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VAT on Training - Limited Company

Do we charge students sent from companies VAT on training if we dont charge private students VAT?

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So we are a limited company and we call ourselves a school. We have 40 students eadch year and charge them without VAT. We charge sponsors of the school with VAT who then get access to the students to help answer projects from clients. So we work that we are partially excempt and do our VAT returns in this way.

First question is, do we need HMRC to actually confirm we are partially excempt? 

Second question is - We are launching a new training course for private people and businesses. Do we charge VAT on these courses to both private students and business or just to business or not at all to either of private students and businesses. 

 

thanks

 

 

 

Replies (34)

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By Paul Crowley
23rd Nov 2021 17:19

Who gave the advice for VAT in respect of the current arrangement?

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Replying to Paul Crowley:
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By spnroom
23rd Nov 2021 17:46

Our ex accountants advised this.

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Replying to spnroom:
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By David Ex
23rd Nov 2021 18:45

spnroom wrote:

Our ex accountants advised this.

Get a new accountant. I don’t think VAT and education is the most straightforward combination and better to set things up right so you don’t face a huge bill later for getting it wrong.

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Replying to David Ex:
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By spnroom
23rd Nov 2021 19:36

Thanks for your comments. We need to double check things for sure.

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By spnroom
23rd Nov 2021 17:33

Our ex accountants.

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By Wanderer
23rd Nov 2021 17:33

spnroom wrote:

So we are a limited company and we call ourselves a school. We have 40 students eadch year and charge them without VAT.

Why not?
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Replying to Wanderer:
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By spnroom
23rd Nov 2021 17:47

As we are an education establishment

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Replying to spnroom:
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By Wanderer
23rd Nov 2021 17:50

spnroom wrote:

As we are an education establishment

Oh, that's all right then? ---- NOT!
Read through this & give us sufficent details to confirm exactly why you are exempt:-
https://www.gov.uk/guidance/vat-on-education-and-vocational-training-not...
Make sure you cover all points as only then will we have sufficent information to answer your question.
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Replying to Wanderer:
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By spnroom
23rd Nov 2021 18:26

Thanks for the link. Our previous accountants advised how we do it now but don't work with them anymore this asking on here. Thanks

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Replying to spnroom:
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By Wanderer
23rd Nov 2021 19:09

Question still stands. You need to go through that & tell us why you are exempt, covering each point, before anyone can make a start on answering your original query.

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Replying to Wanderer:
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By lionofludesch
23rd Nov 2021 19:28

Wanderer wrote:

Question still stands. You need to go through that & tell us why you are exempt, covering each point, before anyone can make a start on answering your original query.

Nay - we know why. His ex-accountant said so.

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Replying to lionofludesch:
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By spnroom
23rd Nov 2021 19:31

I appreciate the positive advice from other people but unhelpful sarcastic rude people l don't. Why do you even bother commenting.

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Replying to spnroom:
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By lionofludesch
23rd Nov 2021 20:02

spnroom wrote:

I appreciate the positive advice from other people but unhelpful sarcastic rude people l don't. Why do you even bother commenting.

Because it was helpful.

Have you considered it or did you just accept what your accountant said?

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Replying to spnroom:
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By Paul Crowley
23rd Nov 2021 20:26

Member Since: 20th Feb 2009
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Please note 12 thousand likes and Aweb moderators' choice for member of the year 2020

https://www.accountingweb.co.uk/practice/general-practice/community-awar...

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Replying to spnroom:
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By Leywood
23rd Nov 2021 20:35

You are expecting free advice from Accountants and Tax advisors for free for some reason, which is not a given! Folk on here do this for a living. So to then have a pop at one of them is frankly a cheek!

Lion was not unhelpful, sarcastic nor rude, so you owe him an apology.

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Replying to Leywood:
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By spnroom
23rd Nov 2021 21:17

Good evening, thanks for your comment.

I can see that we need to get paid for advice on this now due to asking the questions I asked. I am grateful to the VAT experts who have answered. I certainly am no expert but feel more educated to know how to move forward.

And to explain my annoyance. When Lion said 'Nay - we know why. His ex-accountant said so' I read that as Lion taking the 'Michael out of me' for simply blaming my ex accountants as I had responded to a few comments with that. Maybe I read that incorrectly, if so apologies to Lion. Our ex accountants are ex for a reason and the more we move forward without them the more we find problems so I thought to ask a couple of simple questions to see if they were simple answers or not. I am obviously not going to name them on here as that is far from professional.

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Replying to spnroom:
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By lionofludesch
23rd Nov 2021 22:14

My train of thought was

Wanderer asks why the sales are exempt
OP has already said because ex accountant said so
Likely that OP hasn't considered it himself so can't give a rationale, especially as the ex accountant is, well, ex
If sales aren't exempt, then the OP's question is irrelevant
Therefore this needs to be considered first.

It's not Sherlock Holmes stuff.

Jason and Les have expanded on this in great depth so there's no need for me to go further.

To be fair, twelve thousand thanks or not, I can be sarcastic when the mood takes me but this wasn't one of those occasions.

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Replying to lionofludesch:
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By spnroom
23rd Nov 2021 22:24

Thanks lionofludesch, you are obviously more than an expert in this field. Appreciate the thought process, so apologies to you. I misunderstood your meaning.

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Replying to spnroom:
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By Paul Crowley
23rd Nov 2021 20:47

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By spnroom
23rd Nov 2021 17:48
Design and arts.

Our ex accountants advised our VAT status."

This is what you said

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Replying to Wanderer:
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By spnroom
23rd Nov 2021 19:34

Totally agree. We have some homework to do. Thanks again for the link.

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Replying to spnroom:
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By lionofludesch
23rd Nov 2021 18:04

spnroom wrote:

As we are an education establishment

Ah - it's a bit more complicated than that.

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By lionofludesch
23rd Nov 2021 17:43

What do you teach ?

On what part of VAT 701/30 do you rely in claiming exemption ?

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Replying to lionofludesch:
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By spnroom
23rd Nov 2021 17:48

Design and arts.

Our ex accountants advised our VAT status.

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Replying to spnroom:
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By lionofludesch
23rd Nov 2021 18:08

spnroom wrote:

Our ex accountants advised our VAT status.

They might be right. Or they may not.

Have a look at the VAT notice. Better safe than sorry.

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Replying to lionofludesch:
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By spnroom
23rd Nov 2021 18:11

Thanks. Will do.

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Replying to spnroom:
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By lionofludesch
23rd Nov 2021 19:59

spnroom wrote:

Thanks. Will do.


First thing to establish is are you an eligible body? Start there.
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Replying to lionofludesch:
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By spnroom
23rd Nov 2021 21:19

thanks, will do. Appreciate the pointers.

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Jason Croke
By Jason Croke
23rd Nov 2021 20:21

As Wanderer and others have posted, this requires a lot more information and in reality, you need professional advice.

Generally, education is only exempt when supplied by a not for profit entity where there is no distribution of profit. Assuming you did seek advice from an Accountant, I'd expect the Accountant to have been very clear on this point.

It may be possible for a limited, for profit entity to make exempt supplies of education but only where they are funded by certain government approved training courses, the details are in the link that has been posted already. The fact that, in your post you state that you charge the students without VAT, means you are not charging a government agency (such as the DfE) so if you are charging the student directly, logically you cannot avail of the exemption. Again, your Accountant would not have got this wrong as its all in the guidance.

You say you are partially exempt and do your VAT returns that way, you then go onto to ask if you need to confirm your partial exempt status with HMRC. I am not convinced you have received professional advice from an Accountant, if you did, why has none of this been documented? Accountants are keen not to get sued, so they will go to great lengths to detail their advice, the context, the law at play, how to claim exemptions or reliefs, especially in such a tricky areas as education VAT rules.

The sarcasm in the posts is because this is a forum for Accountants to talk to other Accountants, you are not an Accountant and you are seemingly blaming everything on your ex-Accountant, not a good attitude when you are trying to get free advice from....Accountants ;)

On the topic of partial exemption, what basis is your partial exemption calculation done? Is it on income or is it a special method? When was the last time the method was reviewed? Introducing new income streams is likely to affect any existing partial exemption calculation/percentage and so time to ensure your partial exemption method remains beneficial based on the new activities.

Your second question can't be answered until you establish why you think they would be exempt, if you can't meet the conditions for exemption, then the supplies will be VATable whether private or business students. More worryingly, you need to revisit why your current sales are being exempted to students and check the guidance to ensure that this is correct, else you have a potential VAT liability to HMRC.

Time to get a new Accountant as so much to go wrong here both historically and going forwards.

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Replying to Jason Croke:
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By Paul Crowley
23rd Nov 2021 20:36

Well put

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Replying to Jason Croke:
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By spnroom
23rd Nov 2021 21:26

Thanks Jason, as someone else has said, you have on all angles hit the nail on the head. Thank you. We will go and get professional advice. I am not trying to avoid blame on where we are as a business, I am only trying to see what direction I need to go to to help the owner sort it out.
Obviously ask a couple of stupid questions in a professional accountancy forum which I thought was for a place that guidance could be asked for. Appreciate the time you and others have taken to respond.
have a great evening to one and all.

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Replying to spnroom:
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By Tax Dragon
24th Nov 2021 07:18

"Help the owner"? What is your role here? Anyway, best advice you can give the owner has already been set out (by every respondent... seldom has this forum been so unanimous): appoint an accountant.

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chips_at_mattersey
By Les Howard
23rd Nov 2021 20:21

Time to revisit!
Exemption for education depends on (1) the provision of a course and (2) whether provider is an eligible body. This second requires adequate non-profit wording.
If you are receiving sponsorship income you will need to take care on the non-profit question.
And, no you don’t need to advise HMRC on your partially exempt status. VAT is designed to be a self-assessing tax. And you have the added benefit of the wisdom on this page.
And.
Obtain full professional advice urgently.

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Replying to leshoward:
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By spnroom
23rd Nov 2021 21:28

Thanks Les, much appreciated, as per longer responses from me on here, yep, off to get professional advice for sure. Something is not right (understatement by all accounts).

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By Paul Crowley
23rd Nov 2021 20:42

You have replies from the Two acclaimed experts on VAT

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