Recovering VAT for non business activities by Academies

A new VAT refund scheme affecting Academies will start from 1 April 2011.

On the 22 November 2010 the Government proposed draft legislation for the 2011 Finance Bill. This includes a section on the VAT recovery position for Academies

Under this new legislation Academies will be able to recover VAT incurred on their non business activities, which is principally the education they provide. This Bill will create a new section which is similar to the sections on VAT law for local authorities (where local authorities are able to claim VAT on non business activities). The VAT refund mechanism will either be through an existing VAT return of the Academy or if the Academy is not registered for VAT, under a special return similar to the scheme for local parish councils.

VAT incurred in relation to any business activities will have to be dealt with in the normal way including Partial Exemption calculations, which are necessary where there are taxable and exempt supplies being made by the business.

In the meantime if you have any questions please do not hesitate to contact Andrew Norman, VAT Manager at Buzzacott on normana@buzzacott.co.uk or call 020 7556 1366.