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Where Taxpayers and Advisers Meet

vat exempt examination services correct treatment?

robbob
Posts:3061
Joined:Wed Aug 06, 2008 4:01 pm
vat exempt examination services correct treatment?

Postby robbob » Mon Jan 11, 2021 6:47 pm

I seem to be a little unsure if i am coming to the correct answer or not with regard to examination services being exempt - anyone who knows this area better than me and has anything to add i would appreciate it.


Ok "non eligible body" limited company provides nvq type education services that are deemed to be standard rated - the individual being billed is funding the nvq course themselves and the individual taking the course is being billed direct.

Client has come to us after having had a vat visit and the vat office seem happy with exempt "examination services" being estimated on a fair and reasonable basis - the company does all the setting and marking etc with regard to the exams/assessments that form part of the nvq. Client has advised similar buisness to theirs also splits sales into exempt examination services and standard rates training.

However with regard to examination services section 7.2 of Notice 701/30 and specifically VATEDU45500 - i was trying to check that the detail here clearly confirms these services are deffo exempt - it's not 100% obvious to me why these services are deffo exempt - the wording "trainees on Government-approved vocational training schemes" may cover the individual involved but its not obvious here whether the individual being billed is a trainee or not?

Note to be clear here with regard to examination services income this is a fee earned by the business and kept by the business as their income- Ie these are not disbursments that the buisness is simply passing onto the relevant nvq body - there are some "entry fee" type disbursements at play but these have been specifically excluded from the calcs and identified separately as on vatable disbursements.

Any enlightenment would be appreciated as to whether exemption for examination services is the correct treatment heer and why that is the case if it is.

les35
Posts:596
Joined:Wed Aug 06, 2008 3:09 pm

Re: vat exempt examination services correct treatment?

Postby les35 » Tue Jan 12, 2021 10:37 am

The key issue seems to be whether the student is also receiving exempt education or vocational training (Item 3(b) of the legislation). You will only be able to determine this by reviewing the nature of the training scheme.
Have HMRC provided any further information as to why they accept the examination services are exempt?

The fact that your client's income is in the course of business and not a disbursement, and that your client is not an eligible body, presents no problem, if exemption is available under Item 3(b).

robbob
Posts:3061
Joined:Wed Aug 06, 2008 4:01 pm

Re: vat exempt examination services correct treatment?

Postby robbob » Tue Jan 12, 2021 12:34 pm

The key issue seems to be whether the student is also receiving exempt education or vocational training (Item 3(b) of the legislation). You will only be able to determine this by reviewing the nature of the training scheme.
Have HMRC provided any further information as to why they accept the examination services are exempt?
Thanks for adding your thoughts les35

HMRC have not been contacted and i not have the detail of the discussions involved as there was a different agent involved back then - i am reasonably happy the reason why we are now acting is genuine so i am not thinking anything is suspect its not my remit though to dig into the old sorted stuff - there is also the possibility that historical itemsmight have slightly different terms from current items - i know they have differnt course types too so its not inconceivable that the current stuff they are looking at is not the same as the old stuff.

I have contacted our vat specialists but the answer i have had from them is somewhat vague - i think i need to go back to them to get something more authoritative answers if i am being more honest - they did seem to indicate the wording of the legislation was slightly different from that of the procedural manual - i am awaiting from them copy of the current legislation from them all i easily have available is the following which mentioned amendments.

https://www.legislation.gov.uk/ukpga/1994/23/schedule/9/part/II/chapter/6

Part of the issue here is that i don't fully understand the implications of the full general ethos of 701/30 so i am minded to worry that i may be making a fundamnetal error by missing something relevant.

My main practical worry is that it is known that the associated training that is part of the supply being split is being billed as standard rated - so i am preusming its a given that the training itself is standard rated (i will separately double check that)- therefore anything that follows the vat treatment of the associated training is likely to be defaulting to standard rated - so i don't have thta as a get out clause here?

are your initial impressions that the vat treatment of exams would likely follow vat treatment of associated training UNLESS there is specific reason not to as outlined in item 3b

Ref 3b - the wording here is slightly more promising that either notice 701/30 or the linked procedural manual as it specifically states the following UNLESS the text below is out of date which i would have thought is slightly unliely?
(ii)provided otherwise than in the course or furtherance of a business.
So taking this sentence at face value as long as the customer is not an existing business customer it sounds like the services are exempt.

If this is the case then unles si am missing something then the guide guide and the procedural manuals both seem to be slightly or highly misleading as this exact text seems to be absent.

I could do without this hassle in january as the difference between exempt and standard rated treatment here will untimately decide whetehr this clients needs to be vat registered as they are on the registration bubble looking at their next 12 month oder book


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