Court of Appeal: Government Funding Can Be Third-Party Consideration for VAT on Educational Services

The Court of Appeal ruled that government funding for free educational courses can be third-party consideration for VAT purposes if there is a sufficiently direct link between the funding and the educational services provided.
The Court found that in this case, the funding agreements and calculation methods established a direct link, as funding was based on courses delivered and student numbers.
There is no requirement for a legal relationship between the payer (government) and the recipients (students), as long as the payments are directly linked to the supplies.
The decision has significant implications for organizations, including charities, that receive government funding, as such funding may be subject to VAT.
The case may be appealed to the Supreme Court by HMRC.

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.