Election - how soon for VAT on school fees?

[Labtastic]

So I see we're likely to have an election in early July. Obviously that spells the end of the godawful tories which is great, but also hastens the incoming VAT on school fees which, for us, is bad. We are one of those families that no one believes exists who stretch ourselves with school fees, and are going to be very pushed for an extra 20%.

Question is - do we think Labour can make this happen in time for September? It'll be our DC's last year of fee paid education and was hoping the timeline for VAT coming in would be stretched out a bit...

I don’t think that’s quite what she said. There has been speculation. What she actually said according the media is

We’re not going to have a retrospective tax,” she told the Times CEO Summit. “I don’t think that would be the right thing to do. So these changes would be in our first budget, but they would come in after that, not retrospectively.”

That could mean January 2025. They’ve always said they want to do it as soon as possible.

Currently trying to register small company for VAT. The idea that registering all Indi schools for VAT would be speedy is laughable.

Yes, the admin involved in this will be ridiculous. There are around 2,600 private schools. Does HMRC have spare capacity to deal with the huge amount work involved in registering that many organisations and dealing with quarterly VAT returns? If not, where are the extra staff coming from? Where is the funding from that extra staff coming from?

It's a completely unplanned mystery and another £350m to the NHS soundbite, but hey ho.

If you look, schools , even those which are charities, are VAT registered

So I doubt this would be an admin issue of the size you suggest

I’m not a VAT expert, but I don’t think that’s entirely correct. Some schools which raise income from things such as letting sports halls etc sometimes run that part separately from the running of the main school. Those smaller parts might be VAT registered. I’m not sure that most schools will be able to charge VAT without having to register further with HMRC. Leaving aside the VAT registration, the admin involved in 2,600 schools producing quarterly returns will be huge.

There are over 2.7 million VAT registered businesses/individuals. This increase would be a drop in the ocean.

Where does the 2,600 figure come from btw? It seems to be the total number of private schools. So you need to knock off all those which are businesses, and all those which are charities but are already VAT registered. How many does that leave?

Even a one off "further" registration (what do you mean?) is still very minor when set against the scale of the existing VAT administration

Yes it’s the total number of private schools. I’m not sure that they are VAT registered at the moment. The “business” and “charity” position is irrelevant. VAT is a separate issue.

Many schools don’t operate as a single entity. For example, many are run so that the “school” element is separate. They often have separate, limited companies, which covers activities such as letting out their facilities to third parties, and which might be VAT registered already.

Yes, their legal status is relevant as if it is a business, then they/their parent chain will be VAT registered. If a charity, it is still highly likely that it is registered (themselves as well as allied "enterprise" companies - easy to find examples)

You can establish that many are registered either by asking google for "school name" + "VAT number" or using the gov.uk tool.

I would have expected all to be registered, but agree that some might not be. I do not think the number that are not registered would be large. But even on the erroneous premise that none are, they represent about 0.09% of VAT registrations, which is not going to make any difference whatsoever to the administration of the tax.

I can’t find VAT numbers for any of the schools I have experience of (both businesses and charities). A “business” doesn’t mean they will necessarily be VAT registered.

They will likely dedicate their registrations teams for this purpose.

HMRC are understaffed even without extra work. The VAT registration helpline has closed, so I’m not sure that there are hoards of staff twiddling their thumbs waiting for extra work to roll in.

https://www.thisismoney.co.uk/money/smallbusiness/article-12198887/amp/Inside-chaos-tax-office-Whats-gone-wrong-disastrously-understaffed-HMRC.html

https://www.accountingweb.co.uk/community/blogs/the-imprudent-accountant/is-it-the-end-of-the-road-for-hmrc?amp

https://www.bbc.co.uk/news/business-64599493

When the VAT reg process changed back in August 2022, they redistributed other HMRC personell to the VAT helpline/VAT reg processing team to work through the backlog.
They will do likely do it again, if getting these registrations over the line is important to them.
Also, I am not pro this policy - this is just my (very informed) view on the matter.

Also, many of these linked articles are from 2023.

Try looking a little more widely.

I looked up a dozen, all charities, and only found one that did not publish its VAT number on its website (I didn't cross-check that one to gov.uk, so not completely sure)

I have looked at most of our local private schools (in excess of 10). I can’t find a VAT registration number for any of them. I can only find VAT registration numbers for those who run “enterprise” businesses separately from the main school activity.

in fact I’m fairly pissed off about them NOT saying they’ll do something about the false charity status that so many of these private schools have.

@Wewelcomeyourfeedback
The charity status has been discussed at length, both on here and in the news.
Keir Starmer said a few years ago they would abolish it but despite being a hotshot lawyer, then discovered it would be too difficult to carry out this promise.

There’s still plenty of time…
no hurry, VATbis a good start

There will be legal challenges, Tony Blair also tried to get this through and failed, whilst succeeded in that whole illegal war / invasion thing.

The introduction of VAT on school fees will breach Articles 1 and 14 of the European Court of Human Rights. Ironically, Keir Starmer is a supporter of the ECHR. The advice that Labour has had since the 1970s is that it will be unlawful to introduce VAT on school fees because this will breach Articles 1 and 1
We are a signatory to the European Convention on Human Rights (which has nothing to do with the EU whatsoever - don’t be fooled by the name) which contains other protections around education and discrimination.

Says which court?

This is an opinion that's unproven in court.

Maybe a good lawyer can make the case but I still think it's potentially a bigger stretch than you are making out.

You are saying it as fact. Given this hasn't been ruled on, you should probably clarify that.

Not my opinion, opinion from HR lawyers to Labour and why Blair steered clear from the argument.

Also the opinion of Lord Scarman, who served as a Law Lord in the precursor to the Supreme Court, said it would “encourage a challenge which could be mounted by taking the argument to the [ECHR]… if ever a government should seek to abolish or discriminate against [private schools]”.
The opinion was jointly written by Lord Lester and Lord Pannick as advice for the Independent Schools Council (ISC) and later published in its journal. Lord Pannick confirmed his belief that the argument still stands today.

What a strange outlook you have on life. Why on earth would you delight in someone forced into financial hardship?

Bizarre...

False charity status, that's quite an uneducated accusation. if you really believe that it's the Charity Commission who audit charities you have the issue with not schools. Is it just schools yoy believe they are auditing incorrectly or do you want them to investigate other charities too.

@twistyizzy what were the grounds please? I’d like to utilise