PS VAT - international reaction

[AlbionLass]

France and Germany attack UK plan to levy VAT on international school fees
Proposal to impose value added tax in the Budget risks damaging diplomatic ties, ambassadors say.

France and Germany have hit out at Sir Keir Starmer’s plan to levy value added tax on private school fees, saying the policy risks forcing hundreds of children out of international schools and damaging diplomatic relations with the UK.

I wonder how this will square with wanting to be closer to the EU?

I don't think Labour really care. It's a weak argument; there are many better ones (e.g. that it won't actually raise any revenue, increase the burden on state schools, force some private schools into administration, etc.).

It adds to all of the valid arguments.

Agreed - why would Labour care? The don’t care about the impact on SEN kids or children of people in the armed forces, and they would be much more worthy of an exemption. The numbers in these international schools are much smaller anyway so the impact smaller from that point of view too.

As these schools are partially funded by the German and French states then their governments could choose to support their citizens and fund the VAT element too.

Seems naive in the extreme of those governments to expect the UK taxpayer to (in effect) subsidise foreign national kids but not British SEN kids.

(Am totally opposed to VAT on school fees for numerous reasons, largely because I think it will make no meaningful difference to state education and that Labour know this full well).

Labour won’t listen to finances, SEN or any argument on how poor their policy is

Shame they are so cloth eared

Subsidy

noun

1. a sum of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low."a farm subsidy"

The UK taxpayer is giving £0 to private schools, including international schools. There is no sum of money given.

If those 'foreign national kids' leave their private schools, then the taxpayer will subsidise their education: giving the state schools £7k per year per child.

Exempting education from VAT is not - and never has been - a subsidy.

State education is the (100%) subsidy.

Of all the weak arguments this is the very weakest. We are somehow supposed to worry what French diplomats think about this? Obviously we don’t worry at all about it.

Agreed that the opinion of the French and Germans isn't a major concern. They already think we're crazy with our Brexit self-sabotage: this is more of the same, and tbh won't change their opinion much. Just confirm it and piss them off a bit more.

It may reduce the attractiveness of the UK to professional EU workers with dual nationality who may otherwise have chosen to come here for a few years: if they're the doctor or mid-level professional rather than expat-package management.

So some loss of professional skills and tax revenue - which we could certainly do with - but less compelling than the other reasons why this policy is so stupid.

There are no valid arguments !!

There is a state education system. A private one IS A LUXURY..'

You can't square that circle... and have to pay up or give in ...sorry..

Mine are private educated . I have skin in this game .. but also see that our public services are decimated and tax needs to fall on the shoulders that can bear it

The German/French diplomats should simply refuse to pay it. It is not like they can be prosecuted here. And it is a wealth tax and not a VAT in substance so they should not be paying it.
That is the kind of thing that may end up blowing up.

Diplomats refuse to pay tax on children’s school fees? Do you think they should refuse to pay VAT on their shopping?? Refuse to pay tax on cigarettes?? Hmmm

Why would they be prosecuted? Wouldn't the more likely outcome just be that they lose the place at the school? Or if done by multiple people, the school is forced into lowering their fees so that the fee+VAT doesn't end up being much more than the previous fee?

No-one would be prosecuted for refusing to pay, diplomat or UK resident. They will simply lose their place at the school. Whether you think they should pay or not is irrelevant. Unless the government puts a specific exemption in place, diplomats who send their children to private schools will have to pay.

Of course, if we ever re-join the EU the imposition of VAT on independent schools will have to be reversed as it is illegal under EU law.

Yy @KoalaCalledKevin - if a diplomat pays £10k for the term and the bill says £12k incl VAT, the school can’t just keep the £10k and say to HMRC “oh this family just didn’t want to pay the VAT, so you can go after them”

“Why would they be prosecuted? Wouldn't the more likely outcome just be that they lose the place at the school? Or if done by multiple people, the school is forced into lowering their fees so that the fee+VAT doesn't end up being much more than the previous fee?”

The normal process for a private school is to withdraw a place when a parent does not pay the fees and to them pursue them in court. The school is obliged to raise an invoice with VAT but not sure they are obliged that non payment of the VAT will lead to withdrawal of the school place. HMRC could come after the school for the VAT, but the school can just say the diplomats refused to pay it. And if people like Macron get involved it is potentially very damaging and embarrassing. And I can see Macron doing just that.

The question is if the school has to make non payment of the VAT have the same contractual consequences as the non payment of fees. I do not think they do. They could start ending up owing loads of VAT and let HMRC come after them. If it is the French lycee or German Gymnasium etc owing lots of VAT, then what? Are the Government going to let those schools shut down and go bust? I doubt it.

Now especially if there are court cases running on the Human Rights Act and Rights of the Child etc, and we do not know whether this VAT is actually legal or not. Who exactly is going to be enforcing the payment of the VAT? HMRC cannot enforce a tax in breach of the Human Rights Act? As a public body they do not have the power to? So what now? Schools will be sitting on a VAT pot accruing interest just in case it ends up being legal further down the line? What a mess!

Isn't this a bit ridiculous? If someone VAT registered comes to my house and does some work and presents me with an invoice for £120, and I just pay them £100 the response is not "ah well, it's just the VAT that hasn't been paid, I'll let HMRC take it up with the customer".

If they accepted £100, they'd have £100 paid to them for the service and would still have to pay the VAT out of that (~£83 for the service and £17 VAT).

Exactly @KoalaCalledKevin

It’s a weak argument. Who will care where diplomats send their kids to school? If they end up going to other countries then both the people competing for the same place in a UK private school and UK voters won’t care/be happy.
If fees aren’t a perk of senior diplomats then they will negotiate a higher pay rise so they can pay the fees (why would UK voters care ?)

These countries can impose their own tax rules on education if they want 🤷‍♀️ The point of Brexit is UK making it’s own rules and the Labour parties history of not liking educational selection will outweigh the possibility of annoying diplomats.

Well these things happen. Paris just announced it is planning to levy a non-EU visitor tourist tariff for its main attractions.

No surprise here at the posturing and politics around VAT on luxury education.

Isn’t it Another cost of Brexit? And a price UK is prepare to pay? Many people don’t want to be close to the EU, not really - many of the people who voted Brexit were Labour supporters. They would be quite happy if the French lycee went bust, I mean who honestly cares about a very tiny number of privileged French kids? No one living in poverty in Belfast or Manchester I expect.

Just emphasising that the UK is the only Western Government to tax any kind of education. It's not what civilised societies do.

Mine are/were at private school as well and IF I actually believed even a small amount of this VAT would make its way into under resourced State schools I would happily pay it.
Its purely ideological and is born from the politics of envy, Labour don't like small business owners (as evidenced by the fact we aren't "workers" and also by the negative impact the new budget will have on a lot of us).
Most of our DDs friends at Private school are the children of SME owners and we all feel quite targeted by Labour at the moment - they don't have the balls to go after the tax dodging Millionaires so its easier to punish us instead.

Is New Zealand not civilised?

Nah more sheep than people.

I agree with this. I think there is actually nothing wrong with some ideological policies - ideology doesn’t have to be a dirty thing, it’s about engineering the society we want for the future.

But if you’re going to deploy ideological policies you need to have the guts to do it properly.