Source · Select Committees · Public Accounts Committee
Recommendation 11
11
Between September 2015 and March 2017, government oversaw a programme of 37 area reviews of...
Conclusion
Between September 2015 and March 2017, government oversaw a programme of 37 area reviews of post-16 education and training provision across England. As part of the programme, sixth-form colleges were given the option of becoming academies and, by 2018/19, 24 sixth-form colleges had converted.18 The Department highlighted that there are a number of reasons why a college may choose to become an academy, but acknowledged that one reason may be that, while colleges pay VAT, post-16 academies and other schools do not.19
Government Response
Acknowledged
HM Government
Acknowledged
3: PAC conclusion: It is clearly iniquitous that sixth-form colleges have to pay VAT while post- 16 academies and sixth forms do not. 3: PAC recommendation: The Department should work with HM Treasury to assess the merits of making the rules on VAT consistent for schools and colleges. 3.1 The government agrees with the Committee’s recommendation. Target implementation date: August 2021 3.2 State and academy education providers are typically engaged in ‘non-business’ activity as there is no charge for the education provided – this means there is no taxable supply made and value added tax (VAT) is not chargeable. Most of these said providers are covered by the Education Act 2011. 3.3 The meaning of ‘business’ is concerned with making supplies to other persons for any form of payment or consideration. Educational suppliers who engage in the provision of education (for example, higher or further education) for a charge are deemed to be ‘in business’ for VAT purposes - the sales of goods and services are taxed in the normal way. Education providers must register for VAT, if the taxable supplies go beyond the VAT threshold, in a similar manner as other businesses. 3.4 The department’s Tax and Expenses Team will engage with its Customer Relationship Manager at Her Majesty’s Revenue and Customs (HMRC) to explore the potential routes and efficacy of taking forward the Committee’s recommendation. The department will also engage HMRC/HM Treasury (HMT) to gauge ministers’ appetite for changing or implementing legislation to level-up across the education provider base.