Charge VAT to schools or not?

[dharm999]

I'm asking on behalf of a friend. He owns a coach company, set up years ago, that is used by amongst others, local schools. He is VAT registered, but does not charge VAT on the work he does for these local schools but does charge VAT to private sector companies. Now to me that doesnt seem right, but do schools have some kind of scheme in place where they dont get charged VAT? I dont know how schools do their ccounting, but I would have thought they would be like councils, and VAT should be charged. As he has been in business for years, I cant believe he is doing anything wrong, but can anyone enlighten me?

Thanks for your help
Dharmesh

 

[MrAnhcovy]

Whether VAT is charged and at what rate depends on what you are supplying, not who you are supplying.

Coach hire (ie a vehicle with 10 or more passenger seats and provided with a driver) is normally zero rated so he probably shouldn't be charging VAT at the standard rate at all - full details in HMRC Notice 744A available on the HMRC web site.

 

[paulears]

VAT is exempt for educational purposes directly involved with their education, so examiner or training fees are exempt, but supplies to schools are not. So when I supply examination services, where I charge a fee and have expenses for hotels etc, these don't have the VAT. When I supply them lighting equipment, or electrical items then these do have VAT levied. There is a note on the HMRC site somewhere, but I see no way that coach costs are exempt from VAT as it's not directly linked to their learning.

http://customs.hmrc.gov.uk/channels...CE_CL_000117&propertyType=document#P166_11540

This link makes it very clear that it's the education process that is linked to the supplies status. If you are not providing education services, then VAT is payable - the only other possibility is when one education provider trades in some way with another.

I suspect if he's treated his invoices as exempt, he got it wrong - it's a service, not part of their education.

 

[dharm999]

Thanks, that clarifies things. He does hire out coaches with a driver and all the coaches have at least 10 seats. I'll have to find out why he charges VAT to some customers.

 

[MrAnhcovy]

paulears, I think you could do with a review of how VAT affects your business, particularly

1. The exemption for supplies of education only applies to supplies by 'eligible institutions' which are basically schools, universities etc. as detailed in the leaflet you linked
2. Exemption is very different from zero rating and if you do have any exempt supplies in your business it is a bad thing

 

[paulears]

Not quite sure what you mean - I didn't know about the coach transport, but examination services are exempt. Supplies, as I mentioned that I do always have VAT included on the invoice. I'm quite happy with the VAT status on my transactions. The invoices I raise for fees due are clearly marked Educational Exemption, and have never caused problems with the Revenue or my accountant?

 

[talkinpeace]

whereas my OH does charge VAT to the schools he does shows for and they reclaim it.

 

[PaulaS]

Sorry to resurrect this old thread, but I googled my issue and this came up.

We are an eligible body supplying education services to schools so it's my understanding that this is an exempt supply for VAT.

My question is, is this optional i.e. can we charge VAT if we want to anyway? If we can charge VAT then we can recover more of our input VAT.

 

[DWS]

If it’s an exempt supply then you can not charge VAT and you can not claim back the input VAT in relation to these supplies.
If you do also make Vatable supplies then you will be partially exempt and the returns will need to be prepared in accordance to this.

 

[Paul Kelly ICHYB]

@PaulaS What does your accountant say?

 

[lesvatadvice]

Sorry to resurrect this old thread, but I googled my issue and this came up.

We are an eligible body supplying education services to schools so it's my understanding that this is an exempt supply for VAT.

My question is, is this optional i.e. can we charge VAT if we want to anyway? If we can charge VAT then we can recover more of our input VAT.

VAT exemption is mandatory. If the supplies fall into the category for exemption then you cannot charge VAT. Do note that supplies of education must be provided by an 'eligible body' to qualify for exemption. You should check this.
In some instances, we advise providers to make themselves 'ineligible' bodies, so as to avoid exemption. But numbers must be carefully crunched first.