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HMRC internal manual

VAT Government and Public Bodies

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HM Revenue & Customs
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Local authority education services: related activities: school photographs

Introduction

It is quite common for the head teacher of a school to arrange for pupils to be photographed at individual sittings. Subsequently the school distributes a package of photographs of each child, compiled by the photographer, and offered to the parents at prices set by the photographer. Different prices may apply depending on whether the parents decide to purchase the whole package or individual photographs.

They are offered to the parents on a sale or return basis and the parents return their money to a member of the school staff, together with any photographs they do not wish to buy. The school then passes the returned photos and the money on to the photographer, having first deducted an agreed discount or commission for use of the school’s facilities.

The VAT position was considered by the VAT Tribunal in the case of Lancashire County Council (VTD 14655). The chairman accepted the argument that sections 238 and 239 of the Education Act 1993 confers body corporate status on school governing bodies and gives them control of the unofficial school funds. In turn this means that the head teacher, acting on behalf of the governing body, makes a supply of facilities to the photographer. Treatment of photographer. Treatment of the commission depends on the status of the head teacher.

Head teacher acting as employee of the local authority

Where the head teacher is an employee of the local authority and acts for the authority in that capacity, the authority makes a taxable supply of services to the photographer. Accordingly the authority should account for output tax on the consideration it receives. This usually takes the form of the commission or discount.

Head teacher acting as agent for the governing body

If the head teacher acts as agent for the governing body of the school (which is the case in all voluntary aided and in some other local authority maintained schools), then the supply is by the governing body rather than the local authority. A governing body that is VAT registered is required to account for output tax on the commission or discount it receives.

Other arrangements

In some circumstances the contractual arrangements may provide for the photographs to be sold direct to the authority or school who then make an onward, and independent, supply to the pupils and parents. This type of arrangement is also common for group photographs. Under these arrangements the authority, or the school if VAT registered, must account for the VAT on the value of the supply to the pupils and parents and can recover any VAT incurred as input tax according to the normal rules.

For further information about school photographs see the Education Liability manual (VATEDU) (external users can find the guidance at http://www.hmrc.gov.uk/manuals/vatedumanual/index.htm).