Effect of VAT on admissions - any intel?

[BarqsHasBite]

We are applying for secondaries for DS, main target is an independent school but he’s also tried for a partially selective state school.

Am wondering if anyone has any intel on the effect on admissions numbers of Labour’s VAT on school fees policy?

I went to the open morning for our target school and having attended the same event last year numbers did seem down. In previous years it has been fully booked, but I’d say today the hall was 3/4 full at most. However, another nearby indy was also having an open day so that could have been a reason other than VAT.

On the state school side of the coin: my friend’s son sat the entrance exam for QE Barnet and she estimated there were 4,000 boys sitting it over two days - if so that’s up around a third on last year!

Does anyone else have any actual or anecdotal insights please?

Well that's wrong for a start

So you've 1 or 2 X comments saying the case will lose and you've interpreted that as "widely expected to lose"? As with any court case, it comes down to the nitty gritty of legal complexities. The case is being brought via SEN angle, it is complicated and nuanced.

Perhaps you could post links to independent-to-the-case tax experts saying it will win so that I can update my understanding?

I agree with @twistyizzy - Dan Neidle is a tax expert but I doubt he knows the first thing about SEN/education law, which is extremely niche. There will be human rights, equality and discrimination arguments that he’s unlikely to have run into.

Sinclair Law is one of the few firms with real expertise in this area

That’s not to say it’s not a challenging claim - it’s a test case so difficult for anyone accurately to predict, and it may well go to appeal however it’s decided at first instance.

You do sometimes get clients who want to bring a claim despite being told they’re highly unlikely to succeed but it’s rare. I very much doubt Sinclair Law have decided it’s completely hopeless but are bringing it anyway for the money or the publicity- it’s really not how most law firms work.

No-one can say whether it will win or lose at present, it is a test case because , outside of Greece, no government has ever tried to tax education (Greece failed to do it fyi). The accepted principle is that it is VAT exempt. The SEN angle is key and, as I've already stated, is incredibly nuanced.

There will be human rights, equality and discrimination arguments that he’s unlikely to have run into.

He says in the Twitter thread I linked to “A successful ECHR/Human Rights Act challenge can result in the court politely asking Parliament to think again (a “declaration of incompatibility”). But the law remains in force.”

Keir is a supporter of ECHR, it won't be a great look if he goes against that. Although at this stage I don't think Labour give a crap about optics. They certainly seem to revel in being unpopular.
As much as you may want to believe this case will fail, ultimately no-one at this stage can say with any certainty either way

Has this been through the house of lords yet.

No, the public consultation has only just finished. Many Labour peers don't support it. However I believe that it doesn't have to go through Lords due to ammendment of tax law rather than new legislation. That's why this legal case is so important

Blimey @noblegiraffe anyone would think that you believe the current ECHP regime is entirely fit for purpose and that SEN kids are perfectly well catered for in the state system as things stand. 🙄 Not sure otherwise why you are quite seemingly so desperate to see this very limited challenge to VAT fail!

I’d have thought it would be in everyone’s interests for the shocking state of the EHCP and SEN provision to be subject to very public judicial scrutiny.

Neidle isn’t saying anything new here - the whole point of the claim is that the imposition of VAT on education would be unlawful, and seeking a declaration of incompatibility is the method for challenging the law here. It still doesn’t mean Neidle is in a position accurately to opine on the merits of the case, or that it is “widely expected to lose”.

It may well lose but equally it may win - people may have a view, but no-one knows.

My understanding is that, given this was in the Labour manifesto, the Lords traditionally will not vote it down.

Not sure otherwise why you are quite seemingly so desperate to see this very limited challenge to VAT fail!

I have no idea why me presenting my opinion that it was widely expected to fail, based on what I had observed surrounding the discussion of the case, with links, is me being desperate for it to fail. I said I’m not a tax expert and I asked for links to tax experts suggesting it might win so that I could update my understanding of the case. A previous poster said they hadn’t seen much commentary - if it was an exciting case I’d have expected more interest.

If it is a ‘very limited challenge’ - do you mean that it wouldn’t actually prevent VAT being added to private school fees?

I think I’m right in assuming you are supportive of the addition of VAT to school fees generally. Nothing about the tone or content of your posts suggested that you would be sorry to see this challenge fail, or that you think SEN kids should be treated any differently for VAT purposes, but feel free to nail your cards to the mast if you’d rather.

By “limited challenge” it’s my (also pretty limited!) understanding that this case is being brought to challenge the imposition of VAT on fees for kids with SEN but who do not have an EHCP.

So assuming the challenge is successful and assuming Parliament has to reconsider it all, I’d have thought they would be considering whether they have to abandon VAT on school fees for kids with SEN, rather than abandon VAT on school fees generally.

That would of course lead to questions about who determines whether a child has SEN or not. And no doubt a slew of parents seeking a diagnosis that their child’s messy handwriting or the fact they are incapable of remembering their PE kit in fact constitutes a SEN.

So maybe the government would just have to abandon the whole thing after all!

I wouldn't pretend to have even the tiniest % of the expertise of a Niedle or whoever on this, but common sense does indeed suggest that something like a tweak to the tax rules impacting private school [bringing them into step with, say, vocational training providers & private tutoring companies, but out of step with, say, state schools & universities] is the kind of 'political' decision that falls well within the fiscal powers of the elected government & parliament and that a court would only overturn in the kinds of exceptional circumstances which likely aren't present here.

I’m not a tax specialist but I don’t see how you could exempt a service from VAT by the nature of its users/customers rather than by nature of the service.

So I can see how, say, a tutoring agency delivering dyslexia support might be exempt from adding VAT. But not a provider of general education.

The only way I can see would be for a child to get a specific grant to cover the VAT (say) if their SEN were severe enough.

the wording of Eton's letter to parents announcing that fees will rise to a mere £63k per child per year is probably instructive here. they didn't announce the fee rise as a contingency plan which will be enacted in the unlikely event that the legal challenge will fail, but rather as something that is going to happen, which is surely will.

Indy schools aren't like vocational training providers. Parents don't pay for their kids to attend ITPs. This is a tax on parents as they are the ones paying the fees. Indy schools already pay VAT on all purchases but currently can't reclaim it. They will be able to reclaim VAT if this policy passes but they also have to charge parents 20% VAT on fees.

I think I’m right in assuming you are supportive of the addition of VAT to school fees generally.

I’m pretty non-committal tbh. If it raises money for state schools that would be nice but that appears to be up in the air so we’ll have to see. I am however pissed off at the amount of airtime it is getting and all the handwringing about private school kids compared to state school kids, including state school kids with SEN which is an absolute heartbreaking mess.

I don’t see how the government could admit that a kid with an SEN but no EHCP simply needs private education. That would be admitting that state education can be a failure for SEN children. Which it is, but they have to try to fix that not just say ‘ok it’s a disaster but if you can afford private school fees we won’t put VAT on them just for you.’

And there are kids with SEN diagnoses for whom state education is absolutely fine.

Because kids with SEN in Indy schools don't need an EHCP to access support. So many parents turn to indy due to delays and barriers of getting an EHCP to access appropriate support in state. That's not to say state schools cant/don't support SEN but there is no denying that there is an SEN crisis in state. As an example my friend teaches on state and her current primary class has 33% SEN which take up 80% of her time. This means the other 67% of non SEN kids get the remaining 20% of her time. This simply isn't acceptable for any of the kids in her class as none are getting what they need.

As far as I’m aware, Eton’s letter was sent before the legal challenge was announced. In any case, as things currently stand, the VAT is being introduced from January so it’s no surprise that schools are planning for that. It’s worth noting as well that many schools still haven’t announced their fee increases due to VAT and are waiting until at least after the budget.

Have you read the post you quoted? this was on exam day, the queue to collect kids

I'm not sure about bookings at open days for 2025 entry, but I know at our place that Year 7 was completely unaffected. It's very oversubscribed so presumably they made more offers and we'll just become less selective over time with more very very wealthy parents (it's in London). The big impact as @bravefox has mentioned is in the sixth form. LOTS leaving after Year 11 for state
sixth form, far more than normal. And recruitment of new students down. I don't think this is just the VAT actually, but also their perception (rightly or wrongly) that they are more likely to get into Oxbridge if they apply from a state school. But mostly the fees. I think anyone applying for a selective sixth form from another state school night have a harder time as (where I am) the private school kids mostly have straight 8s+9s so realistically will be accepted wherever they apply. and lots are accepted at sixth form to schools they didn't get in Year 7.

I think @user149799568’s point is that the only way to know for sure (this year’s numbers vs previous year’s numbers) is from the school’s punished admissions stats when they come out. And we don’t know if they count applicants who filled in the form or those who actually turned up on the day and completed all the exams.

Estimating the number of applicants based on parents waiting on the day and comparing this with last year’s school stats may give a skewed impression, if what the school counts is the number of application forms received - I don’t think we know.

But maybe I’m overthinking it all!

This is our experience too. My DD has joined a state selective sixth form and new starters are mainly from private schools or other grammars.