Independent higher and further education providers have a new VAT decision to make after HM Revenue & Customs said some businesses can submit protective refund claims following a Court of Appeal judgment.
The update matters to alternative providers that have charged standard-rate VAT on education or closely related services. It does not create an automatic repayment, and HMRC is appealing the judgment to the Supreme Court, but affected businesses may now need to review historic VAT treatment before normal claim deadlines expire.
What has changed?
HMRC published Revenue and Customs Brief 9 (2026) on 2 September. The brief follows the Court of Appeal decision in St Patrick’s International College and Others Ltd v The Commissioners for HMRC.
The education VAT exemption in Group 6 of Schedule 9 to the Value Added Tax Act 1994 normally applies to education supplied by an “eligible body”. HMRC’s long-standing view has been that education supplied by providers that do not meet that definition is standard-rated.
However, the Court of Appeal found in favour of St Patrick’s International College. HMRC says the judgment means some supplies by organisations that were not eligible bodies could nevertheless be exempt from VAT. The court’s reasoning drew on an earlier case concerning fiscal neutrality and the perspective of the typical consumer.
HMRC has permission to appeal to the Supreme Court, so the final position is not settled.
Who should pay attention?
The brief is aimed specifically at alternative providers of higher or further education and VAT advisers. For smaller private colleges, specialist training organisations and other independent providers, the key question is whether their supplies are sufficiently similar to those considered in the St Patrick’s case.
This is a narrow test, not a general VAT exemption for every commercial training business. Providers should avoid assuming that a course, workshop or training service qualifies simply because it has an educational purpose.
Refund claims are possible, but they are not simple
HMRC says alternative providers that believe they are in the same position as St Patrick’s can submit a claim for VAT repayment. Claims will be reviewed individually and remain subject to the usual statutory conditions and time limits.
Businesses also need to calculate the net position rather than simply total up VAT previously declared. HMRC says it will consider:
- whether a repayment would result in unjust enrichment;
- the impact of partial exemption rules;
- whether overdeclared VAT was accounted for correctly across the supply chain;
- input tax that the provider previously recovered; and
- any other adjustments needed to reach the net claim.
For example, a provider that treated its fees as taxable may have recovered input VAT on associated costs. If the supplies are instead treated as exempt, some of that input tax may no longer be recoverable. Customer pricing and any commitment to reimburse students or funders may also affect an unjust-enrichment assessment.
What affected SME providers should check now
First, establish whether the organisation is an eligible body under the existing education exemption. If it is not, identify the precise supplies for which standard-rate VAT was charged and compare the facts with the St Patrick’s judgment. This is likely to require specialist VAT advice because the commercial arrangements, course structure and customer perspective may all matter.
Second, gather the evidence behind past VAT returns. That could include invoices, course agreements, funding arrangements, pricing records, input-tax calculations and partial-exemption workings. Providers should retain a clear audit trail showing how any proposed figure was reached.
Third, check the relevant claim periods and deadlines. The Supreme Court appeal may take time, but ordinary statutory time limits continue to apply. A protective claim can preserve a business’s position while the litigation continues, provided it is validly made and adequately supported.
Finally, consider the wider financial effects before changing current invoicing. The Court of Appeal decision is under appeal and HMRC says it will protect its position pending the Supreme Court outcome. An abrupt change could create cash-flow, pricing and correction problems if the legal position changes again.
The practical takeaway
Alternative education providers should treat this as a prompt for a focused VAT review, not as confirmation that a refund is due. The immediate task is to identify potentially affected supplies, quantify both output and input tax consequences, and decide with an adviser whether a protective claim is appropriate.
The primary source is HMRC’s Revenue and Customs Brief 9 (2026). HMRC also points businesses to VAT Notice 700/45 for correcting errors and making claims, and VAT Notice 706 for partial exemption.
