Dec 11th 2024 4.03 pm school sends out its new rates for 2025 showing that VAT is to be charged.

Parent. (11th Dec 4.47 pm)  Has the school changed its status from a charitable trust at this point?  If not I don’t see how the school can be looking at charging VAT.  Please can you let me know what category of legal entity the school is operating as before issuing any invoices with VAT, as otherwise I will be enquiring into this issue.  If you have become a trading business, then charging VAT would be in order.

School. (12th December 9.54 am)  Thank you and we have no plans to change our charitable status.  It has been passed in law and all schools will be required to add VAT or the school themselves will be liable through HMRC

(TAP – not passed into law actually, more later, and school is not liable if the VAT is being charged illegally.  Make that ‘all private schools’  – as state schools can bill parents without charging VAT under current proposals).

The school has not changed its status and is still a registered charity.

The addition of VAT on school fees is a legislative change introduced by the Labour government on all independent schools irrespective of their status, charitable or otherwise.

The Independent Schools Council is pursuing a legal challenge under the European Convention on Human Rights which would go to the High Court.

Parent. (12.12.24  12.44 pm)  A problem at this moment is that the Statute under discussions (The 2025 Finance Bill) has not yet passed the House of Commons, the  House of Lords or received Royal Assent.

Accountant’s advice. (12.12.24 10.04 am)  As I understand it,  it’s a change to the law – the introduction of the VAT charge for private schools is planned to be enacted in the 2025 Finance Bill, which has passed its second reading and is now at the Committee stage for MP’s scrutiny and debate on any amendments needed, before going to the Third Reading stage after amendments have been made.    Then it would be debated but not amended by the House of Lords before receiving Royal Assent.

Parent (3.00pm)- If you issue fee notices and bills now, they are VAT free as there is as yet no statute. Why wait, costing parents hundreds of thousands? I will be happy if you issue our bill for next term in this manner.  This then gives time before the next term for the situation to define itself. I propose to raise a self billing invoice to pay fees now without VAT at the rates you described yesterday.

School.  (4.07 pm) Unfortunately, the VAT bill contained (sic) anti forestalling legislation that prevents bills that relate to the Spring Term 2025 being paid in advance of January 1st or issued prior to that date without VAT applied.

I can assure you that the independent sector has taken robust and comprehensive legal advice and all schools are required to follow it to be compliant with HMRC. Indeed, the school is now VAT registered.

(3.18 pm) Please find attached the Spring 25 term fee bill in respect of your son/daughter for your attention.

The fee bill will now look slightly different than you may have been used to previously due to the format having been changed with the introduction of VATon all fees with the exception of Nursery fees which are exempt.

Parent. (4.36 pm)