Teenagers going to university in Britain could fall into a VAT trap due to Labour’s “rush” to introduce the sales tax on independent school fees, tax experts have told The National.
Vague wording of the current draft VAT legislation means that fees paid by those under the age of 19 could be liable for the charge, they say. All education in the UK is currently exempt from the 20 per cent sales tax. However, Labour wants to change that by adding VAT on fees paid to independent schools, from January 2025.
All other educational institutions, including nurseries and universities, are meant to be unaffected. But experts say the definition of a private school in the current draft legislation text leaves the possibility open that higher education students may also be liable for the charge.
Although VAT is technically a tax on the consumer, it is paid by businesses to the government, based on charges and fees received. It is unlikely that universities would be able to soak up the addition of VAT, given that 40 per cent face making a loss this year, according to estimates.
The draft legislation defines an independent school as a fee-paying “institution at which full-time education is provided for persons over compulsory school age but under 19 and which is principally concerned with providing education suitable to the requirements of such persons (for example, a sixth form college)”.
A spokesman for HM Treasury told The National the government “had no intention” of adding VAT to university fees. “University education is not captured by the draft legislation and we have no intention of bringing universities into VAT,” he said.
However, once the policy becomes law, it is up to the tax authority – HM Revenue and Customs – not the government, to interpret and enforce VAT legislation. Some have suggested that universities could be caught by the definition regardless, due to the fact that most students are 18 when they start.
“The [definition] on the face of it, unintentionally, would appear to catch universities and colleges which receive fees from students under the age of 19,” John Rainsford, VAT director at Evelyn Partners, told The National. The issue, a consequence of the government’s “rush” to introduce the tax, proves how difficult it is to introduce VAT legislation, he said.
“That’s why most governments do not change the VAT legislation, because it always comes up with these anomalies. It seems to be a consequence of the rush to get the legislation pushed through at a much, much earlier date than anyone had envisaged,” added Mr Rainsford. When the legislation is finalised on October 30, it must make absolutely clear that it does not include universities and further education colleges, he said. “You can’t have a mismatch,” he added.
The British Universities Finance Directors Group, which represents finance staff at 180 universities, has reportedly written to the Treasury to highlight its concerns. The warning comes following a call from British universities to introduce the first fee increase in a generation in order to help struggling institutions, amid claims that 40 per cent face making a loss this year.
Concerns about the policy were also recently raised by the Association of School and College Leaders, which warned in its response to the Treasury's consultation on the policy that introducing the sales tax in the middle of the school year could lead schools to make unbudgeted staffing changes, resulting in job cuts. It has called on the Treasury to delay the implementation until September.
The change would make the UK the only current western country, aside from New Zealand, to tax education. The only real-world example of a country latterly introducing VAT to private schools is Greece, which imposed a 23 per cent tax on school fees in 2015, only to later roll it back following the closure of smaller schools and pressure building up on the state sector.
Around 600,000 children – about 6 per cent of UK pupils – are currently educated privately. The policy is predicted to result in an as-yet unknown number of children being removed from independent schools and placed in the state sector, with estimates ranging from 3 per cent to more than 20 per cent.
Critics of the policy point out that VAT is a tax on the consumer, not the business, adding that staffing costs account for more than 75 per cent of independent schools’ budgets, leaving them little headroom to make efficiency savings.
UAE currency: the story behind the money in your pockets
'Midnights'
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The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
UAE currency: the story behind the money in your pockets
If you go
Flights
Emirates flies from Dubai to Phnom Penh with a stop in Yangon from Dh3,075, and Etihad flies from Abu Dhabi to Phnom Penh with its partner Bangkok Airlines from Dh2,763. These trips take about nine hours each and both include taxes. From there, a road transfer takes at least four hours; airlines including KC Airlines (www.kcairlines.com) offer quick connecting flights from Phnom Penh to Sihanoukville from about $100 (Dh367) return including taxes. Air Asia, Malindo Air and Malaysian Airlines fly direct from Kuala Lumpur to Sihanoukville from $54 each way. Next year, direct flights are due to launch between Bangkok and Sihanoukville, which will cut the journey time by a third.
The stay
Rooms at Alila Villas Koh Russey (www.alilahotels.com/ kohrussey) cost from $385 per night including taxes.
Honeymoonish
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The National in Davos
We are bringing you the inside story from the World Economic Forum's Annual Meeting in Davos, a gathering of hundreds of world leaders, top executives and billionaires.
Players Selected for La Liga Trials
U18 Age Group
Name: Ahmed Salam (Malaga)
Position: Right Wing
Nationality: Jordanian
Name: Yahia Iraqi (Malaga)
Position: Left Wing
Nationality: Morocco
Name: Mohammed Bouherrafa (Almeria)
Position: Centre-Midfield
Nationality: French
Name: Mohammed Rajeh (Cadiz)
Position: Striker
Nationality: Jordanian
U16 Age Group
Name: Mehdi Elkhamlichi (Malaga)
Position: Lead Striker
Nationality: Morocco
LEAGUE CUP QUARTER-FINAL DRAW
Stoke City v Tottenham
Brentford v Newcastle United
Arsenal v Manchester City
Everton v Manchester United
All ties are to be played the week commencing December 21.
Avatar%20(2009)
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Killing of Qassem Suleimani
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
More coverage from the Future Forum
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
AUSTRALIA SQUAD
Aaron Finch (captain), Ashton Agar, Alex Carey, Pat Cummins, Glenn Maxwell, Ben McDermott, Kane Richardson, Steve Smith, Billy Stanlake, Mitchell Starc, Ashton Turner, Andrew Tye, David Warner, Adam Zampa
