§ Mr. McNamaraTo ask the Chancellor of the Exchequer (1) which(a) universities and (b) other institutions are required to adhere to the Customs and Excise T element; [163962]
1697W(2) what plans he has to extend the T element to (a) all universities and (b) other institutions; and if he will list the institutions which (i) have not yet adhered and (ii) have adhered but not made payment; [163963]
(3) if he will compensate those universities which have paid the T element and are financially disadvantaged in relation to universities which should have paid but have not. [163964]
§ John HealeyOrganisations can only recover VAT they incur on purchases that relate to their taxable business activities. The provision of education for a fee is exempt from VAT, so universities and other educational institutions cannot recover the VAT which relates to their exempt supplies of education.
Bodies which engage in both taxable and exempt activities must use a partial exemption method to work out the amount of VAT they can recover. The partial exemption method a university uses is designed to take account of its individual circumstances, but HM Customs and Excise cannot accept a partial exemption special method that does not produce a fair and reasonable recovery of VAT.
Universities and other higher education institutions often use methods that calculate their recoverable VAT in proportion to the value of their supplies of education. In these cases, Customs will take account of the value of the Higher education Funding Council teaching grant (the "T element") when agreeing the method.
The Government cannot comment on the VAT affairs of individual taxpayers. Exemption 15(a) of the Open Government Code applies.