- Colchester Institute Corporation reclaimed VAT on campus redevelopment in 2008 using the Lennartz mechanism
- In 2014, the College identified its further education provision as an exempt activity and claimed a repayment of the balancing charge
- The Upper Tribunal in 2020 found the College’s supplies were exempt and it should not have used Lennartz, but reduced the claim to nil due to set-off rules
- The College decided in 2015 to stop paying output tax based on the exemption status
- HMRC assessed the College for underdeclared output tax, which was contested and upheld by the First-tier Tribunal
- HMRC appealed the decision but the Upper Tribunal rejected this appeal, following its earlier decision
- HMRC reserved the right to challenge the 2020 decision in the Court of Appeal, which is not bound by Upper Tribunal decisions
- The outcome of a potential Court of Appeal case could impact the further education sector’s access to VAT reliefs
Source: taxscape.deloitte.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
