The Exam House — February 02, 2021

Vat on Exams

Here at the Exam House we get asked a great deal why we have to charge Vat on GCSE & A level exams for an Exam Centre.

We have taken professional guidance and have for the shake of clarity published some of this guidance below.

We hope it is of use to readers:

Introduction

I have been instructed to provide VAT advice in respect to the use Examination Centre (EC), and the resultant VAT liability of the supplies.

I understand that BYT invoices the parent for the Awarding Body (AB) exam fee (ES), along with an invigilator and room fee.

VAT principles.

Under the legislative provisions of the VAT Act 1994 Schedule 9 Group 6, the provision of Examination Services (ES), is exempt from VAT when supplied by or to an eligible body, [under item 3(a)], or to a person receiving education or vocational training which is exempt from VAT, [under item 3(b)(i)].

ES are defined as services which include:

· The setting & marking of exams;

· The setting of educational or training standards;

· The making of assessment;

· Other services provided with a view to ensuring that educational & training standards are maintained.

Interpretation.

On the basis of the information provided, I consider that the following factors must be taken into account when deciding on the VAT interpretation in respect to the relevant supplies.

1. Whether or not, BYT will qualify as an eligible body, the conditions of which are : a school; university; college; independent school; a not for profit body or a provider of EFL.

2. If BYT is an Awarding Body making supplies of ES.

3. BYT is providing the facilities and means by which students or learners can receive ES.

4. The VAT liability of the supplies by BYT acting as an EC, will depend on the nature of the supplies and if they fall to be exempt or liable to VAT at the standard rate under the relevant legislative provisions.

5. If the ES can be regarded as disbursements, being separate from the supplies by BYT.

Advice & Opinion

1. I am not aware of any circumstances whereby BYT will qualify as an eligible body, therefore I consider that the supplies of ES would not qualify as exempt under item 3(b) above, being supplies of ES to an eligible body.

2. Similarly, I am not aware that BYT operates as an AB, and assuming this to be the case, I do not consider that the supplies of ES can be regarded as exempt supplies of ES made by BYT as an AB.

3. I consider that the primary purpose of the supplies by BYT, is to provide facilities for the taking of the exams by the students/learners, which will be liable to VAT at the standard rate.

I do not consider that either the invigilator, or room fee will qualify as exempt from VAT.

This opinion is based on the premise that the former is a supply of the services of the invigilator to BYT and charged onto the parents of the examinees as part of the BYT supplies, this view assumes that the contract is between BYT & the invigilators, who will thus not be making their supplies directly to the student/learner.

The latter, will not satisfy the exempt legislative criteria to be a grant of any interest in, or a right over land, or a license to occupy the room under the provisions of the VAT Act 1994 Schedule 9 Group 1, Item 1.

4. The crucial consideration with regards to the ES is whether this is part of the supplies by BYT, which if it is, will be liable to VAT at the standard rate, or whether the ES can be treated for VAT purposes as a disbursement, not being part of the BYT supplies, and if so, will not be liable to VAT. In order for the ES to be treated as a disbursement and thus not vatable, the HMRC publish in their guidance, that the following criteria must be met.

· BYT acts for the parent when paying the third party.

· The parent (student/learner) actually received the services provided by the AB.

· The parent is responsible for paying the AB.

· The parent authorised BYT to pay the AB on their behalf.

· The parent is aware that the AB is supplying the ES.

· BYT outlay must be separately itemised when issuing their invoice.

· BYT must only recover the exact amount paid to the AB. In other words no uplift.

· The AB ES services must be clearly additional to the BYT supply of facilities to the parent.

5. The VAT liability of the AB supplies of ES to the student/learner, will depend on the legislative provisions detailed above under Item 3 (a) & (b)(i), namely either if the AB is an eligible body, or the student is receiving VAT exempt education or vocational training. If the supplies by the AB are deemed to be to BYT the exemption will not apply.

Conclusion

The crucial issue in the VAT liability of the supplies by BYT, is whether the ES by the AB, is part of the BYT supplies, or a separate disbursement, satisfying all of the HMRC conditions.