Charities SORP - Going global: things to think about

Use of overseas agents

Many schools use agents to recruit international students but there are implications that schools need to be aware of: Do you have a proper contract with your overseas agents? Agents acting on your behalf are caught under the wide reaching UK Bribery Act and a reference to that act must be included in the contract and agents need to be aware of the Act.

Are you getting value for money from your agents?

Many schools end up paying agents for pupils who would have come to the school anyway- perhaps through friends/colleagues recommendations or even siblings of those already attending the school.

Have you considered VAT on agent payments?

These payments can create a VAT liability under a process called 'Reverse Charge' where the school effectively pays the VAT in the UK on behalf of the supplier. These charges also impact the VAT registration of the school (counting towards the registration threshold).

Setting up a school overseas

Many larger schools are looking to international expansion as a strategy for growth. This often takes the form of an arrangement with a joint venture with the UK school licensing its brand and/or providing management services to the overseas entity.

As well as the legal/risk/governance issues to consider, there are important tax considerations.There are potential VAT benefits to setting up an overseas venture if it is outside of the EU as VAT can be recovered on set up costs and fees.However the income and expenditure may not be covered by the school’s charitable objects (which are often limited to the UK only) resulting in a potential liability to corporation tax.

Advice should be sought on the tax implications of any overseas activities as part of the initial viability studies and before going ahead.

Please contact Heather Wheelhouse if you want to discuss how this might impact you.