Education Sector

Plans afoot to remove valuable VAT exemptions for fee paying schools – are you ready?

by Berthold Bauer on October 26, 2023

With the 2024 Election looming and pundits appearing to forecast a landslide Labour win, the stated intention to add VAT onto private school fees is now something that Bursars and Governors should be taking very seriously.


With the fear of driving parents back into the state sector at the forefront of your minds, just adding 20% on top of term charges will not be a realistic option for most.

Berthold Bauer have a team of VAT experts with experience of providing VAT advice and support to schools, including independent fee paying schools, and can guide you through this uncertainty.

How can BBVAT Help?
Many of our clients have wanted to get ahead of the changes, to understand exactly what a shift in political landscape will mean for them, financially.  One way is by undertaking our VAT Impact Assessment.  This is a desk-based study to consider what impact of the addition of VAT on fees and other income will have on your school, and what VAT on costs can subsequently be treated as Recoverable; allowing you to accurately determine what degree of Sales VAT could be [part] borne by the school.

What does the review entail?
Each assessment is bespoke and individual to the school, based on the activities undertaken and the corporate structure adopted.  Our review is split into phases.  A scoping phase and an implementation phase.

Phase 1 will determine your ‘true’ base costs, and will allow the school to understand its margins in order to determine what – if any – VAT can be absorbed.

Phase 2 will be undertaken once it is clear what the VAT changes will be.  This phase seeks to implement recommendations from the first phase, whether that is devising a new, more beneficial Partial Exemption method, or the restructuring of certain activities to achieve a VAT saving.

Why Berthold Bauer?
We are experienced in the sector.  Our VAT Director, has more than 20 years’ experience closely dealing with the VAT affairs of educational establishments, both independent fee paying schools and those under Section 33 of the VAT act (academies and local authority schools). She has experience in putting VAT efficient structures in place, undertaking VAT health checks, savings reviews and dealing with HMRC visits for these organisations.

Our relationships are senior consultant led. You will have the details of your experienced consultant, and we encourage your team to keep in regular contact with our team of VAT experts. We can hold regular strategic meetings to understand your upcoming projects and capital works, and to allow for discussions on key topics in the sector, with your dedicated senior consultant and other VAT specialists as required.

We are respectful of your appetite to risk. In many organisations, VAT compliance can take a back seat or not be given the attention it deserves. HMRC undertake periodic inspections of complex VAT Returns with the primary objective of identifying errors – ensuring there have been no over recoveries or undeclared VAT. Therefore, our reviews treat VAT savings and compliance equally to support the organisation avoiding any unexpected retrospective VAT cost and potentially penalties from HMRC. Where HMRC do challenge VAT recovery, we can provide as much or little support as required to work through the inspection. From reviewing HMRC correspondence and responses, to dealing with the inspection, beginning to end.

We give back. Our team don’t stop at reviewing your VAT return. We transfer knowledge and understanding to our clients. We actively promote our VAT helpline to open the lines of communication, reduce errors and avoid corrections at a later date, and provide support to your staff. Further, we create bespoke training sessions based on actual client issues identified. Our consultants are only at the end of a phone for any questions, and we are able to book additional training sessions tailored to your needs, at your request.

Next Steps
If you wish to understand how we can support you in this unsettling period, or would like to know more about what a VAT review will look like for your school, please contact us via our Free VAT Helpline  on 01732 868266

Berthold BauerPlans afoot to remove valuable VAT exemptions for fee paying schools – are you ready?

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