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HMRC internal manual

VAT Education Manual

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Group 6 Item 5 vocational training: the Young People's Learning Agency (YPLA) and the Skills Funding Agency (SFA): VAT Treatment of certain YPLA and SFA-funded programmes

Subject to the basic principles outlined in the rest of VATEDU58500, the treatment of the following programmes is highlighted because they contain elements that might not always be straightforward to decide and may have distinctions from normal YPLA or SFA contracts that you need to bear in mind.

Promoting Vocational Qualifications

Grant aid to other organisations to produce and disseminate information about their own services is outside the scope of VAT because the YPLA or SFA is simply passing out grant money and is not receiving any of the supplies.

However, where a local YPLA or SFA commissions its own website, good practice guides or outside organisations to run its seminars, there is a supply to the YPLA or SFA and normal rules apply for determining liability.

Excellence Challenge

This is a programme aimed at widening participation in higher education. Where the YPLA or SFA commissions summer schools, master classes and mentoring, this is a supply to the YPLA or SFA since they are commissioning specific work. Training providers are therefore supplying the YPLA or SFA in helping to fulfil its remit. Since the supplies are exempt under item 5A of Group 6 of Schedule 9 of the VAT Act 1994 (VATEDU15000) the providers should exempt their supply.

However, separate supplies of marketing services, information and guidance provided to the YPLA or SFA are liable to VAT at the standard rate.

Vocational Training through the University of Industry (UfI)

This is discussed in VATEDU59000

Youth Policy Development Fund

This programme funds a number of support activities including policy, strategy, research, evaluation, promotion, marketing, public information, dissemination of good practices and networking.

Where the YPLA or SFA employs consultants expert in the training and education fields to advise on the development and implementation of standards and assessments, this qualifies as an exempt examination service.

This is distinct from the services of marketing, market research and IT systems consultants, which are liable to VAT at the standard rate.

Research commissioned by other eligible bodies is exempt.

Information, advice and guidance for adults

YPLA and SFA payments are outside the scope of VAT on the grounds that they are in the form of funding.

Local workforce development

Previous treatment

See paragraph VATEDU58750.

Employers use this fund to pay for a wide range of activities, including grant support to employers, to encourage greater take up of workforce development activities. In most cases employers are expected to make a contribution in cash or kind to the cost of these services.

  • Contributions by the YPLA or SFA to employers to encourage workforce development activities are outside the scope of VAT;
  • where the YPLA or SFA contracts with advisers and consultants expert in the training and education fields to advise on the development and implementation of standards and assessments, this qualifies as an exempt examination service;
  • separate supplies of marketing, market research or IT consultancy are liable to VAT at the standard rate;
  • funding of Business Links to reimburse them for the payments made to employers to promote workforce development is outside the scope. 

Revised treatment

It is understood that funding and contractual arrangements have changed from those outlined above and further changes may occur. Where the YPLA or SFA provides funding rather than receives supplies on its own account the payments it makes are outside the scope of VAT. In other circumstances please refer to the above guidance in this section. Please also refer to VATSC and contact Supply Policy Team if in any doubt as to whether there is a supply in return for a consideration.

Investors in People (IiP)

IiP pre-assessments, diagnostics and assessments are not examination services within Group 6, item 3 and are therefore standard-rated, regardless of who actually receives the supply.

Work specifically aimed at the development and implementation of training standards qualifies as an examination service. It is exempt when supplied either to or by an eligible body, unless it is part of a broader package of IiP services, in which case the whole programme is standard-rated.

Work-Based Training Standards Fund and the Local Initiatives Fund

Education, training and examination and assessment services supplied under contract with the YPLA or SFA all qualify for exemption.

Market research, marketing, general management consultancy and systems consultancy services are liable to VAT at the standard rate.

Grant support is outside the scope of VAT.

Trainee allowances, etc

Where providers claim trainee allowances, childcare, travel accommodation and hardship grants and simply pass them on to learners and apprentices, these payments are outside the scope of VAT since they are not consideration for a supply.