- The Colchester Institute VAT case may treat public grant funding for FE colleges as payment for education services, making it potentially within scope of VAT.
- The Court of Appeal found the funding had a direct link to approved courses, so Colchester was making business supplies of education.
- If applied widely, FE colleges may lose access to VAT reliefs on building projects, utilities, and similar non-business exemptions.
- HMRC has issued a brief, won’t appeal further, and is considering whether policy or guidance changes are needed.
- Colleges may need to decide whether to keep treating education as non-business or adopt the Colchester approach and reassess VAT claims.
Source: menzies.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.
