HMRC Confirm VAT on FE Loans

It has been confirmed by the taxman that from next year, adult learners will have to pay VAT if they study with an independent training provider.

As part of the “twenty-four plus advanced learning loan”, HMRC have confirmed that the twenty-percent charge will be applied to independent training providers; but will not affect “eligible bodies” including Further Education colleges and not-for-profit organisations.

Following the announcement, a spokesperson for HMRC said: “A provider of further education that is not an eligible body must charge VAT on its supplies of further education.”

However, the move by HMRC has been met with some criticism, with the chief executive of the Association of Employment and Learning Providers (AELP), Graham Hoyle, calling the ruling “nonsense.”

A second spokesperson for AELP, added that the issue had “come out of the blue” and would affect how many providers delivered level 3 and 4 qualifications for adult learners; claiming the move: “could have a huge impact on whether providers are in the game or out of the game, because it’s already giving the not-for-profit organisations a huge advantage in price fixing.”

Meanwhile, a spokesperson for Business Innovation and Skills (BIS) said:  “BIS are not in a position to offer advice or views on matters relating to VAT and the position of training organisations.

“The position on VAT will differ depending on the individual circumstances of different training organisations and therefore it is important that organisations seek their own independent advice.

“BIS have been in discussions with HMRC regarding the treatment of VAT for the fees charged to individuals in respect of education and training.“

This work has focused particularly on the position of private universities but we are also looking at how this applies to the fees charged in respect of provision funded by 24+ advanced learning loans.”