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VAT Tribunal clarifies definition of examination services – how does this impact your business?

Name: MHA
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Bruno Gomes · Posted on: May 21st 2025 · read

Generic Maths Ltd supplies “ConquerMaths” which is an online platform offering diagnostic assessments alongside a limited number of tutorial videos. The product is marketed as a tool to help users identify gaps in mathematical knowledge, enabling further targeted learning.

Following a VAT assurance check in 2017, HMRC concluded the supply was a composite taxable supply of educational services, not exempt “examination services.” HMRC raised an assessment covering VAT periods 10/14 to 07/18. Generic Maths appealed, contending the supply qualified for exemption as an “examination service” under Group 6 of Schedule 9 of the VAT Act 1994.

In its appeal, Generic Maths argued that its product, ConquerMaths, should be exempt from VAT as it constituted the provision of “examination services” under Item 3(b) of Group 6, Schedule 9 of the VAT Act 1994.

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Generic Maths Ltd maintained that the platform was primarily an assessment-led resource, designed to help pupils identify their level of mathematical ability and locate specific gaps in their knowledge, thereby enabling further learning through other means.

They relied on Note 4 to Group 6 of Schedule 9, which includes “the making of assessments” within the scope of exempt examination services. Additionally, they argued that the appropriate test should be a functional analysis of the product’s purpose, rather than how it was perceived by consumers. Generic Maths also challenged the validity of HMRC’s VAT assessment on procedural grounds, claiming that HMRC had not exercised best judgment as required by section 73 of the VAT Act.

In response, HMRC argued that the supply was a taxable educational service, arguing that the assessments were embedded within a teaching tool and did not constitute standalone examination services. HMRC maintained that the product was marketed and functioned as an online learning platform and therefore fell outside the VAT exemption for examination services.

The First-tier Tribunal found in favour of HMRC, concluding that Generic Maths Ltd’s supply was a single, composite supply of taxable educational services, not exempt examination services. Applying an objective test, the Tribunal assessed the nature of the supply from the perspective of the typical consumer, who would view ConquerMaths primarily as a teaching tool rather than as a service for formal assessment.

"While Note 4 to Group 6 does include "the making of assessments" within the scope of examination services, the Tribunal held that Note 4 must be read as a whole and, in the context of “examination services”, the word “assessments” is limited to assessments provided with a view to upholding educational standards, not those embedded within general teaching. The Tribunal also rejected the argument that a functional analysis should apply, noting that even under that approach, the product’s main purpose was to enhance users’ understanding of mathematics, reinforcing its purpose as educational."

Bruno Gomez, VAT Director

Finally, the Tribunal found that HMRC had exercised best judgment in issuing the VAT assessment, having considered all available information.

Understanding the VAT Exemptions: Education vs. Examination Services

Under Group 6 of Schedule 9 to the VAT Act 1994, there are two primary VAT exemptions relevant to education providers:

Education Provided by Eligible Bodies
Examination Services

Items 1 and 4 of Group 6 provides exemption for the provision of education, vocational training, and certain closely related services by “eligible bodies” only, such as schools, universities, further and higher education, public bodies and certain not-for-profit organisations.

Item 3 of Group 6 provides an exemption for the supply of examination services provided by or to an eligible body or to a person receiving education. This exemption may apply therefore even if the provider is not an eligible body. Examination services include services such as the setting and marking of exams, the making of assessments, and other related functions carried out to ensure or uphold educational or training standards (as defined in Note 4 to Group 6). However, this exemption is strictly interpreted and does not extend to assessment tools or exercises that are merely part of a teaching process.

What Should Businesses in the Education Sector Consider?

For commercial providers of online learning or training tools, this case shows the limits of the VAT exemptions:

Nature of Supply You must determine the nature of your product. Is it designed to deliver teaching, or is it an assessment service aimed at certifying knowledge in a structured way?
Single vs. Multiple Supplies Where a product includes mixed elements (e.g. assessments and tutorials), consider whether it can be split into distinct supplies for VAT purposes, or whether it constitutes a single composite supply, where the predominant element determines the VAT treatment.
Consumer Perception How your service is marketed and perceived by typical users plays a significant role in determining VAT liability. If your students view your product as an educational resource rather than an external examination service, it is more likely to be deemed taxable.
Eligible Body Status If your organisation is not an eligible body, you cannot rely on the broader education exemption and must consider whether you can fall under one of the narrower exemptions like examination services.