End Point Assessments and VAT
Active IQ supplies examination services in relation to end-point assessment. Where a training provider is an eligible body, such supplies are fully exempt from VAT.
Employers place apprentices with a training provider in order for them to receive training in the course of their apprenticeship (or they deliver the training themselves). Funding is drawn down by the training provider from the Employer's Apprenticeship Levy account and in some instance additional payments are made by the employer. As part of the Apprenticeship scheme an end point assessment (EPA) must be undertaken by an End-point Assessment Organisation (EPAO) that should be selected by the employer although in practice the training provider is likely to make recommendations and/or introductions to EPAOs, such as Active IQ.
When Active IQ is selected, it carries out the necessary work and issues an invoice to the training provider (in two stages – 25% on enrolment and 75% at gateway) and is paid the agreed consideration by the training provider. The funds will again be either in part or in full drawn down by the training provider from the Employer's Apprenticeship Levy account.
VAT analysis
1. Eligible Body – examination services to an organisation that is an eligible body are fully exempt from VAT on the basis of Item 3(a), Group 6, Schedule 9, VAT Act 1994 which states:
"3. The provision of examination services - (a) by or to an eligible body; ..."
Please note: this also applies to all 16-18 year olds irrespective of VAT status of the organisation, as all funding for students in this age group comes from the government.
2. Non-eligible Body – examination services to an organisation that is not an eligible body is subject to VAT for the employer contribution element of the training, which is 5% for non-Levy payers. The other 95% is funded by government, therefore it is only the 5% which is subject to VAT. Before April 2019, the 5% contribution was set higher at 10%, which meant that 90% was funded by government with 10% subject to VAT before that date.
Eligible Body Status
With effect from 1 August 2019, an eligible body is defined as:
- a school, sixth form college, tertiary college or further education college or other centrally funded further education institution (defined as such under the Education Acts)
- a centrally funded higher education institution in Wales, Scotland and Northern Ireland (defined as such under the Education Acts)
- the governing body of one of these institutions:
- a local authority
- a government department or executive agency
- a non-profit making body that carries out duties of an essentially public nature similar to those carried out by a LA or government department
- health authority
- a non-profit making organisation that meets certain conditions
- a commercial provider of tuition in EFL, in which case special rules will apply
- a university
- a higher education provider registered in the approved (fee cap) category of the register maintained by the Office for Students from the date of inclusion in the register
Commercial providers of education
If the education is provided by one of these (with a view to making and distributing profits) it is unlikely to be an eligible body:
- tutorial college
- computer training organisation
- secretarial college
- correspondence college
- partnership
A non-profit making organisation
An organisation is likely to be an eligible body, where it’s a charity, professional body or company:
- that cannot and does not distribute any profit it makes
- with any profit that might arise from its supplies of education, research or vocational training is used solely for the continuation or improvement of such supplies