VATEDU39600 - Group 6 Item 1 Education, research and vocational training provided by eligible bodies: eligible bodies: teaching English as a foreign language
Liability of supplies of tuition
All supplies of tuition in English as a foreign language (TEFL / EFL) by commercial providers are exempt under item 1 of Group 6 of Schedule 9 of the VAT Act 1994 (see VATEDU15000). The exemption applies because any supplier of EFL tuition is an eligible body falling within the description of Note (1)(f) of Group 6.
Following the judgement of the Court of Appeal in Pilgrims Language Courses Ltd [1999 STC 874] we now accept that this includes all elements integral to the course. This means elements that are held out for sale as such and by means of which the provider aims to promote fluency in the use of the English language. For example:
- sports and games;
- recreational activities;
- sightseeing; and
- social activities.
Any separate supplies of closely related goods and services are also exempt, providing they meet the conditions set out in VATEDU50000.
What the exemption does not cover
The exemption for suppliers of EFL tuition does not extend to any educational or training courses that a provider of tuition in EFL might also offer, such as tuition in a language other than English or training people to teach EFL. Note (2) of Group 6 of Schedule 9 of the VAT Act 1994 refers (see VATEDU15000). If however the supplier is an eligible body falling within any other description of Note (1) - that is, (a), (b), (c), (d) or (e) - then all its supplies of education and training will be exempt under item (1) of Group 6.
Tuition in EFL provided as part of another course
Where a commercial provider supplies courses in modular form, comprising some tuition in EFL plus broader coverage of other curricular subjects, it may use any fair and reasonable method to apportion the supply to reflect the exempt element.
However, if the provider finds it inconvenient or impractical to do this, it may continue to standard-rate the whole supply.
Tuition integral to a course in EFL provided as part of another course
If a course of EFL includes modules such as study skills, subject-specific language, or profession-specific language, this is part of the supply of EFL if the reason it is being taught is that the recipient’s first language is not English.
Tour Operators' Margin Scheme
Supplies made by EFL providers which fall within the education exemption are not within the Tour Operators’ Margin Scheme (TOMS, see V1-23 Ch 12). This applies whether EFL providers are making supplies from their own resources, or by buying and selling packages of tuition and other services. TOMS does not therefore apply to bought-in services such as transport, catering, accommodation or excursions where these are integral to, or closely related to, a supply of exempt EFL tuition.