Guidance for specific trade sectors: educational establishments: Further Education Colleges (FECs)
Overview of the FE sector
There are approximately 700 FECs in the UK. Much of the education they provide is for students who are under 19 (under 18 in Scotland). This is financed entirely by Funding Council grants and is considered to be a non-business activity for VAT purposes (see V1-7, Chapter 21, Education). Therefore many of them are not registered for VAT.
They do provide other education which is for business purposes e.g. degree courses for linked universities, see below; evening classes, as well as other supplies e.g. hair-dressing, catering or sales of confectionery.
Of those that are registered for VAT, many of their properties will not come under the Capital Goods Scheme, because either:
- due to the high proportion of non-business activities, the properties were not considered to be for business purposes; or
- when they were constructed they were eligible for zero-rated relief.
The FE sector is represented by three bodies:
- the Association of Colleges (AOC) - representing FE colleges in England and Wales
- the Association of Northern Ireland Colleges (ANIC) - representing FE colleges in Northern Ireland; and
- the Association of Scottish Colleges (ASC) - representing FE colleges in Scotland
Further education funding
This is provided by the Learning Skills Council (LSC) in England, Scottish Funding Council (SFC) in Scotland, Welsh Assembly Government in Wales and DELNI in Northern Ireland.
The Government wants to make higher education available to more people and one of the ways to do this is to make it easier for students to study nearer to where they live. Some HEIs enter into arrangements where other colleges (mostly FECs) provide tuition on their behalf.
The students still enrol with the HEI, remain students of that HEI and receive that HEIs degree.
The fact that the HEI outsources some of its education to these other colleges does not alter the fact that the teaching grant received by the HEI is intended solely for the HEI. The cost of teaching those students remains a cost of education for the parent HEI. All that has happened is that the university has sub-contracted the work out to the associate college, which is providing supplies of education to the HEI. The value of the education provided to the student is still the tuition fee, plus the full teaching support grant.