Helping you prosper
HMRC’s Revenue & Customs Brief 9 (2026) provides an update on HMRC’s position regarding the VAT treatment of supplies of education and closely related services provided by alternative providers. This follows on from the recent Court of Appeal decision in St Patrick’s International College and Others Ltd v The Commissioners for HMRC ([2026] EWCA Civ 852) which overruled the previous decisions of the First and Upper tier Tribunals and found in favour of St Patrick’s International College and Others Ltd.
What is the issue that was decided by the Court of Appeal?
Supplies of education made by ‘eligible bodies’ are normally VAT exempt under Group 6 of Schedule 9 of the VAT Act 1994.
HMRC’s long-standing policy is that supplies of education made by providers that are not eligible bodies (such as alternative providers) are subject to VAT at the standard rate, and that the perspective of the typical consumer does not alter this position.
However, the Court of Appeal decision concluded that it was bound by an earlier Court of Appeal judgment in the case of Leisure, Independence, Friendship and Enablement Services Ltd (LIFE) ([2020] EWCA Civ 452), which decided that the perspective of the typical consumer is relevant when assessing fiscal neutrality, even where legislation imposes additional qualifying conditions for a VAT exemption to apply.
Consequently, it was decided that some supplies made by organisations that were not eligible bodies, such as St Patrick’s International College, were VAT exempt (as excluding alternative providers from the exemption would breach the principle of fiscal neutrality).
HMRC has received permission to appeal the Court of Appeal’s decision to the Supreme Court.
Potential for VAT claims
In light of the Court of Appeal’s decision, HMRC recognises in Revenue & Customs Brief 9 (2026) that some affected businesses may wish to protect their position, pending the outcome of HMRC’s appeal of the decision to the Supreme Court.
In particular, any alternative providers of education who consider they are in the same position as St Patrick’s International College can submit a VAT refund claim to HMRC, subject to the normal statutory requirements and time limits. Such claims would need to be calculated on the basis that supplies similar to those in dispute within the St Patrick’s International College and Others Ltd case may have been VAT exempt.
Claims need to take into account adjustments for any related input tax previously recovered (which would as a result become irrecoverable) as well as reflecting the impact of the partial exemption rules.
HMRC has stated that it will review any such claims on a case-by-case basis, considering the unjust enrichment and partial exemption rules as well as whether overdeclared VAT has been correctly accounted for across the supply chain.
HMRC has stated that it will protect its position to secure tax revenues, pending the outcome of the appeal to the Supreme Court. Therefore, if the Supreme Court reverses the decision of the Court of Appeal, this will remove the basis for the protective VAT claims accordingly.
The next step
This will be of interest to non-mainstream alternative providers of higher or further educational programmes, who may wish to review their own specific positions in view of the Court of Appeal decision and whether there is scope for protective VAT claims at this stage which will be highly fact dependent. Where protective claims are made, the input VAT recovery, partial exemption and capital goods scheme position will need to be revisited accordingly.
If you would like to discuss further, please contact Lisa Burnside, London VAT director, or your usual UHY VAT adviser.
