Magazine article The Times Higher Education Supplement : THE

For-Profit VAT Break Plans 'Are Not Broken': News

Magazine article The Times Higher Education Supplement : THE

For-Profit VAT Break Plans 'Are Not Broken': News

Article excerpt

The government says its plans to exempt for-profit higher education providers from VAT are developing, despite a Budget announcement postponing the proposals because of "significant concerns".

For-profit training providers - big players in the market include firms such as A4e - are thought to have argued that the exemption should not stop at the degree level, prompting an outcry from further education colleges and leading the coalition to promise a fresh consultation on the issue.

The Treasury's plans, first outlined in the 2012 Budget for introduction by 2013-14, would have given commercial providers VAT breaks to put them on a "level playing field" with universities, which are exempt from charging the tax on tuition fees.

BPP University College, the UK's leading for-profit provider, is already VAT-exempt after adopting a non-profit corporate form. However, this means its profits cannot routinely be distributed to its owner, Apollo Global. BPP's 2011 accounts state that "due to statutory restrictions ... retained earnings of Pounds 23,974,000 (2010 Pounds 21,119,000) are not currently distributable".

If the law were changed, for-profit providers could potentially benefit from the VAT exemption while also giving owners access to their profits. …

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