Update on the VAT treatment of closely connected educational supplies

27 January 2017

In the long running saga of Brockenhurst college, the advocate general considers supplies of catering in educational restaurants and admission charges to performances by students are not services closely related to the supply of education and, as such, should be subject to VAT.

In her considerations of how the Court of Justice of the European Union (‘CJEU’) should respond to the UK’s Court of Appeal, the Advocate General (‘AG’) reiterates that the purpose of the VAT exemption applied to education is to benefit the students in their access to the provision of education, and to make sure that such does not become more expensive due to VAT. 

While the performance of projects for external third parties is certainly beneficial for a student’s education, it would be their guardian / recipient (i.e. the ‘customer’) and not the student or their education that gains the principal benefit if the supplies are treated as exempt from VAT. Exemption in such circumstances would merely create a more favourable treatment of the taxable person concerned (in this case the College). While the CJEU does not always follow the legal interpretation of the AG, it may yet find that restaurant, entertainment and other such provisions are ultimately for the benefit of the students’ education; though this does now seem a remote possibility.