I have my first client who is a pre-school/nursery they receive funding from the council for the free childcare parents are entitled to am I correct in thinking it is not vatable but exempt from VAT.
I have read that if they are registered with Ofstead they would be exempt from registering for VAT, would this apply to just the preschool or the nursery element too?
If they are not registered and reach the VAT threshold would they need to register for VAT?
You didn't add some detail when Doug asked for an intro the other week. So please advise, who is your licence with/what level of licence and who is your MLR with?
Don't mean to be rude, but given the number of questions here, should you have accepted this client?
Don't think we have enough info here anyway to form a full judgement.
Suggest you employ the services of a VAT expert, can recommend a poster from this site, Les, might be along soon to add his comments.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi. Alternatively ring HMRC, they are there to help Agents. Julie
Hi Julie
From experience has to be heavily caveated with a massive dollop of cynicsm given they are prone to offer incorrect information especially in more complex cases.
HMRC rely on their own guidance which is sometimes a million miles away from the actual law, as proven in the number of cases they bring and lose.
Besides their own website (pre the dumbed down gov.uk) always said that you should not rely on the advice given over the phone, nor in writing UNLESS it has been referred in writing for a ruling, with the response also in writing. That comment always stunned me, but the more I see the differences between the taxes act and their guidance the more I now get it.
Hi Lowenna
Might help if you can confirm which part of the VAT act you are relying on or confirm your 'sources'. Plus provide a bit more info on the entity in question.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi Joanne, yes I do understand your comment. I tend to contact them to get their take on a given issue as my starting point but must admit can come away more confused. Recently attended a VAT inspection, asked inspectors about MTD, to my amazement told me they are as much in the dark about how it's implementation will be received as anyone else ! What chance have we got to ensure we and our clients comply !
Its a minefield and when I used to run a children's group we employed the services of a VAT specialist who had brought a couple of test cases to court.
You, however used the word "childcare". From memory (and I havn't looked at it for a while) the key word is education. You may think the terms are interchangeable aged 2-3 but there are separate rules for childcare which comes under "welfare" and Early Years Education. Its far too long and complicated without advice from a specialist.
I have my first client who is a pre-school/nursery they receive funding from the council for the free childcare parents are entitled to am I correct in thinking it is not vatable but exempt from VAT.
I have read that if they are registered with Ofstead they would be exempt from registering for VAT, would this apply to just the preschool or the nursery element too?
If they are not registered and reach the VAT threshold would they need to register for VAT?
I would expect childcare to be exempt from VAT, under either the welfare or education rules.
However, exemption also depends on the status of the provider. Are you a charity, or sole trader? The Offsted registration is also a factor.
HMRC guidance is in Notices 701/2 and 701/30.
