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Introduction to the education sector

The education sector can be extremely complex from a VAT perspective. Some organisations in the sector combine non-business, exempt and taxable activities. There can be difficulties both in establishing the correct liability of supplies, as well as determining how much VAT to recover.

Business/non-business in the education sector

One of the first questions an education provider must ask itself is whether it is acting in the course or furtherance of business.

The main advantages of an education provider's activities being 'non-business' are that:

1. Ìý

   •ÌýÌýÌýÌý the construction of certain buildings may be zero-rated

2. Ìý

   •ÌýÌýÌýÌý income from non-business activities is outside the scope of VAT

3. Ìý

   •ÌýÌýÌýÌý fuel and power may be subject to the reduced rate of VAT

The main disadvantage is that, in general, VAT incurred on purchases will be irrecoverable unless the education provider has some element of taxable business.

There is a significant volume of case law on the topics of business and economic