The ruling
Could your private college's fees be VAT exempt?
Short answer
Possibly, if your courses are ones students would see as the same as courses universities and further education colleges supply VAT free, such as Pearson HNCs and HNDs, foundation courses or degrees validated by a UK university. The Court of Appeal held that three colleges supplying courses like these were exempt. HMRC is appealing, and any claim is reduced by the input tax you recovered, so the numbers need checking college by college.
Signs the ruling may apply to you
- You are a private company or LLP with no degree-awarding powers and no university title.
- You deliver HNCs, HNDs, foundation courses, or undergraduate or postgraduate degrees validated or franchised by a UK university.
- Some or all of your courses are designated for student finance.
- Your learners pay their own fees, including through student loans.
- You have been charging VAT on those fees and paying it over to HMRC.
The test the Court of Appeal applied looks at things from the student's side. Would a typical student see your HND in business as the same thing as the HND in business at the local FE college? If the answer is yes, your position looks similar to the colleges in the case.
When it probably does not apply
- You are registered with the Office for Students in the Approved (fee cap) category. You are already an eligible body, so your education should be exempt anyway. If you have charged VAT, that is a different error, but it is still worth putting right.
- Your fees are mostly paid by VAT-registered employers. They recover the VAT, so there is little to gain and you would lose input tax.
- Your courses have no real equivalent at universities or FE colleges. The ruling rests on comparing your courses with theirs.
Why smaller colleges should look now
The colleges in the case took it through three courts over four years with specialist counsel, and large private education groups have in-house tax teams watching it closely. Smaller colleges often rely on a general practice accountant who has no reason to follow a VAT case through three courts.
Two things make timing matter. A claim can only go back four years from the end of each VAT period, and HMRC has not said whether claims can cover supplies from 2024 onwards. The periods with the clearest footing are the ones falling out of time each month.
What a claim looks like
- List the courses you ran in each VAT period and which ones are comparable to courses at eligible bodies.
- Work out the VAT you accounted for on fees for those courses, period by period, for the last four years.
- Take off the input tax you recovered on costs linked to those courses, using partial exemption rules.
- Gather evidence on pricing, so you can answer HMRC if it argues your students bore the VAT.
- Notify HMRC with full workings.
The claim checklist lists the records you will need. The worked examples show how the numbers can come out.
What can reduce or defeat a claim
- The Supreme Court appeal. If HMRC wins, claims are expected to fail.
- Input tax you recovered on costs linked to exempt courses.
- Unjust enrichment, if HMRC can show your students bore the VAT.
- Periods after 2023, which carry extra legal risk.
Sources
- St Patrick's International College Ltd & Ors v HMRC [2026] EWCA Civ 852: caselaw.nationalarchives.gov.uk
- First-tier Tribunal [2023] UKFTT 408 (TC), describing the colleges and their courses: caselaw.nationalarchives.gov.uk
- Revenue and Customs Brief 9 (2026): GOV.UK
- VAT Notice 701/30, eligible bodies: GOV.UK