The government has announced it will amend the VAT law from 1 August 2019 to ensure continuity of VAT treatment for English Higher Education (HE) providers under the Higher Education and Research Act 2017. The change in legislation applies to English HE providers who register with the Office for Students (OfS) in the Approved (fee cap) category.
Background
VAT exemption currently applies to UK universities and their colleges, institutions conducted by higher education corporations (HECs) and other institutions that are designated as eligible to receive support from central funding.
There are changes to the way that HE providers are funded by the OfS from the start of the 2019 to 2020 academic year. These changes require an amendment to be made to the statutory definition of an eligible body in Note 1(c) of Group 6 of Schedule 9 to the VAT Act 1994.
Paragraph 4.1 of VAT Notice 701/30 (Education and Vocational training) explains that an eligible body includes ‘a school, university, sixth form college, tertiary college or further education (FE) college or other centrally funded higher or FE institution’ (defined as such under the Education Acts).
Revised VAT treatment
Note 1(c) to Group 6 of Schedule 9 to the VAT Act 1994 is being amended in respect of HE institutions in England (only).
The exemptions that relate to FE will be unaffected, although some providers of FE that also provide HE may register with the OfS in the Approved (fee cap) category.
Note 1(c) currently refers to bodies that fall within subsections 91(5)(b) and (c) of the Further and Higher Education Act (FHEA) 1992, but subsection 91(5)(c) of FHEA 1992 will no longer apply to England once the Higher Education and Research Act 2017 fully commences.
Sub-section 91(5)(b) of FHEA 1992 will be amended so that this only applies to institutions in Wales.
In order to be bodies entitled to exempt their supplies, those English HE providers who are currently exempt by virtue of being HECs or designated institutions will in future need to be registered by the OfS in the Approved (fee cap) category.
All English HE providers who will become registered in the Approved (fee cap) category will also become entitled to exempt their supplies in future.
The overall impact of the change is to ensure that those HE providers that are currently eligible to receive central funding can continue to exempt their supplies of education.
institutions which currently fall within section 91 FHEA 1992 will have to show that they are registered with the Office for Students in order to exempt their services
HEMore details are available in VAT Information Sheet 08/18
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