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VAT REgistration Query

VAT REgistration Query

Just come accross the following.

Potential client calls themselves a tour operator.

What they actually do is transport kids from Spain to the UK, provide accommodation (usually with a UK based familly) and then send them to a language school.

Turnover for last year to 31st March 2012 is £175k Cost of sales £85k Gross Profit £90K.

Sales invoices issued do not provide a breakdown of services provided just say something along the lines of ''English Language School serrvices for the Term''.

Confused by the vat situation should they be registed? Gross profit is above the threshold under the tour operators margin scheme - however they provide education?

Can anyone help?


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07th Dec 2012 14:11

It's VAT, so it's details, details,..

As I say to give anything meaningful we'd need more information, and even then it's likely to be the case that this is going to be so involved that you'll possibly need to get some specialist help in, to actually review contracts etc.

HMRC do traditionally take the view that transport and acomodation provided to those receviing education can often be seen as incidental to the supply of education, so there's a fair chance that if the main element of the service is educational that it can be accepted that it's all educational, so then we'd need to look at whether this is educational.

The exemption for education provides that education by 'eligible bodies' is exempt, and includes in Note 1 (f) that a body providing English as a Foreign Language (EFL) training is an eligible body (even if it's a wholly commercial body/supply), so it certainly seems there's a fair chance of some, to all of it, being exempt.

But it does need the contracts analysing to see if they match up with what you think's happening, for instance is it possible that there's a disclosed agency agreement so that the education is actually provided by a third party (although given the margins this seem unlikely), are there any place of supply issues (is the provider UK based with no other places of belonging).

One thing that may be helpful is this paragraph from the VAT education Manaul for HMRC staff to use (see )

"Supplies made by EFL providers which fall within the education exemption are not within the Tour Operators’ Margin Scheme (TOMS, see V1-23 Ch 12). This applies whether EFL providers are making supplies from their own resources, or by buying and selling packages of tuition and other services. TOMS does not therefore apply to bought-in services such as transport, catering, accommodation or excursions where these are integral to, or closely related to, a supply of exempt EFL tuition." So if the client's acting as principal in the supply of education then they're probably safe from a) registration and b) TOMS, but I'd still say it may be best to buy in some expert time to go over this with you.

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By cleo
07th Dec 2012 14:46

Many thanks

thanks a lot spidersong - great reply accounting web at its best

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