As you would expect, there are specific VAT rules for academies, and while there is no VAT grant scheme available to academies, there exists special provision to allow the reclamation of VAT on certain running expenses.
Because education is deemed to be provided on a non-business basis, VAT would not normally be a consideration. However, a VAT refund scheme was enacted retrospectively from 1st April 2011 for academies, that enables an academy to claim back VAT on selected goods and services that are directly consumed in the education process.
At present there are two alternatives open to academies when it comes to reclaiming VAT:
- The first option is to elect to be VAT registered and, like any other business, make VAT returns to HMRC. Choosing this option means that the academy takes full responsibility for the application and accounting of VAT on all goods and services it provides, as well as the reclamation of VAT paid (solely on the goods and services consumed in the provision of education).
- Alternatively the academy can choose to operate under a Section 33 claim. By choosing to operate under a Section 33 arrangement, academies are required to record the VAT paid and charged in their day-to-day operations under four specific headings: non-business supplies; taxable supplies; exempt supplies and mixed supplies. Under a Section 33 claim it is the responsibility of the academy to calculate the proportion of VAT that can be reclaimed.
If you’re in any doubt as to which VAT route may be required or may work best for your academy, or if you need help completing your VAT returns, then why not contact us so we can discuss the options open to you, helping you make sure you make the right decision.