VAT treatment of training services provided by registered providers (Apprenticeship Levy)

At the recent Charity Tax Forum meeting, CTG Vice-Chairman Richard Bray asked for clarification of the VAT treatment of training services paid for through Apprenticeship Levy contributions. There was a concern that charities would incur additional irrecoverable VAT by having to outsource this training provision to an external registered provider.

HMRC has since clarified to CTG that VAT will not be chargeable on services provided by training providers where it is being paid by digital vouchers.

“Payments made made by the Secretary of State in respect of education or vocational training in exercise of his functions under Part 4 of the Apprenticeship Skills, Children and Learning Act 2009 are exempt from VAT under Item 5C of Group 6 Schedule 9 VAT Act 1994 (as amended). Payments from the Skills Funding Agency (SFA) for apprenticeship training under the digital voucher system will therefore be exempt from VAT under that item”.

Where training costs exceed the amount paid (or allowed to be paid) by digital vouchers, normal VAT rules will apply.

This information is not currently in HMRC guidance but officials have resolved to include it in the next round of updates.

CTG continues to call on the Government to consider delaying the implementation of the Apprenticeship Levy for affected charities, to allow them sufficient time to put the appropriate apprenticeship schemes and support structures in place. CTG has also called on Government to allow Apprenticeship Levy contributions to be used to pay for volunteer training costs as well as apprentice training costs.