VAT ON SCHOOL FEES – FURTHER CLARITY NEEDED ON ‘PRACTICALITIES AND LOOPHOLES’, SAYS MILSTED LANGDON
Released On 16th Jul 2024
Leading independent South West accountancy firm, Milsted Langdon would like further clarity on how Labour will introduce fees for independent schools.
However, there is likely to be uncertainty until the Autumn.
It is understood that at a summit organised by the Times immediately prior to the Election, Rachel Reeves suggested that the measure is likely to be introduced at Labour’s first Budget in the Autumn. It is also likely that the introduction of the charge to VAT will start from September next year rather than this year.
This Budget will hopefully clarify whether there will be categories of pupil who will not be subject to VAT. It would also be useful to understand the extent of any anti-forestalling rules to determine whether invoicing in advance will have any benefit or even be possible.
It may also be possible that schools will have to consider changing their invoicing systems to demonstrate the circumstances where it is appropriate to charge VAT and those where it is not.
Julian Borley, VAT Director at Milsted Langdon, said: “We know that adding VAT onto fees for independent schools is a contentious issue, particularly for middle-income families and those paying for children to attend non-mainstream schools.
“Formal clarification of when the new rules will be applied would therefore be welcomed.
“However, it is worth noting that for some schools the application of VAT may even be beneficial. It should allow the recovery of VAT incurred on expenditure. Where a school has incurred significant costs on the construction, refurbishment or extension of a building within the last 10 years then it may be possible to claim VAT in respect of the works.
“It is highly recommended that schools consider whether such a claim will be possible as the sooner such a claim is made the better.”
For advice on VAT and its impact on schools, please contact our specialist VAT team today.
