VAT and Bursary impact

What is turnover and not profit?

They are quite different and not usually mixed up.

thia money have to be invested in school and cannot go just in anybody's pocket unless it is a salary for specific job

The management charge isn’t just money in someone’s pocket. It’s paying for HR support, finance systems, educational materials development, admin support etc from the central head office function which is sitting in a limited company. It isn’t just the direct costs of those functions either. There’s a margin on them because the limited company is allowed to make a profit. I.e, direct cost (which by the way is an allocation based on certain assumptions) £95. Charge to the school £100.

Yes but you don't understand that thia money have to be invested in school and cannot go just in anybody's pocket unless it is a salary for specific job. This is not profit. This is turnover and not profit. You clearly don't have understanding the basic principles of business and what is profit

I am still waiting for the examples for profit based schools.-?

You will agree that schools charge fees and have costs, yes?

Fee income £5m
Costs £4.5m
Management charge £0.5m
Surplus/profit £0

I have explained how it is possible for a school to ultimately not make a profit having paid its owners a sizeable amount as a management charge.

I appreciate it but it goes against the rules of not for profit law for educational institutions in UK as set per government. Please see above the Wikipedia script which I copied.
Hence I am asking for evidence: example of schools or so on. And btw, I am not an enthusiast of private schools at all but I am aware of the law and that it for profit are illegal in the UK ( as per links I quoted above)

No you have given your opinion, you haven't given data or evidence to support that so what you've said isn't a fact.

No because VAT has nothing to do with charitable status. Even if they aren't charities they are still not for profit. They aren't profit making businesses

But I’ve explained it.

That's because not all indy schools are charities so it may be that the ones near you aren't and therefore don't have to provide anything to meet that charitable status.

Right? So, not charities, and should therefore be paying VAT…

That's because not all indy schools are charities so it may be that the ones near you aren't and therefore don't have to provide anything to meet that charitable status.
The Indy sector is complex and not 1 homogenous "type". More varied than state schools purely on the basis of being independent.

Most of the better academic private day schools like those where my children went are not private equity run. Eg one is described as follows:

"The School was founded in 1561 by the Merchant Taylors’ Company, one of the Great Twelve City of London Livery Companies. In 1933, the School moved to its present site at Sandy Lodge in Northwood. In 1967, the Merchant Taylors’ Company appointed the Merchant Taylors’ Educational Trust (“MTET’),
a charitable trust set up for educational purposes, to take over the governance of Merchant Taylors’ School and St John's School. On 1 August 1997, MTS was incorporated as a private company limited by guarantee and was registered as a charity, taking over the business, assets and liabilities of Merchant Taylors’ School."

There are no profits being paid to shareholders.

On the question of bursaries more generally I believe VAT is charged on what is invoiced so if a parent is invoiced 50% of fees ie has a lower bill that is what 20% will be applied to. Since about 2010 private schools, opera houses and other similar organisations where they are charities must provide public benefit and this depends on how much spare money if they have. If they have very little then opening the tennis courts to locals at weekends may be enough. If they are really really rich then fully funded bursary places may be required etc. So if a private school has much less money due to the VAT and business rates changes which is very very likely as schools will be trying to swallow the VAT cost then they can offer fewer bursaries. This will also be fairer to those parents who are paying full fees, paying the highest UK tax burden for 70 years (which applies to higher earners who tend to use private schools - other people have had tax cuts since 201) and thirdly paying through their school fees to fund the fees sometimes for other people where one parent is simply choosing not to work!

I’m highly amused by the idea of independent schools supporting the state sector.

I’ve worked in four state secondaries. Between them, my DC have been to four primaries and one secondary, in two very different education authorities.

I’ve never seen any kind of support from the private sector. In fact, my only contact with them is when their pupils move to my current school for A-Levels, because our results are significantly better than any of the local private schools.

Suggesting private schools should keep charitable status because of all the sterling work they do to support state schools is absolute bollocks.

Can you provide any evidence of ahat you have in mind. Private Equities can have members salaries by the school.

Again? Ok
So if you have some top secret research that isn't available on the Internet please share it otherwise it is clear you don't understand what you are talking about.

Have you been googling again. Well done.

Conclusion: So at the primary and secondary school level there are no profit private schools in the UK

Sigh.

There are schools, owned by Private Equity.

The school doesn’t make a taxable profit because the difference between its revenue and costs, I.e, its profit is reduced to nothing by a management charge from its owners.

Hence the school doesn’t make a profit.

The school’s owner however does make a profit because there is a margin on the cost of the actual support they provide centrally.

No, you state something as a fact you need to be able to back it up otherwise it isn't a fact. From what I can tell, the biggest group of private schools owned by PE companies are specialist SEN ones, so not the "normal" independent mainstream schools

But are still owned by profit seeking owners.

I think that the problem is that you don't understand the types of business entities.

The owner is not getting any profit. The owner can be salaried employee in the school. The " not for profit" and " charity" organisations are not governed by one owner but they have to have an electable board.

and?

Copying and pasting Wikipedia isn’t an argument.

@Boater

The UK does not permit for-profit schools (independent schools are mostly non-profit making trusts), but there are a number of for-profit institutions in higher education. In 2013, Michael Gove, then secretary of state for education, was said to have drawn up plans to allow free schools and academies to become for-profit businesses, and in 2014, his successor Nicky Morgan refused to rule out for-profit schools. However, the Conservative manifesto for the 2015 General Election committed the party not to introduce for-profit schools, and after the Conservative victory, Morgan ruled out any place for for-profit schools in the UK education system.[3]
In higher education, by contrast, there are a large number of for-profit providers. A study by the Department for Business, Innovation and Skills identified 674 privately funded institutions and estimated that the majority were for-profit businesses (based on survey returns from 249 providers, of which 136 identified as for-profit).[4] Most of the 136 for-profit colleges that returned the survey were either non-specialist (56) or specialized in business, management and accountancy (49).[5] There are three for-profit universities in the UK: the University of Law, BPP University and Arden University, which are the only for-profit institutions with degree-awarding powers.

Conclusion: So at the primary and secondary school level there are no profit private schools in the UK

Get a grip love.

But are still owned by profit seeking owners. They ensure the school itself doesn’t make a profit by charging the equivalent of the school’s profit for the year as a management charge.

Please can you post the numbers which you believe are run by PE for profit

If I was paying for 2 kids fees of 40k a year and then another 8k a year in VAT to subsidise state schools, I would not be happy about my money subsidising bursaries as well. We are not that rich or generous, and don’t enjoy our stressful jobs so would be very resentful of this.

I doubt the drug and alcohol addicted or homeless or jobless of society will be pushing their poor children for bursaries anyway, it will be middle class parents, who know all the rules, what level to keep their incomes at, and what preparation their child needs to do. Hardly a top-priority charitable cause.