- Colchester Institute Corporation provides vocational education courses funded by government grants.
- CIC initially recovered VAT on building project costs and accounted for output VAT under the Lennartz rule.
- CIC later argued that government grants were for exempt supplies, meaning output tax was not due.
- HMRC rejected CIC’s claim for VAT repayment, viewing education as a non-business activity when funded by the government.
- The First-tier Tribunal agreed with HMRC, dismissing CIC’s appeal.
- The Upper Tribunal overturned the decision, supporting CIC’s view that grants were for exempt supplies.
- The case is significant for the education sector and similar cases are pending in tax tribunals.
- HMRC plans to present key arguments in a Court of Appeal hearing in June 2026.
Source: rpclegal.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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