Navigating the New School VAT Regime: Opportunities and Challenges

• The deadline for the first VAT return under the new school VAT regime is approaching.
• Schools should seek advice to benefit from opportunities presented by this first return.
• Generalised advice on VAT fails to address the idiosyncrasies of VAT law and the unique aspects of school life.
• Establishing the appropriate VAT treatment for schools is a nuanced process.
• HMRC’s guidance has resulted in confusion and ambiguity.
• Schools must account for VAT on their expenditure, requiring a minimum of three VAT account treatments: recoverable, irrecoverable, and partially recoverable VAT.
• The first VAT return presents an opportunity for newly-registered schools to reclaim VAT on their pre-registration goods and services.
• The position on services remains unclear and arguably contradicts earlier case law.
• Schools with an existing VAT registration have an opportunity for reclaim that did not exist before.
• The choice of VAT year-end is significant for schools.
• Changing the year-end to align with the financial year may initially increase VAT recovery.
• Schools should forecast their VAT position for both 31 May 2025 and 31 August 2025 when deciding on their VAT year end date.
• Schools with existing VAT recovery methods cannot retrospectively change them without HMRC’s agreement.

Source: vwv.co.uk

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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