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HMRC internal manual

VAT Education Manual

From
HM Revenue & Customs
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Group 6 Item 5 vocational training: learndirect, University for Industry (Ufi): operation from August 2010

In Wales and Northern Ireland the business model remains unchanged from the model in place from August 2004 (see VATEDU59250). The guidance on the rest of this page only applies to the business model for England.

In England, Ufi is not an eligible body. From August 2010 Ufi became the principal provider of education and subcontracted the delivery of the majority this education to ‘learning providers’ as well as commencing to deliver education itself. The grant funding provided by the Skills Funding Agency (SFA) to Ufi remains outside the scope of VAT.

The subcontracted supply of education from ‘learning providers’ to Ufi is exempt to the extent that the services are ultimately funded by the SFA.

Fees charged by Ufi to learners for education are subject to VAT at the standard rate.

The subcontracted supply of education from ‘learning providers’ to Ufi depends on the status of the ‘learning provider’.

  • Where the ‘learning provider’ is an eligible body the services funded from the fees collected from learners are exempt from VAT.
  • Where the ‘learning provider’ is not an eligible body the services funded from the fees collected from learners are subject to VAT at standard rate.

Fees charged by ‘learning providers’ to Ufi for education are exempt from VAT as the consideration is a charge to funds which are ultimately funded by Government, under Item 5A to Group 6 of Schedule 9 VAT Act 1994. This is irrespective of the status of the provider.

Where education directly delivered to learners by Ufi is:

* wholly funded by SFA grants this is not consideration for a supply of education, or a business activity, and is outside the scope of VAT;
   
* funded by a combination of SFA grants and by making a charge to learners / their employers it is a taxable business supply for VAT purposes. The SFA funding is a contribution to the taxable business activity and is outside the scope of VAT.