We’re looking for some advice please.
Our subcontractors are charging over the Apprenticeship funding band for the portion of the apprenticeship that they will be delivering for us. (Funding band = £9000, the course is £13,000).
They believe they should therefore be charging VAT on the whole £13,000.
It was our understanding that they cannot charge VAT on training at all or if they can charge VAT, this can only be on the amount that exceeds the funding band (so the £4000).
Can someone please clarify?
We have contacted HMRC but it’s been 2 weeks and still no response…
Whether a service is VATable depends on the nature of the service and the nature of the body. Education and training is non-VATable if provided by an ‘eligible body’ (school, college, charity etc.).
If they usually charge VAT (which it sounds like here) then they are presumably not an eligible body and so right to charge it.
The funding rules say that VAT is charged on the additional above the band:
156.4. If the employer negotiates an overall price that is more than the maximum allowed by the funding band for the chosen apprenticeship, then the employer must pay in full the difference between the band maximum and the agreed total price. This must not be funded from the digital account or co-investment. You may charge VAT on the difference.