If you are an initial teaching training (“ITT”) placement school or a provider which is accredited to deliver ITT courses that lead to qualified teacher status (“QTS”), read on.
What’s the issue?
One of the many wrinkles to be ironed out since the introduction of VAT on private school fees has been the VAT liability of funding received by an ITT placement school.
The VAT liability of these fees would not have been an issue prior to the imposition of VAT, as the school, whether for example a private school or academy, would almost certainly not have been registered for VAT.
Existing precedent for trainees in other professions
There is existing precedent for placement fees for trainee GPs, which we addressed in an insight published in 2023 Healthcare, training provision & VAT. The placement providers in this case would have included GP surgeries, some of which would have been registered for VAT.
Health Education England (“HEE”) issued the following guidance on behalf of the Department of Health and Social Care (“DHSC”) on the VAT treatment of placement fees in December 2022.
“The charge made by placement providers to HEE (or to a medical school where Education and Training Tariff funding has been devolved by HEE) has always been considered as a VAT Exempt charge. The exemption applied has been under Group 6 of Schedule 9 of the VAT Act 1994 as a provision of Examination Services. DHSC does not disagree with this VAT treatment.”
Latest update from HMRC
HMRC have issued the following guidance, which we understand results from a discussion between the Independent Schools’ Bursars Association (“ISBA”) and HMRC.
“Teacher training supplies to universities
If the training is provided as part of a recognised higher education course (such as Post-Graduate Certificate in Education – PGCE), it will be exempt where supplied by an eligible body.
If the training is not part of a recognised higher education course, then the supply will be taxable, if it is supplied by an institution which meets the definition of a private school.”
Legal basis
"An “eligible body” is a defined term in VAT law and will include all schools and colleges offering full time education, which are state regulated by Ofsted or the devolved equivalent. Similarly, “private school” is a defined term in VAT law, which covers fee paying independent schools and colleges."
The HMRC guidance excludes “training” provided by private schools that does not support a higher education qualification.
The way forward
At face value, there may be some discrepancy in the VAT treatment of placement fees between different professions. The nature of a supply from a VAT perspective will depend on the relationship between supplier and customer, most importantly what is delivered in return for the payment received by the supplier.
If you have any concerns about the guidance issued by HMRC, please do not hesitate to contact the author of this insight or your usual VAT contact at MHA.
