UK VAT exemption refused for commercial education

Tue 25th Dec 2012

In a recent First Tier Tribunal case, the UK has confirmed that commercial education providers may not necessarily qualify for automatic exemption from UK VAT on its activities.

UK Education VAT exempt

In the UK, the provision of education is deemed to be VAT exempt.  This means providers suffer input VAT, but do not have to charge output VAT on their services.  In this case, involving appellant was providing IT and English as a foreign language service, both on a B2B and B2C basis.  It was including in the list of organisations providing preparatory education for degrees.  On this basis, it attempted to claim that it was exempt from VAT under the UK VAT Act.

UK’s HMRC rejects VAT exemption

The UK’s tax authorities, HM Revenue and Customs accepted the VAT exemption on English language courses.  However, denied exemption on the other courses.  The recent judgement also concluded that the company was not a school.