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FE Colleges in line for VAT refund from HMRC

Earlier this month, The Court of Justice of the European Union (CJEU) issued its decision in the VAT case of Brockenhurst College, who have been advised throughout on this matter by VATangles VAT Consultancy.

What our Brockenhurst case was about

The case concerned the treatment of income generated from areas such as training restaurants and hair and beauty salons, where members of the public pay for services supplied by students as part of their courses.

The Court agreed with the arguments made on behalf of Brockenhurst that VAT was not due on the income generated on such activities, as it was closely related to the provision of education or vocational training. It rejected HM Revenue & Customs’ (HMRC) original policy decision that such income should be subject to VAT.

VATangles’ view

Noel Tyler, Director of VATangles, who successfully took the case to the First Tier Tribunal (FTT) in 2012 stated:

‘It is extremely good news that the European Court has agreed with the arguments that we have consistently made on behalf of Brockenhurst and other Colleges through the FTT, Upper Tribunal, the Court of Appeal and the CJEU.  Hopefully, this will now finally result in HMRC making the repayments due to the Colleges who have made claims to them.’

Past claims

It was assumed by many advising the FE College sector that the original decision made by the FTT would be overturned in the Higher Courts and therefore VAT claims were either not encouraged or incorrectly argued.  It is unfortunate that many Colleges were advised against submitting a timely claim, as several millions of pounds have already been lost to the sector.

Claims made by VATangles of behalf of our clients are now being paid by HMRC, with some claims going back to 2006.

VATangles has also been asked to ‘step in’ where claims have previously been made by Advisors or Accountants on behalf of Colleges but have then stalled due to the questions raised by HMRC.  We are aware of the tactics used by HMRC in an attempt to delay a payment and have successfully argued for these claims to be repaid.

We will be happy to assist any College who has found themselves with a claim that has stalled at HMRC.

Future claims

VATangles argued before the Tax Tribunal in Brockenhurst that all education and training provided by the College was exempt from VAT, regardless of age, and this position was not challenged by HMRC.

As such, at least until Brexit, since the European Court provides the highest form of precedent, HMRC should make repayments in respect of all claimant Colleges who are extensively in the same position as Brockenhurst. Certainly, as far as our clients are concerned, this has covered all of them.

A timely claim submitted now using our arguments contained within the Brockenhurst case will enable eligible FE Colleges to obtain benefit for the past four years.  VATangles will be pleased to assist your College in submitting a timely and beneficial claim.

Other incorrect HMRC ‘policies’

VATangles’ arguments in Brockenhurst contradicted HMRC’s long held ‘policy’ regarding what constitutes education and our interpretation was found to be correct in Law.  Our thoughts therefore turn to what other HMRC ‘policies’ are also incorrect in Law?

Lennartz Assets

Lennartz is an area of VAT in which VATangles has consistently argued against current HMRC ‘policy’ over the past 4 years.  Our case has been backed by UK Law, EU Law, as well as both UK and EU case law and our arguments are due to be heard in Tribunal in July.

If your College has or is paying output VAT relating to any Lennartz assets, we will be happy to discuss various ways to mitigate your payment.

Please contact either Andrew Belcher on 07436 274517 or Noel Tyler on 07553 370632 from VATangles VAT Consultancy to discuss our Brockenhurst or Lennartz cases.