Whitehall “braced for private schools collapse” 4

[ICouldBeVioletSky]

Continuing the discussion about the impact of VAT on independent schools…

So it was the mismanaged one.

Also wound up in 2024 with £1.7 million debt and then taken to an employment tribunal. You have to wonder who would pay huge amounts of fees to places like this.

They should argue thjs as funding can definitely transfer from LAs. It's really common for children to be placed out of county.

Parents might be being fobbed off here.

Our DS’s prep school has a huge loan from the bank as it’s not generated profitable cashflow since 2019.

It will go bust once the money runs out which may be in a year or two. It’s secured on prime property in an expensive location and will be turned into luxury flats in the centre of town.

if you look on the charities commission website, I’m sure you’d fine plenty of others in dire financial straits.

VAT has cooked the goose. Enjoy the feast, there won’t be anything left after to feed anyone on ever again.

Possibly, I am not personally affected but I was told by The Heads PA at my DS's private school that they are trying to help but getting funding transferred is proving challenging.
I hope all the kids however funded get sorted, it must be especially worrying for Y10 who will be halfway through GCSE's

It had a very good reputation for ballet.

Also something parents don't always understand if they move.

I know of a child whose parents moved house from one London borough to another. His EHCP was reduced by a huge amount at the next review despite no educational reason to reduce (He hadn't suddenly got fewer needs).

My local sixth form college has a good reputation for ballet too.

Good for you. None of our local sixth form colleges offer dance at all.

Moorlands was exceptionally well known for ballet.

Suspect your local 6th form college isn't in quite the same league.

That’s pretty unusual - not many state schools or colleges offer ballet.

Does anyone know if the schools would refund the tax already taken if the High Court votes against? I don't know if the schools have already paid the tax for the future term which has had the added 20%.

If they do we may be able to keep dd in for 6th form, but if they don't and it takes another few terms we won't.

Maybe so. Teachers are ISTD international examiners so I would expect tuition is at a reasonably decent level.

I’m pretty confident the high court will rule in favour of the children, but I can’t see Labour backing down on this easily. The aim of theses policies are clearly to damage the independent education sector, so I think we’ll see a lot more schools go under/children forced out of schools whilst Labour wriggle and tweak the policies to spin it out as long as possible.

I think if the high court challenge removed VAT from school fees, and if it applied retrospectively, then because you presumably have an invoice that states (for example) fees £5k VAT £1k total £6k, then yes, they would have to refund you any VAT that you had already paid. They would not be able to hold on to the VAT that you have paid, because it would sort of cease to exist.

VAT returns are usually completed quarterly and the net VAT payable is paid over to HMRC a month after the end of a VAT quarter. So it might be that they haven’t actually paid anything to HMRC yet. In which case it would be a bit simpler for them to refund you, as they should have the money sitting in a bank account somewhere.

If they had already paid HMRC then it could take a bit longer to unwind, and you might have to wait until they’d clawed money back from HMRC to be able to refund you.

But you should get it back eventually, if any decision by the high court applied retrospectively.

Schools only have to pay any VAT over to HMRC once they have invoiced it to parents. So unless you have paid loads of terms upfront, then the schools won’t have paid over VAT for future terms, that’s not how VAT works.

I used to lve in the next road. I was really sad to see this happening. the Moravian settlement in Fulneck is lovely and very interesting.

IAAL and there is no prospect of this happening even if the High Court VAT challenge is successful I’m afraid.

Even if it succeeds, all this would mean is a declaration from the court that the policy is incompatible with human rights law.

The outcome would be that Parliament would be required to consider if and how to amend the measure to make it compatible. There will be no court order requiring VAT payments to be refunded to parents, sorry.

(And I’m being told by colleagues who know more about these things than I do that the legal challenge is not likely to succeed).

Moorland Ballet Academy essentially appears to be run by a two person business. It has already announced that it will shift to a new venue and continue.

Thank you all. Dd is a boarder so the VAT is a lot for us - about £10kpa - which is all out of (heavily taxed) inheritance. We have already paid the termly fees upfront which had the VAT added, and trying to reconcile how much inheritance we have left and figure out our next move. I agree it is unlikely they'll apply it retrospectively even if it did go through. Thought I should ask though as it would have solved our issue!

In a downturn in the economy historically the birthrate has tended to rise a bit. it appears that with hopefully just temporarily low economic prospects, people decide that they won’t postpone having a baby for work reasons right now, and that adds to the birthrate along with those who were going to have kids at that time anyway, regardless of the economic climate.
The group of prospective parents who could be very badly affected however is people who need to pay privately for fertility clinics to have a baby, it is really expensive and the NHS restricts funding so much. So what will happen to birthrate in the next few years doesn’t feel easy to predict.

Supposing there is a statement of incompatibility, I'm interested in how they could weasel out of it (ie. avoid a climbdown)
e.g. an exemption process on VAT for those with evidence of SEN or medical need, and a VAT exemption threshold equal to the cost of a state school place (so that the first ~8k of fees were VAT free) would arguably deal with the concerns of some of the special interest groups who brought the legal actions. It would also mitigate the damage the policy does to smaller/cheaper schools and stop them closing, while leaving fees at the most expensive schools mostly taxed But it would also reduce the revenue raised.
A government motivated more by pragmatism and less by spite might have thought through the adverse consequences and put those exemptions in there from the beginning.

That’s a question that should be tried in court- what happens to the kids with an EHCP specifying a private mainstream school on it, if that school then closes? It’s rare for an EHCP to name a private mainstream school (but can happen due to small class size). However it’s increasingly common for those private mainstream schools to shut down, as we’re seeing on these threads.

Location outside of local authority boundaries should not be a limit. If the logistics stack up and the child’s family can make a further away school work in their individual case when the new school is outside of their local authority, why are there funding rules about where the school must be, to be funded?

Fundind should be available for the next school that the LA and the family can find, that objectively suits the needs of the child (and which the family can manage)- as with all schools. This policy seems so arbitrary and potentially harmful, I can’t see how it can be justified.

Look for Brexit we all know who the prime Brexiteers were in the Tory Party.

Personally, if this is a breach of the HR Act, I really want to know which Labour MPs hate private schools so much that they are willing to throw children with SEND under the bus (and ignore the HR Act). The public deserves to know who these MPs are. It’s in the national interest, just like the Brexiteers. We have already heard publically from Ellie Reeeves, for example, on her stance. I hope her constituents take note, including of the fact that a number of the private schools there are open for use for swimming pools, holiday clubs, hockey, rugby etc. I really hope she never makes use of those facilities for herself or her family (we saw in the press that Phillipson has no qualms about using hockey pitches in private schools).

IANAL. Very sorry as layperson to see this on an uninformed common sense reading of the law, for all the reasons I have posted about this is a higher burden on kids with SEND, or kids who need a smaller school/class size and/or single sex school for any reason including trauma. And/or who need a specific religious or skill-based education. It is a complete lie that equivalent options are are available to these families in the state sector. So it seems completely disproportionate that the government seeks to obliterate that sector by pricing out those specific families who have no state alternative and thereby starving out the sector permanently.

Also surely governmentIBU where is existing taxpayer gain, to try to stop use of private schools even where kids are sent just on a matter of parental preference, just because those parental principles are disliked by government? That’s a bit authoritarian isn’t it?

Especially when that government position will lose money for the taxpayer and children and it will break the ecosystem for good. The result of that serves to entrench privilege in both the elite private schools AND the elite state schools, both of which groups will flourish unhindered. So the political aims of this whole mess aren’t even achieved either. I don’t know how any Education Secretary can defend this politically, morally or legally. It’s a harmful failure from the off.

"And I’m being told by colleagues who know more about these things than I do that the legal challenge is not likely to succeed)"

Can you clarify the reasons for this?