Breakfast Clubs and After-School Provision

The provision of childcare before and after school in the form of breakfast clubs and after-school activities are a regular feature in many schools.  The Government has pledged to provide funding for some breakfast clubs, while other provision may be provided free using academy resources, or funded by way of parental contributions.

The government funding is given in the form of an initial set-up grant, followed by recurring payments towards ongoing costs.

After school activities are not generally funded by government grants, but may still be provided on a free basis by some academies.  Many other activities will be operated on a part-paid or fully paid basis, with payments often used to fund sports coaches, activity leaders or other helpers.

Any state-funded element or freely provided provision should be considered non-business activities.  Where payment is received it is likely to be a business activity, but HMRC have suggested that a two-stage test should be used to help determine this.  The steps are based on the Court of Appeal case involving Wakefield College and are:

Stage 1: Does the activity result in a supply of goods or services for consideration?

Stage 2: Is the supply made for the purpose of obtaining income therefrom (remuneration)?

In most instances the supply of paid breakfast clubs or after-school clubs will be a business activity, but where it can be shown that the income generated is not the purpose of the club and that payment is not intended to create a source of remuneration then it can be treated as a non-business activity.  This is not quite as simple as assessing whether the charges will be below cost, but will be one factor when considering the arrangement.

VAT Treatment