VAT Treatment of Public Funding for Further Education Institutions: HMRC Response to Colchester Judgment

• HMRC published Revenue and Customs Brief 3 (2026) on the VAT treatment of public funds received by further education institutions.
• The Brief responds to the Court of Appeal judgment in Colchester Institute Corporation, confirming that such funding is third-party consideration for education services and subject to VAT.
• HMRC will not appeal the judgment and will consult stakeholders before announcing any policy changes.
• Institutions treating education as a non-business activity can continue current VAT reliefs until a future date is announced; HMRC will not revisit past periods.
• Institutions treating funding as third-party consideration should continue this approach and may be affected by private school fees legislation.

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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