On October 4^th 2022, HMRC published a full rewrite to clarify the extent of COS Heading 65 – Training, tuition or education, which can be found here.

This heading previously contained little detail on what COS Heading 65 included however, as the guidance purports to be rewritten ‘to clarify’, we have outlined the key clarifications below and strongly urge s.41 bodies to contact us where this clarification has created uncertainty in relation to particular services previously reclaimed under COS Heading 65.

Where uncertainty is identified, adjustments subject to the four year cap may be applied subject to HMRC approval.

Key clarifications

Removal of ‘there is no general restriction under this Heading’

• Although no longer included in the online HMRC guidance, the embedded TCoE guidance clarifies that the ‘no restrictions’ approach still applies but only in relation to :
  • how the training is delivered;
  • who delivers the training; and
  • who receives the training, subject to the qualifying services being supplied in the course of a statutory non-business obligation.

Where training is not delivered directly, e.g. via an e-learning training package, the service will need to require the user ‘to interact with the training package in a substantial way to realise the benefit of the training’. The guidance goes on in this vein to exclude:

• ‘Supplies involving access to information designed to aid training, education or tuition’ and,
• ‘Services involving access to training, tuition or educational packages which are not interactive in nature’.
• Access alone is not sufficient rather, the user must interact with the training package and the supply must not be access to training resources only

The ‘to whom’ element is clarified further noting this heading applies in relation to:

• ‘a qualifying body’s own employees’ or,
• ‘supplies delivered to non-employees where the qualifying body acts under its own statutory remit to deliver training to those non-employees in a non-business capacity.’
• HMRC is acknowledging that the remit of a training provider often captures those outside of the qualifying body’s own employees, e.g. staff at a collaborating organisation.

We are grateful for the above clarifications which align with BB’s approach to COS Heading 65 however, we understand this may bring uncertainty to some organisations on how they have chosen to approach Heading 65 historically and urge affected bodies to contact us regarding next steps.

Where you may have any questions on the revised COS Heading 65 Guidance, please contact your lead BB consultant or alternatively contact us here.