VATEDU75000 - Education action zones
Statutory education action zones (EAZs) were established under the School Standards and Framework Act 1998 (SSFA) and have been in operation since 1 September 1998. They aim to maximise educational opportunities in both urban and rural areas throughout the country. Each education action zone will operate for an initial three year period, which can be extended for a maximum of two further years.
They are essentially loose partnerships comprising schools, further education colleges, local authorities (LAs), local businesses, voluntary bodies and parents’ organisations. They work under the direction of an education action forum, which is a public body with separate corporate status made up of members of the education action zone itself.
The Forum is legally responsible for administering education action zone funds and has wide powers to act in furtherance of the Zone’s objectives. Typically an education action zone can receive around £1million per year, comprising money raised from local businesses and partners and (usually matching) central government funds.
Recovery of VAT by a statutory education action zone
A statutory education action zone (one established under the School Standards and Framework Act 1998) is not part of a local authority. Neither is it in business for VAT purposes (see VATEDU25000). This means that the education action zone cannot recover any VAT it incurs on purchases except where it acts as agent of the local authority.
The following table will help you to decide when VAT can be recovered in various situations.
| If an EAZ buys goods and services… | then… | because… |
|---|---|---|
| using funds delegated to it by an LA via the governors of participating schools | the LA can recover any VAT incurred | the EAZ is acting as agent to the LA in the purchase. |
| using funds that it has obtained from other sources | the LA cannot recover any VAT incurred | the EAZ is not acting as its agent. |
| via the governors of participating schools using funds it has obtained from non-LA sources | the LA cannot recover any VAT incurred | the governors are not acting as its agent. |
| and incurs VAT that the LA cannot recover | the VAT sticks with the EAZ as a real cost | the EAZ makes no taxable supplies of its own and so is not registrable for VAT. |
| from an LA using funding channelled to it by the LA via the governors of participating schools | the transaction is outside the scope of VAT | the EAZ is acting as agent of the LA and no supply takes place. |
Supplies of teaching staff from a local authority to a statutory education action zone
If a local authority supplies teaching staff to a statutory education action zone for purposes of instruction, the local authority should not charge VAT. This is because both the local authority and the education action zone are eligible bodies (see VATEDU39000) and the supply is exempt.
Excellence in Cities (EiC) Action Zones
These are non-statutory education action zones, originating not from School Standards and Framework Act 1998 but as one of six strands of the Excellence in Cities Initiative. Typically they focus on the needs of a single secondary school and its associated primary schools.
Day to day work of such education action zones is overseen by a project director who is appointed by the local authority, or the schools own governing body. This means that the education action zone acts as agent of the local authority. Therefore the local authority can recover under section 33 of VAT Act 1994, VAT on goods and services supplied to the education action zone when the education action zone is agent of the local authority.
These education action zones have no distinct legal status as a corporate body and no specific statutory powers.