Capital goods scheme and pre-registration input tax for private schools

Imagine the following situation: a private school constructed a purpose built gymnasium facility on its premises five years ago costing £1m plus VAT. The school has never registered for VAT because all supplies of private education are currently exempt from VAT so it could not claim any input tax on the project costs. However fast forward the clock to 1 January 2025 – when private school fees and boarding charges will be subject to 20% VAT – and the goalposts will move in dramatic fashion. Will this give a belated opportunity for schools to claim input tax on past capital projects and other pre-registration expenses? Read on and all will be revealed.

Capital goods scheme

The capital goods scheme (CGS) has stood the test of time and its objective is to review input tax claimed on certain capital projects over a five or ten-year period so...