So an academy school teaches GCSEs and gets state funding. Under the old rules it was not making business supplies as it wasn't receiving consideration for the supply (so Sch 9 doesn't even come into it), so it couldn't register or recover VAT.
Now, with the new rules, the supply is still non business, but VAT recovery is allowed on related items (VATA94 33B) despite this. However, in my example the school has to use form VAT126 to make a reclaim, as 33B doesn't change the nature of the supply (i.e. it is still outside scope), thus no VAT registration is possible.
If it offered lessons caught by Sch 9, it would still not be able to register as only exempt supplies would be made.
So only if it offered some sort of service that brought in outside money and wasn't caught by Sch 9 would it be allowed to register (and then would only charge VAT on that one service). I'm thinking... play groups maybe?
That's correct isn't it? I've read all sorts, including Notice 09/11, but just want to be sure what I've read is what it actually says (basically, where no taxable services are made, the academy can't actually register but can still reclaim the VAT on its inputs).
This moment of paranoia has been brought to you by some course notes that say 'recover through VAT return' several times followed by 'academies are unlikely to be able to register for VAT'. D'oh.