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19th February 2012

Charitable Schools, trading companies and VAT exemption

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Many schools operate sporting facilities via a trading company and also claim the VAT exemption applicable to sports services.

However beware: in the case of St Andrews College Bradfield v HMRC [2015] the First-tier Tax Tribunal has just rejected a claim by an independent school for a refund of VAT charged on sporting services made by its trading subsidiaries. The tribunal said, to be an eligible body for this purposes, the company’s Articles must prohibit the distribution of profits other than to another non-profit making body. The companies in question had deeds of covenant in place requiring profits to be given to the main school charity, but to no avail.

If you are involved with a charitable school and think this may be relevant, do get in touch with Chris Knight via phone 01604 463103 or click here to email Chris.