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In December 2010 it was announced that, from 1 April 2011, Academy schools should be put on the same footing as local authority maintained schools in terms of their ability to recover VAT from HM Revenue & Customs in certain situations.
Tim Fife, Director of VAT at accountants Armstrong Watson, advises:
“The measure affects the following types of academy schools:
Previously academies didn’t have the same powers as local authority schools to recover VAT incurred with respect to non-business activities and additional grant funding was available from the government to try to bridge this gap. However, from 1 April 2011 academies are being treated in the same way as local authority maintained schools on this issue and will be able to recover VAT on purchases made to support their non-business activities (principally the provision of free education), which would have ordinarily been recovered by the local authority.
Following this change, academies will need to be in a position to:
ArmstrongWatsonhas already provided training in this area and would be happy to assist academies or schools in the process of converting to academy status, not only during the period of transition, but also on an on-going basis.”
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