When will the outcome of the VAT legal challenge be known?

[kitz90]

Does anyone know the answer to this? (VAT on private school fees).

It hasn't even gone to court yet. Until the bill has been passed into law there is nothing to appeal against

Does it mean that VAT can’t be charged until the bill becomes an act? I don’t really understand the legal process but thought the addition of VAT was a definite from January?

But I'm paying the extra at school ftom January 🤔

The policy took effect on 30th October due to a resolution made under the Provisional Collection of Taxes Act 1968. This Act basically allows the government to change taxes by a resolution before the relevant Finance Act becomes law. So @twistyizzy is wrong. There is something to take to judicial review. However, it will be a while before the outcome is known. For a judicial review, it can take up to a year from instructing solicitors to receiving the judgement.

No I'm not wrong. The legal case hasn't yet started. A letter of intent has been sent to government but it hasn't yet got Royal Assent so can't be tried in court yet

That makes sense - thanks for the explanation!

You are correct that the legal case hasn't reached court yet. You are wrong in your assertion that it can't be brought until the Finance Act becomes law. This change requires a Finance Act to become permanent, but it is already in operation under the Provisional Collection of Taxes Act so can be challenged by judicial review.

I am only going off what Sinclair Law have told us ie the law firm bringing the private legal challenge (not the ISC one).

This is really helpful, thank you to those who have posted so far. I’ve been looking online and can’t find any information so this is a starting point.

I have just been sent an invoice with VAT attached for next term’s fees. I haven’t asked the school yet but don’t know if all schools are broadly the same. What happens if the legal case is successful? Do the schools refund all VAT paid to date on behalf or once we’ve paid it, is it gone forever. I’ve so many questions.

It depends on the wording of the ruling but I wouldn't bank on getting any refund.
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Interesting. I respectfully disagree with them.

VAT and a range of other taxes can be changed by a resolution under the Provisional Collection of Taxes Act 1968 provided a bill making the change permanent passes its second reading in the Commons within 30 days (only counting the days on which the Commons is sitting). The Finance Bill passed its second reading on 27th November, so the resolution has the same effect as an Act of Parliament and will continue in force until either the Finance Bill is passed or until the end of May (in the unlikely event that the Finance Bill hasn't become law by then).

In 2011, Jersey and Guernsey brought a pre-emptive judicial review challenge against proposed legislation abolishing VAT relief on low value goods. At this stage this was only draft legislation. The draft legislation was brought into effect by a resolution under the Provisional Collection of Taxes Act, but this didn't happen until after the judicial review had been heard and the judge had given his decision. Jersey and Guernsey lost, but not because the legislation was only at the draft stage. They lost because the judge decided that the draft legislation complied with EU law.

That's interesting.

Jersey and Guernsey have never been part of the EU, and have their own general sales taxes. How did it come to pass that there was something in the VAT regime that affected them at all?

That's fine, you are free to disagree with them. I'm sure they don't care.

I was giving you a couple of pointers you might want to share with them. As I understand it, they deal mainly with family law, so they may not be familiar with the case I mentioned or the Provisional Collection of Taxes Act.

EU law on VAT requires fiscal neutrality and non-discrimination. Their argument was that the proposed change treated Jersey and Guernsey differently to other non-member states and territories, and therefore breached the fiscal neutrality and non-discrimination principle.

Thank you

I see the reasoning now, but personally think it's illogical to seek to impose one particular measure when so many of the arrangements for the CI was sui generis

I am also a little confused about timing because Judicial Review cases need to be brought promptly, that normally means within 3 months. One has to assume that Lord Pannick KC and Kingsley Napley and the other barrister on the ISC side do know about the time limits and when exactly the clock starts ticking… perhaps the other claim is waiting for them to go? Personally I would have thought the clock is ticking now too?

Assume it'll fail. It won't be binding on the govt even if it passes and labour are very unlikely to backtrack past maybe some SEN exemptions. Don't make any financial decisions based on VAT being overturned

Judicial Review cases need to be brought promptly, that normally means within 3 months

Where is this from, please @Araminta1003 ?

ETA: a quick google indicates that an application for judicial review should be made within 3 months of the government decision being protested, but couldn’t see anything about how quickly thereafter they actually come to court.

Yet they are wanting to get closer to the EU, they uphold ECHR and in Europe it is illegal to tax education. The policy isn't compatible with either of those 2 things.

Taxing education in this way isn’t compatible with EU VAT principles.

But I doubt very much there would ever be a ruling against a non-member state solely on the basis that it arranges its domestic sales tax differently.

Any decent lawyer will want to hear an opposing view so they can consider it.

Sinclair law is not a firm known for having a specialism in this area.

“Getting closer” to the EU and having this policy isn’t an issue. It might be for rejoining, but that is - sadly - a distant dream right now.

So, as far as I understand any VAT refund will be repaid to the school not the parents who then decide what to do with it.
Maybe I'm naive but I think our school would pay it back to the parents or do something like take it off the next term bill rather than keeping it...
in terms of timelines, our head says around 3 years - I think due to delays, appeals etc.

Is this the sort of manners private school teaches?