VAT & the FE Sector – VAT Risks & Opportunities – Forum Review

Centurion’s Annual VAT Forums for the Further Education sector went online this June and added real value from sharing VAT knowledge even more widely across the UK than in past years. Delegates attending and there were over 56 college staff on the Forum, all agreed that the virtual format worked well – improving accessibility to relevant VAT information, reducing travel time and costs.

The polls we used also helped illustrate some of the VAT risks and opportunities that the further education sector has from the VAT management perspective and we thought it useful to highlight some of those key aspects in this overview. From the perspective of the Centurion Education specialist team the number of attendees and the range of colleges that joined us demonstrated that access to VAT expertise is not hindered by geography – we had colleges joining the two hour VAT session from all parts of the UK – from the North East of England, across Wales and through to the South Coast of the UK. Many were existing clients but finance staff from 14 colleges who are new to Centurion joined this session.

What did we learn of the current Covid impact on VAT in the sector?

The impact of the change of use of buildings from facilities being provided to third parties was noted. This was primarily provided to the NHS with 5% of colleges leasing space. Alternatively, a change of use will be triggered by internal reallocations of space as colleges look to manage their education provision in different ways. Readers will be familiar with the VAT concerns that this can bring in buildings where a college has secured zero rating on the development costs because of the planned use for the provision of non-business education. 48% of respondents indicated that this was an area they had yet to review, although 5% indicated that having looked at it they had identified a change of use issue. Where a potential change of use has been identified the next step would be to establish the VAT at risk and consider if there are options for this to be mitigated.

Where possible we would recommend that Finance teams stay in conversation with their Estates colleagues to identify as early as possible any potential planned changes.

The sector has certainly been doing its bit to support the NHS and charities in this crisis and 48% had donated PPE goods either from stock or manufacturing from their own departments. A zero rating VAT relief has been in place on the majority of PPE items from the 1^st May but this is a temporary relief which will end on the 31 July so again an important change to pick up at the start of August if your college is involved in buying and/or selling such items.

It should be mentioned that the donating aspect of PPE has created a VAT issue and more detailed commentary of this aspect can be found  here : Donated Goods to the NHS or other bodies – VAT Concern. Again, another to-do on the list for 38% of delegates was to verify what if anything – goods or services they had been supplying to the NHS and to ensure the VAT treatment was correctly applied.

A potential opportunity for reducing the VAT burden that the college sector faces remains in the recent zero rating of e-publications that applies from the 1^st May. This, when combined with the potential for retrospective claims of these supplies following the Newscorp case, is certainly an expenditure area to review.

In respect of retrospective claims, whilst 15% of delegates had looked at this opportunity they had yet to finalise a retrospective protective claim, 14% of respondents had looked at this issue but found that there was little VAT of value to warrant progressing. That left 71% of respondents with the need to add this issue to their “to-do” list for VAT.

Raising these VAT issues highlights that each college and client will have a very different VAT profile and it is important to recognise that what may be an issue or opportunity for one will not necessarily impact on another.

At Centurion we aim to keep our clients up to date on any issues that could apply and to work with them to assess any potential risk or opportunity.  Our Annual VAT Forum allows us to engage and inform at a group level with our further education network.  If you are reading this and would like to find out more about the support we provide to our education clients then do get in touch with us at emailus@centurionvat.com.

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