HMRC’s new VAT guidance for alternative education and training providers

HMRC has published new guidance following a recent Court of Appeal decision concerning the VAT treatment of education supplied by alternative providers of higher and further education.

The decision could provide an opportunity for some providers to reclaim VAT previously accounted for on supplies of education. However, HMRC is appealing the decision to the Supreme Court and any repayment claims remain subject to the usual statutory time limits. For affected providers, it may therefore be important to review the position now rather than wait for the outcome of the appeal.

What has changed?

HMRC published Revenue and Customs Brief 9 (2026) following the Court of Appeal’s decision in St Patrick’s International College and Others Ltd v HMRC.

Under VAT legislation, education is generally exempt when it is supplied by an ‘eligible body’. This includes organisations such as universities, schools, further education corporations and other regulated publicly funded or not-for-profit education providers.

Historically, HMRC’s position has been that education supplied by providers falling outside this definition is subject to VAT at the standard rate. However, the Court of Appeal found that, in certain circumstances, education supplied by providers that were not eligible bodies could still qualify for VAT exemption.

HMRC disagrees with the decision and has been given permission to appeal to the Supreme Court. Its underlying policy has therefore not changed. In the meantime, however, HMRC has confirmed that alternative providers which believe they are in a similar position to those considered in the St Patrick’s case can submit claims for VAT they believe has previously been overdeclared.

Who could be affected?

The guidance is aimed at alternative providers of higher and further education.

These are typically independent or private providers of higher or further education that fall outside the definition of an eligible body. It is this group that HMRC’s latest guidance is primarily aimed at.

Importantly, the Court of Appeal decision does not mean that all education supplied by alternative or commercial providers is now VAT exempt. Each provider will need to consider its own circumstances and how closely its supplies compare with those considered in the St Patrick’s case.

How would a VAT repayment claim work?

Any potential repayment is not simply a refund of the gross VAT previously charged.

HMRC has confirmed that claims will be considered on a case-by-case basis and will recalculate your true position, factoring in:

• Input VAT previously recovered on costs associated with the relevant supplies.
• The impact of the partial exemption rules;
• Whether making a repayment could result in unjust enrichment.

These adjustments mean that any claim would be based on the net VAT position, rather than simply the gross amount of output VAT previously declared.

Should alternative education providers act now?

Providers that believe they could be affected should consider reviewing their VAT position now.

HMRC’s appeal to the Supreme Court is still pending, so the final position has not yet been settled. However, VAT repayment claims remain subject to the normal statutory time limits.

Waiting until the Supreme Court has reached its decision could therefore result in older VAT periods falling outside the claim window.

Where there is a reasonable basis for believing the Court of Appeal decision could apply, providers may wish to consider making a protective repayment claim to preserve their position while the appeal is ongoing.

How Carpenter Box can help

Determining whether a claim is available will depend on the nature of the education supplied and the individual circumstances of the provider.

Our specialist VAT advisers can help you assess whether the decision could apply to your organisation, review the periods potentially available for repayment and calculate the appropriate net VAT position.

If you are an alternative provider of higher or further education and would like to discuss how the updated guidance could affect you, please get in touch with our VAT team.