The Supreme Court (SC) has ruled on a case where a private for-profit company was providing educational services to students, and it considered itself a college of a university for VAT exemption purposes.  When charging students to attend its courses it treated the supplies as exempt from VAT and did not charge VAT.  For certain organisations to qualify for exemption from VAT they must be an “eligible body” and universities and colleges are such eligible bodies.  The word university or college isn’t defined in VAT legislation.

The SC found that while university wasn’t defined in the legislation to be able to use the word university in its title an organisation must satisfy certain requirements and these requirements are governed by statute.  Of the organisations allowed to use university in its title in the UK a small but significant minority of those organisations were for-profit companies.

The SC noted that the general purpose of the VAT exemption was not to hinder access to higher education by the imposition of tax.  The private company was provided higher education and to hinder that objective would have been against the purposes of the legislation.

The SC further noted that it was not necessary for the private for-profit company to be included within the constitutional documents of the university for it to be considered a college of that university.

The decision can be found at: SAE Education Ltd (Appellant) v The Commissioners of Her Majesty’s Revenue and Customs (Respondent) – The Supreme Court

Determining the cut-off between exempt supplies and taxable supplies can lead to complicated questions.  This is a subject matter we are very experienced with.  Please do contact us if you have any questions around VAT.  This case highlights how finding the cut-off point is important.