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Pupils self-isolating before autumn term: the VAT and tax implications

Robert Warne, Partner, Head of VAT
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With the hope that classroom lessons get back to ‘normal’ from September, a number of schools are considering how to re-integrate their pupils presently based overseas.  

To facilitate this re-integration process, we understand that schools are offering pupils who reside in countries that are excluded from the quarantine exemption list the opportunity to spend a self-isolation period in their boarding houses.

Fees are applied by schools to the services provided in order to cover the costs incurred. We cover the VAT and corporation tax treatment of these fees below:

VAT treatment

  • The reason that the school is providing the services is ultimately to educate the students from the start of the new term. On this basis, the exemption covering services ‘closely related’ to education will apply.
  • This exemption usually covers schools providing boarding and meals to students while being educated, but would equally appear to apply to the same services in preparation for the new term.
  • Please note that for the exemption to apply, the service should be provided by the school itself and not its trading subsidiary.
  • VAT incurred on costs cannot be recovered as they relate directly to an exempt supply.

Corporation tax treatment

  • As long as the services are provided to pupils of the school, the income is ancillary to the primary purpose and so not subject to corporation tax.

If you choose not to bring pupils into the UK but seek to educate them remotely through the use of electronic means, you should be aware that some countries are seeking to collect local taxes from the recipient of the supply (the parent). For more details on this, view our recent webinar

If you would like to discuss this issue further, please contact Robert Warne below or your usual Crowe contact.

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Robert Warne
Rob Warne
Partner, Head of VAT and Customs Duty services