VATEDU39320 - Group 6 Item 1 Education, research and vocational training provided by eligible bodies: eligible bodies: universities and higher education institutions (applicable with effect from 1 August 2019)

The scope of note (1)(b) to Group 6 of Schedule 9 of the VAT Act 1994 remains unchanged and covers:

(b) a United Kingdom university, and any college, institution, school or hall of such a university;

However, Note (1)(c) has been amended to reflect changes in the way that higher education providers are to be funded in England with effect from 1 August 2019. Centrally funded institutions in Wales, Scotland and Northern Ireland remain unchanged.

Note (1)(c) will cover:

(c) an institution -

(i) falling within section 91(3)(a) or (b) or section 91(5) (za), (b) or (c) of the Further and Higher Education Act 1992; or

(ii) which is a designated institution as defined in section 44(2) of the Further and Higher Education (Scotland) Act 1992; or

(iii) managed by a board of management as defined in section 36(l) of the Further and Higher Education (Scotland) Act 1992; or

(iv) to which grants are paid by the Department of Education for Northern Ireland under Article 66(2) of the Education and Libraries (Northern Ireland) Order 1986.

Section 91(5) new subsection (za) of the Further and Higher Education Act 1992 refers to registered English higher education providers of a description prescribed by regulations made under section 39(1) of the Higher Education and Research Act 2017. The English higher education providers concerned are those registered in the ‘Approved (fee cap)’ part of the register maintained by the Office for Students. Sections 91(5)(b) and (c) will now refer only to Wales.

Note 1(c) includes as eligible bodies centrally funded further education institutions, for which there are no changes at 1 August 2019. These include further education corporations that left local authority control on, or since, 1 April 1993. It also includes certain other further education organisations, such as the Workers’ Educational Association (WEA).

In a case involving Robert Gordon University (RGU) - Tribunal (V19317) and the Court of Sessions CSIH 22 XA124/05 - RGU had a wholly-owned subsidiary called Univation which provided nursing and midwifery courses to NHS Scotland. As RGU considered Univation was not an eligible body, its supplies were treated as taxable at the standard rate. RGU provided services to Univation which enabled Univation to deliver its courses. RGU contended these services were standard rated as being supplies of staff and administration. RGU sought to recover input tax attributable to these supplies.

HMRC argued that, applying “commercial reality” to the arrangements, the services supplied by RGU to its subsidiary were in fact exempt education. The Court of Sessions held that what RGU “supplied to Univation fell properly to be characterised as a provision of education, just as much as did the supply the university made to the Scottish Executive prior to the arrangements with Univation”.