Upper Tribunal Rules on VAT Claims for Colchester Institute’s Educational Activities

• Colchester Institute Corporation reclaimed VAT on campus redevelopment in 2008 using the Lennartz mechanism
• In 2014, the College viewed its fully-funded further education as an exempt business activity and sought repayment of a balancing charge
• The Upper Tribunal in 2020 found the College’s supplies were exempt and Lennartz should not have been applied
• The Tribunal also ruled the College’s claim should be reduced to nil due to set-off rules
• The College’s decision to stop paying output tax in 2015 was potentially justified by the exemption finding
• HMRC assessed the College for underdeclared output tax, which the First-tier Tribunal initially overturned
• HMRC appealed but the Upper Tribunal rejected this, following its earlier decision
• HMRC reserved the right to challenge the 2020 decision in a potential Court of Appeal case
• The outcome may impact the further education sector’s access to VAT reliefs on construction and energy supplies

Source: taxscape.deloitte.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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