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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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.
Why not?So we are a limited company and we call ourselves a school. We have 40 students eadch year and charge them without VAT.
Oh, that's all right then? ---- NOT!As we are an education establishment
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.
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.
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.
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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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.
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.
"avatar
By spnroom
23rd Nov 2021 17:48
Design and arts.
Our ex accountants advised our VAT status."
This is what you said
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.
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.
"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.
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.