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HMRC internal manual

VAT Education Manual

Is a business making supplies for consideration?: the Connexions Service

Under the provisions of the Learning and Skills Act 2000, Connexions replaced the Careers Service with effect from 1 April 2001. Connexions is far wider in scope than the service that it replaced. It aims to provide advice, guidance and support to young people aged 13 to 19 across a broad range of topics of concern to them - for example, careers, education and training, drug misuse, youth offending, truancy, housing, health and leisure, and cultural and voluntary activities.

To achieve this it draws on the services of a network of specialist advisers including youth and social workers, the Probation Service, Youth Offending Teams and teachers.

The delivery of Connexions Services is non-business.

Historical position

Until 31 March 2004 Connexions Services were considered to be taxable supplies, and the funding received by providers from the (then) Department for Education and Skills (DfES) was treated as consideration for those supplies. This enabled providers to recover any VAT incurred as input tax. This arrangement ceased from 1 April 2004; payments received by providers are now correctly treated as outside the scope, and providers are not able to recover any VAT.

This change of treatment has necessitated a change in delivery structures, and the guidance which follows reflects the current and future position.

Delivery structures 

Connexions Services are delivered by:

  • Connexions Partnerships, which are separate legal entities operating as non-profit making companies;
  • local authority-led Connexions Partnerships, where the local authority acts as the accountable body for the partnership company; or
  • local authorities acting in their own right.

In each case the provider contracts with the Supporting Children and Young People Group (SCYPG) - part of the Department for Children, Schools and Families (DCSF) - to deliver Connexions Services.

The change in VAT treatment outlined in ‘Historical position’ above means that, increasingly, local authorities will take on responsibility for delivering Connexions Services, either in-house, or by buying in components of the services from other contractors. In either case, the local authority will be able to recover any VAT incurred under section 33 of the VAT Act 1994.


All providers receive the bulk of their funding from SCYPG, although additional resources may come from individual partners (in the case of Connexions Partnerships) or from European Social Fund monies.

With effect from 1 April 2008, all funding from SCYPG will pass direct to local authorities, which will use this either to deliver Connexions Services themselves, or to buy in components from other contractors.

VAT Treatment

Delivery of Connexions Services

Delivery of Connections Services by providers to SCYPG is a non-business activity, and any payments or funding received in respect of it are outside the scope.


Where a provider buys in goods or services from a third party in order to deliver Connexions Services, the VAT liability of the supply by the third party is determined according to the normal VAT rules.

VAT Recovery

Connexions Partnerships are unable to recover any VAT they incur in delivering Connexions Services, as this is a non-business activity. Local authorities, however, can recover VAT incurred under section 33 of the VAT Act 1994.

With effect from April 2011 

As part of a Government website rationalisation programme, with effect from April 2011 Connexions Direct has become part of Directgov offering wider online support for young people, bringing careers, work and learning advice and information together in one place.