02 Nov 2017 1:13 PM


The claim arose from the VAT Tribunal looking at the question of whether charges made for certain supplies made by the college when it uses its own students could be considered to be VAT exempt. 

The charges were in respect of supplies for meals at the college (where these had been prepared and served by students) and tickets sold to school plays/ concerts performed by students.

HMRC contended that those supplies were taxable because the consumers were not students, and were not in receipt of education.

However, in the understanding that the supplies provided the college students with the opportunity to practice, improve, and demonstrate their learning, the Tribunal found that these could be treated as ‘closely related to the supply of education’ and therefore, VAT exemption should apply to the charges made to third parties since the purpose of the supply was to further the education of the students (and not a commercial concern earnestly undertaken by the college).


HMRC has ceased all litigation in respect of the Brockenhurst College appeal and has accepted the decision of the Court of Justice of the European Union’s (CJEU).

They have also published internal guidance on when it would be prepared to accept the treatment of supplies similar to those which were at issue in this case, as being ‘closely related to the supply of education’ and therefore not liable to VAT.

In its guidance HMRC insists that in order to benefit from the court’s decision, the supply had to satisfy the following three conditions:

  1. The education in question must be provided by way of business
  2. The activity in question must be student-led and ‘essential’ to their education
  3. The activity must not have the purpose of generating additional income for the body in direct competition with commercial enterprises

What does this mean?

In essence, this means that HMRC is limiting the scope of the decision to the same or similar facts as those within the Brockenhurst College appeal, but it effectively, also means that education bodies providing grant funded education (such as Academies and some Further Education Colleges) would be unable to benefit from the Brockenhurst College decision, to the extent that their supply of education is treated as non-business. 

They would instead, be expected to treat their ‘closely related supplies’ as taxable at the standard rate.


Having now published their policy guidance in relation to when supplies could be treated as closely related to education and therefore VAT exempt, it is clear that condition one seeks to restrict the application of the Brockenhurst College decision only to providers of exempt education.

Therefore, pending expected clarification of the situation from HMRC, providers of grant funded education who would ordinarily benefit from this opportunity, but for condition one,, might want to make and submit protective claims to treat similar supplies to those within the Brockenhurst College decision as ‘closely related’ to their supply of education and therefore non-business.

Going forward, should HMRC choose to treat income from such supplies as non-business, then you might want to consider setting aside a provision to cover any potential VAT liability from this.