Academies and VAT

In this article, Richard Collier – VAT Director at Wilson Wright, part of BKL since April 2024 – gives an overview of the VAT complexities which UK academies should be aware of.

VAT is not the simple tax that some suggest. This is true for the UK education sector, where VAT is one of the main accounting challenges we assist clients with; and especially for academies, which have a multi-faceted identity within the VAT system.

As an institutional education provider, your academy can reclaim VAT from the Government, without charging VAT or needing to register for VAT.  However, there are many ancillary sales and activities which fall outside this pure educational role and stray into what the VAT rules would view as the commercial sector.  This in turn can mean VAT registration is required; or where not strictly necessary, is possibly even beneficial on a voluntary basis.

Once VAT registered, VAT is then chargeable on relevant sales, but it opens the door to VAT recovery on many costs.  However, to complicate matters further, some of these “commercial” activities are in fact VAT-exempt. That removes the need to charge VAT but, unfortunately, then blocks VAT recovery on costs, impacting the bottom line.

The combination of these different activities with different VAT outcomes, is complex enough within a single academy. For larger multi-academy trusts (MATs), the challenges of collating, integrating and managing multiple schools starts to become quite significant.

Considerable VAT knowledge, strong procedures and reviews are required to navigate what are complex and not always self-evident rules.  The sale of ostensibly the same thing could potentially have up to three VAT treatments, depending on the circumstances.

Strict conditions apply in many cases, particularly around the hire of a tennis court or hall, school trips, catering, uniforms, fundraising and similar income, even before we start to look at the various VAT issues associated with costs, particularly on new buildings, repairs etc.

How we can help

Trying to ensure that the non-business vs business split, partial exemption VAT calculations and associated capital goods scheme positions are all correctly managed on a quarterly basis is enough to tax the most sophisticated of finance functions.

VAT compliance and optimisation are vital for academies’ financial health and operational efficiency. Staying updated, and using expert VAT services, will empower you to focus on your core mission of delivering quality education.

BKL’s wealth of VAT experience in these areas can help academies shoulder this responsibility, manage compliance risk and identify VAT savings to protect the finance health of the institutions.

Our tailored VAT services at BKL will support your academy in navigating these complexities through compliance reviews, optimisation strategies, and specialist advice as well as offering training packages and ongoing support helplines to your finance team.

For a chat about how our tailored VAT services can benefit your academy, please get in touch with your usual BKL / Landau Baker contact, or email Richard Collier at [email protected].

 

 

NICOLA HALL

BILSHAN MENSAH

Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.

ELANA DIMMER

Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.

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