On 7 June 2013, HMRC published responses to the consultation on extending the exemption from VAT to for-profit higher education providers.
The consultation, which was launched on 12 September 2012, set out two possible options for extending the exemption. While most of the respondents supported widening the exemption, many did not consider that the proposals went far enough and did not consider that either of the two options was appropriate. In particular, as both options required the incorporation of a separate entity that exclusively provides higher education courses, concerns were raised over the resulting administrative burden and the possibility that the measure would not be fiscally neutral since providers that did not establish a separate entity would not benefit from the exemption. Some respondents also commented that the list of proposed higher education courses should be widened to include foundation courses and professional and vocational training. Existing not for-profit higher education providers expressed concerns that the benefit of any VAT exemption would not be passed to students by way of decreased fees.
As the responses highlighted that there was support for extending the exemption but the proposed options were not considered suitable, HMRC has stated that it will consider alternative options. A further consultation may be launched later in 2013.
Click here for more information on the consultation responses.