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The Legislation

There are a number of pieces of legislation that regulate the VAT system, but for academies there is also a special piece of legislation that provides the opportunity to reclaim VAT on purchases. The section is as follows:-

Value Added Tax Act 1994 Section 33B

Refunds of VAT to Academies

(1) This section applies where

(a) VAT is chargeable on

(i) the supply of goods or services to the proprietor of an Academy,

(ii) the acquisition of any goods from another member State by the proprietor of an Academy, or

(iii) the importation of any goods from a place outside the member States by the proprietor of an Academy, and

(b) the supply, acquisition or importation is not for the purposes of any business carried on by the proprietor of the Academy.

(2) The Commissioners shall, on a claim made by the proprietor of the Academy at such time and in such form and manner as the Commissioners may determine, refund to that proprietor the amount of VAT so chargeable.

(3) Subject to subsection (4), the claim must be made before the end of the period of 4 years beginning with the day on which the supply is made or the acquisition or importation takes place.

(4) If the Commissioners so determine, the claim period is such shorter period beginning with that day as the Commissioners may determine.

(5) Subsection (6) applies where goods or services supplied to, or acquired or imported by, the proprietor of the Academy cannot be conveniently distinguished from goods or services supplied to, or acquired or imported by, it for the purpose of a business carried on by that proprietor.

(6) The amount to be refunded under this section is such amount as remains after deducting from the whole of the VAT chargeable on any supply to, or acquisition or importation by, the proprietor of the Academy such proportion of that VAT as appears to the Commissioners to be attributable to the carrying on of the business.

(7) References in this section to VAT do not include any VAT which, by virtue of an order under section 25(7), is excluded from credit under section 25.

(8) In this section

(a) references to the proprietor of an Academy are to the proprietor of the Academy acting in that capacity, and

(b) “Academy” and “proprietor” have the same meaning as in the Education Act 1996 (see section 579 of that Act).

The crucial parts are 1(b) and (2), as these provide for refunds of any VAT not related to business supplies made by the academy.

Subsidary Companies and Other Entities

This part of the VAT Act is specific to academies.

It does not give permission to trading subsidiaries or other entities (PTA, suppliers, etc.) to reclaim VAT.

Local authorities use a different part of the legislation to facilitate their VAT recovery, so this section does not apply to them.

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