher education institutions

  2.  

    •     further education colleges

  3.  

    •     schools

  4.  

    •     EFL providers

Business/non-business in the education sector

One of the first questions an education provider must ask itself is whether it is acting in the course or furtherance of business.

The main advantages of an education provider's activities being 'non-business' are that:

  1.  

    •     the construction of certain buildings may be zero-rated

  2.  

    •     income from non-business activities is outside the scope of VAT

  3.  

    •     fuel and power may be subject to the reduced rate of VAT

The main disadvantage is that, in general, VAT incurred on purchases will be irrecoverable unless the education provider has some element of taxable business.

There is a significant volume of case law on the topics of business and economic activities

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