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?

Yy @KoalaCalledKevin ❤️

Is it this, @Araminta1003

https://amp.theguardian.com/education/2024/oct/28/vat-international-private-schools-hundreds-pupils-leave-uk

There is zero mention in this article that either the French or the German diplomat considers this is illegal. They are arguing for an exemption for the specific French and German school, in their national interest. Just as we argue against low food safety standards on imports in our national interest, or whatever.

@SheilaFentiman - the French and German ambassadors would not be making public statements like this without appropriate backing and legal advice. It is just not how diplomacy works at the top level.

“But there will be people who have children with the same health needs as your friend's DC who already couldn't afford to send to private school - why wouldn't that have been a breach of international law already?”

The Government cannot interfere and penalise. We have been through this many times on all these threads. And the Government does not even have an argument in proportionality, namely that the tax raised will be significant. The detriment of the interference by public institutions in those children’s lives with disabilities and health needs in private schools far outweighs the benefit to Government/society as a whole in raising an optimistic 1.5 billion and 1/3 of a teacher per school.

There is literally zero balance here. And we have a damning very recent public report on how children with SEND are being failed.

Why would anyone who supports Labour want them to lose in court on a human rights issue vis a vis disabled children? It makes no sense to me whatsoever.
I am honestly starting to think those championing this policy must be pro Tory and gagging for the embarrassment.

I agree that they would not make such statements without appropriate backing. But they simply do not say that the move breaches any international legal obligations. They are exactly the same as my hypothetical MP in Kent who might protest that a move on fuel taxation by the French government was not good for friendly relations, might lead to fewer petrol stations staying in the business, making it harder for French hauliers needing fuel here, etc etc.

So again I ask if you have a link where any senior foreign official actually asserts the illegality that you mention?

Why would anyone who supports Labour want them to lose in court on a human rights issue vis a vis disabled children? It makes no sense to me whatsoever.

Because many of us think there is vanishingly small chance that they will lose on a human rights issue.

IANAL but nothing you have posted so far makes me think they will lose. Going back to my hypothetical fuel duty, surely you could make a similar human rights case that fuel duty increase is discriminatory, because disabled people are likely to need to travel by car more. AFAIK no such case has been brought before, but I am willing to be corrected.

There are proportionality arguments for fuel and tobacco duty which there are not in the case of education.

Are you arguing that private education is harmful like tobacco?

“Duchêne said: “We are not asking for an exemption to the rule; we are not the target of this VAT measure. Our schools are different from the target ones, since we follow special courses preparing for French exams.”
Berger told the same paper that a German school in Richmond, south west London, is “totally distinct from British private schools” and deserved to be treated differently.
“We would really like to see the British government recognize the importance of these schools — not only for our political and cultural relations but also for the people this will affect,” he said.”

A foreign government cannot be seen to interfere openly in British policies. The argument they are making is diplomatic and by inference.
Read the above clearly in light of everything I have said. They clearly believe those children have those rights to be schooled in their own curriculum without interference by the British state.
It is similar to the argument that church schools are bringing in the British courts.

I still want to know if HMRC has enforcement rights if the courts accept the cases on the human rights act. I believe they do not. So what kind of limbo is this going to be?

Same goes for healthcare and that would be way more lucrative.

@Araminta1003

Read the above clearly in light of everything I have said. They clearly believe those children have those rights to be schooled in their own curriculum without interference by the British state.

I read the whole article, including the quotes you quoted.

And absolutely none of what was said is an assertion that the policy contravenes international law. So I will assume that you do not have any such quotes and will not ask again, but will draw my own conclusions about the basis of your thinking.

What makes you think that the government cannot continue to enforce a law that is being challenged? Do you have precedent for this?

The Labour government don’t care about rational economic argument. They will do anything to harm the private sector. It has nothing to do with raising money.

Starmer said, pre-election, that he didn’t want to diverge from EU law. By imposing tax on education, he’s doing exactly this.

No sensible policy maker would go about intentionally harming the one area of the education system which, on the whole, works very well.

In some respects yes, the Charter goes beyond the HRA but, unlike the HRA, it is not enforceable through the courts.

In the unlikely event that HMRC needs to take enforcement action against private schools, it will have no problem doing so despite any ongoing legal challenges. Taxes remain enforceable unless and until such time as the government changes the rules or the courts strike down a government decision.

I did not say there is a problem giving diplomats an exemption but, since the only exemption they have is for vehicles manufactured in the EEA/EFTA, I don't see any reason why we would exempt them from VAT on school fees. EU governments cannot charge VAT for UK diplomats sending their children to international schools - that would be a breach of EU law. And if other countries do start charging VAT or similar on school fees, our diplomats will have to pay. It will be up to the government to decide whether to compensate our diplomats for the extra cost, just as with any other taxes our diplomats have to pay.

Whilst I am vaguely pro the policy, as noted, this is a far better set of arguments against than any claims about breaching international law or human rights.

“In the unlikely event that HMRC needs to take enforcement action against private schools, it will have no problem doing so despite any ongoing legal challenges. Taxes remain enforceable unless and until such time as the government changes the rules or the courts strike down a government decision.”

If the courts strike down the decision, then they will have to refund? If the courts believe there is a case to be heard I would have thought an injunction will be sought. It makes no sense to allow some independent schools to go bust and for HMRC to then have to refund the parents in the future.

The courts will either alllow the claim to be heard on human rights grounds or they won’t. If the case has a reasonable chance of success it will be heard. I am assuming the claimants will file the cases shortly and we will all find out soon enough.

If the courts believe there is a case to be heard I would have thought an injunction will be sought.

Who would seek this injunction and to what purpose?

Today’s OBR estimate - 6% reduction in pupils

https://x.com/Steven_Swinford/status/1851633887262163188

Under EU law they cannot charge VAT, but they can reciprocate diplomatically if they wish to. The Chinese could also do stuff to British international schools etc etc.

We are not as special as we think. If we stop other having an education according to their curriculum requirements, then the same is likely to be reciprocated in other jurisdictions. Within the laws of their own legal systems of course. There is the concept of reciprocity in international law in diplomatic relations.

An injunction to levy 20 VAT on school fees for children with SEND as their withdrawal from private schools, where the parents cannot afford the fees, would be harmful to their mental health, have long term repercussions and is not balanced by the state’s need for the extra cash for state schools, which represents a drop in the ocean for state schools.
So the needs of the children have to be paramount.

Multiple injunctions were issued before immigrants were put on planes back to Rwanda. It is literally what the courts do.

Heavens to Betsy, we are not stopping anyone having an education according to their curriculum requirements. No one is ruling that the French and German schools mentioned cannot exist!

They will get more expensive when VAT is added. Just as (I expect) they have been getting more expensive over time at costs of electricity, matching TPS contributions etc have gone up.

So international employees who have a contribution from their employer towards schooling will either have to pay more themselves or the employer will, or split the difference.

This is not “stopping” any curricula!

The figures given by Labour when they first announced this policy were clearly calculated as 20% of the fees paid to independent schools. Whoever came up with the figures assumed that schools would not reduce their fees at all and would pass the full cost on to parents, that there would be no significant change in the number of pupils attending independent schools and that schools would not have significant amounts of input tax they could reclaim. We now have the OBR estimating a 6% drop in pupils and that schools will reduce their fees so that parents will only pay 2/3rds of the cost, on average. It isn't disastrous, but it does mean they will raise significantly less than they originally said if these figures are right.

Thanks @prh47bridge

On this injunction point, IANAL but i thought the bar for the injunctions re Rwanda was “irreparable harm” ie to an individual being deported if the deportation was later ruled unlawful - is that the bar for any injunctions?

@SheilaFentiman Kind of!

To get an injunction, the plaintiff needs to show that they have a valid underlying claim (not that the claim would necessarily succeed, but it is one that has a chance of success) and that damages would not be an adequate remedy. In the case of deportation, for example, damages would clearly not be an adequate remedy if someone is deported unlawfully.