This week’s miscellaneous updates – 21 October 2024

In this week’s miscellaneous updates, we bring you news of updated guidance from HMRC on VAT on private school fees and HMRC has made a new direction impacting R&D tax relief claims. The latest schedule of HMRC live and recorded webinars for tax agents is also available for booking. Spaces are limited, so take a look now and save your place. And finally, check HMRC’s online services availability page for details of planned downtime and the online services affected. 

Updated guidance - VAT on private school fees 

HMRC has published updated guidance for private schools on if, when and how they must register for VAT on private school fees. It is still expected that the change will commence from 1 January 2025. Further guidance is available on GOV.UK. According to the updated guidance this is based on the legislation and technical note published on 29 July 2024 but will be updated if any policy or legislative changes are announced on Budget Day on 30 October 2024. 

The guidance explains:  

• Who must register for VAT.  

The normal tests apply meaning that the educational provider must register for VAT if total taxable turnover exceeds £90,000 for the last 12 months or is expected to exceed £90,000 in the next 30 days. 

• Guidance is provided on how to apply the tests, and it will also be possible to register for VAT voluntarily.  

• When to register for VAT.  

Education providers will be able to register from 30 October 2024. However, the precise date of when they will need to register is dependent on the value of school fee payments they receive and when they receive them. VAT should not be charged, nor VAT invoices produced until the education provider has registered.  

• How to register for VAT. 

The education provider should follow the normal process for registering for VAT entering ‘private education provider’ in the ‘business activity’ section of the application and selecting the correct standard industry classification code. 

• How to determine if VAT is chargeable on goods, services and payments.  

Guidance is provided on a wide range of circumstances, including where education services include other elements such as school meals and the treatment of grant payments, and 

• How to reclaim VAT on supplies.  

Once registered for VAT, the educational provider may reclaim VAT incurred on the goods and services used to make its taxable supplies. Guidance is again provided on a number of areas, including partial exemption and how to recover VAT incurred pre-registration.  

R&D direction and recent R&D Tribunal decisions 

HMRC made a new direction on R&D earlier this month. This direction specifies how information and notifications required under both R&D schemes should be made and authenticated and updates the rules to align with recent changes to the reliefs. The direction is available at: HMRC Directions regarding claim notifications and additional information made 1 October 2024. 

HMRC has also highlighted to us a range of First Tier Tribunal cases on R&D-related decisions: 

• Tribunal finding for the company: H&H Contract Scaffolding Ltd v HMRC TC/2023/08212 (a penalty case), and Get Onbord Ltd (in liquidation) v HMRC TC/2022/13281, 

• Tribunal finding for HMRC: Assembly Global Networks Ltd v HMRC TC/2023/08328, Flame Tree Publishing Ltd v HMRC TC/2022/13745, Tills Plus Ltd v HMRC TC/2022/11982 and Strictly Money Ltd v HMRC TC/2022/02573.