Labour, private schools VAT and universities

[BloodyHellKen]

Following on from the thread about Labour, private schools and VAT please could someone explain to me why we shouldn't be concerned that a Labour govt wouldn't remove tax exemption from universities also as they are also VAT exempt in the same way private schools are.

I'm not personally worried about VAT being added onto private school fees and I recognise arguments for and against but the possibility of VAT being added onto a university education does really concern me.

Anyone?

BUT private schools not being VAT exempt on things they buy, which they are at present as they are on the whole charities

This is incorrect. Private schools are not VAT exempt on their expenditure at the moment (whether or not they are charities). Compare this with state schools who can reclaim their VAT via the local authority. If, however, private schools have to charge VAT on fees and they become VAT registered, they will be able to reclaim that input VAT.

We already have a VAT system which penalises private schools. In addition, there are other issues worth noting. For example under the Assisted Instrument Purchase Scheme, state school parents are able to buy musical instruments without VAT being added. Private school are not able to do this. How can anyone justify a private school parent having to pay an extra 20% on buying an instrument when a state school parent does not? They are buying exactly the same thing.

OP, what's the weather like on Tufton Street this afternoon?

Completely wrong I'm afraid. VAT is not based on whether something is a luxury or not.

A tin of luxury baked beans at Harrods is VAT free, just like a lidl economy tin!

A cheap aldi chocolate biscuit is VATable, the same as a luxury chocolate biscuit from Selfridges.

Flights don’t have VAT either. Someone can fly first class around the world without paying VAT. The air passenger duty is often far less than the equivalent VAT would be. My understanding is that because VAT on flights is zero rated rather than exempt, it means flight operators can also reclaim their VAT on purchases. We have a situation where airlines are operating on a more favourable VAT basis than schools providing children with an education.

In that case, what we’ll see is the equivalent of chocolate digestives trying to pass themselves off as just rich tea biscuits.

Not easy really as it's the chocolate that causes them to be standard rated. Not much point in having a chocolate biscuit without chocolate!

Yes, they can write the legislation in a way to suit them. However, it is likely to lead to expensive legal challenges (your cake/biscuit scenario is a good example of this).

But you can still have the chocolate - you just need to pay the VAT.

but not if you declare your biscuit to be cake, or your school to be a university

Given that the VAT man can define a plain digestive and a chocolate digestive to enable one to be subject to VAT but not the other, I’m sure it’s not outwith the wit of the VAT man to also adequately define post 18 education.

A shop can't just "declare" a biscuit to be a cake. There is extensive case law which defines a cake and which defines a biscuit. The case law determines whether VAT is chargeable or not, not the shop!

Likewise there will be statute and case law upon which a court would determine whether an education provider was a school or a university, or something else.

The case law has shown that HMRC is incapable of making these decisions and that ultimately, a court will decide based mostly on whose lawyers can make a more convincing case. Which is mostly those who can afford the better lawyers.

I'm not sure about private schools being tax exempt on things they buy. I thought it was state schools that didn't pay VAT on purchase/stock, but private schools do (but private schools don't charge VAT on fees)

Why is it that as soon as anyone asks a reasonable question about Labour Policy they are deemed by some to be what? a Tory plant, a journalist? What is Tufton Street and what does it have to do with my question?

Is this where we are now on MN? An average middle aged woman can't ask a perfectly reasonable question about something that concerns them without being accused being part of some subterfuge.

Is this Labours version of 'no debate'? Vote for us without question or you're one of the bad people? 😂

@BloodyHellKen I have no great love of Labour, but you're inventing policy from whole cloth. There's been no credible discussion of VAT on university fees as a Labour policy even from the usual right wing sources (e.g. Daily Heil), yet here you are running the right-wing playbook of inventing a Bad Thing supposed to be being done by the Bad People.

@BloodyHellKen I think, having looked it up, there is an office hub in that street that hosts a number of centre-right think tanks? Seems the person making that accusation is much more political and zealous than the average poster. Hence their vitriol, perhaps.

The thing is, to win Labour need to attract people who have previously voted conservative. They seem to forget this when their pitch is so combative and nasty.

Glad you raised this issue OP, people need to know what the risks and opportunities are to make an informed choice.

Given their u-turns, lack of detail speculation is inevitable. They could address this with a firm proposal with clear scope. They have bit done so despite this policy being developed for some years and supposedly to be implemented within months of them taking power.

It's not as you described at all - rather disingenuously. These are quite valid questions. Just last week they confirmed no divergence from EU rules but to implement this would be just such a divergence. I make no apology for speculating given the muddled thinking.

I am just airing my own fears of what could happen following on from what Labour say will happen. I have 3 children. 1 already at uni and another 2 to go in the next few years. The possibility of Labour adding VAT on uni education is something I am very concerned about.

I am not inventing anything. If Labour weren't hell bent on changing the law around private schools VAT status then it would never have occurred to me as an option. In my mind it is not unlikely to happen.

If any political party wants to appeal to voters then they need to be able to discuss what concerns those voters and not just brush aside their worries as 'right wing playbook'.

You’re just scaremongering.Why on earth would they? Private schools are only accessible to a tiny fraction of the population- the wealthiest. University is accessed by a more diverse cohort as regards wealth

Why on earth would labour want to saddle students from low and medium income families with even more debt?

Why don't they make it clear then? - It's obviously not going to be as straightforward as they think, hence the u-turns.

The Lib Dems were quite happy to introduce fees while in coalition and I can't recall it being challenged by Labour or any promise of a roll back by Labour ever since so IMO Labour and the Lib Dems are as happy to saddle students from low and medium income families with...debt as the Conservatives are.

The only reason uni is accessed by a more diverse cohort is because students are encouraged to take out huge loans to pay for the education. If no loans were available then I suspect the number of people going to university would fall dramatically and be more inline with private education.

Aaaand why would any party get rid of loans?

VAT on private school fees is an incredibly niche topic, and not unpopular with most of the population. Surveys suggest about half the electorate are in favour, less than 20% against.

But if a disinformation campaign raised doubts about VAT on higher education fees, then they might get more support. And this is a classic Tufton Street tactic using shills on well known forums such as MN to plant the idea. It allows their tame gutter press to quote it as "concerns raised by MN users".

I'm not at all suggesting any party would get rid of loans. I'm sure all 3 main parties know a good deal (for them) when they see one.

I'm just pointing out that were it not for the student loans the number of people going to uni would be much more inline with private schools - I suppose as a way of drawing further comparison between private schools and uni education.

I wonder if a loan was made available for parents to take out specifically to fund private education for their children if it would take off?

Someone noted that private tutors take cash in hand so adding VAT wouldn’t make a difference.

Please also be aware that it is optional to register for VAT if your business turnover is less than £85,000 annually. If a tutor has set up as a business on their own, it doesn’t matter whether the service is vat exempt or not, they are unlikely to have that level of revenue. Same probably true also for “one man band” after school football clubs or whatnot.

Obviously different for tutor companies or national brands like Little Kickers.