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HMRC internal manual

VAT Education Manual

Academies

Academies are publicly funded schools that provide free education to pupils aged up to 16 years and from 16 to 19 years old. Consequently, their supplies of education are outside the scope of VAT.

Alternative Provision Academies, University Technology Colleges for 14 to 19 year olds and Free Schools, which teachers, parents and others are encouraged to establish are also academies.

From 1 April 2011 a new VAT Refund Scheme under s.33B VAT Act 1994 was introduced for academies. The scheme, confined to England, permits academies to reclaim the VAT incurred on purchases, imports and acquisitions which relate to their non-business activities. These are predominantly the provision of free education, together with goods and services closely related to this which are sold at or below cost price for the direct use of pupils.

Such activities include, for example,

  • catering and boarding, provided at or below cost;
  • breakfast and after school clubs when provided to the academy’s own pupils;
  • items such as calculators and stationery sold for use in the classroom;
  • musical instruments sold to pupils for use in school music lessons (which can include playing in the school orchestra).

Academies may be registered for VAT subject to the value of their taxable supplies or voluntarily. VAT registered academies can include their s.33B claim on their VAT Return. Academies that are not VAT-registered should follow the guidance in the VAT126 form.

Claims for VAT relating to non-business activities can only be made by the proprietor of the academy acting in that capacity.

Academies are publicly funded independent secondary schools. They are sponsored by the private or voluntary sectors or by churches or other faith groups. They can either replace existing schools or are set up new as part of a wider school reorganisation.

Academies offer a broad curriculum together with a specialism in one area, such as sport, science and technology, modern languages, business and enterprise or the arts.

Each academy will be set up as a company limited by guarantee with charitable status and will have a board of governors responsible for leadership of the school.

Sponsorship

It is unlikely that the funding academies receive from sponsors either in the commercial or voluntary sectors will be consideration for any supply. All that sponsors derive in return for their backing is some influence over the appointment of governors and, perhaps, their contribution reflected in the school’s name. However, once appointed, governors are under a legal duty to act in the interests of the school alone, not the sponsors.