NAO warns of VAT threat to city academies

The government should ease a tax burden on flagship city academies that
restricts them from opening up their facilities to the local community.

A report by the National Audit Office found that academies were not opening
up their facilities to the public because of potentially large VAT liabilities.

Academies that open up their facilities to the public for more than 10% of
their total usage incur VAT liabilities on the construction cost of the academy,
which cost an average £24m to build.

‘There is a need to resolve the issue of large, unfunded VAT liabilities
falling on academies if they do not restrain communities’ use of academy
buildings,’ the report stated.

‘Academies are typically built in areas that have historically suffered from
lack of educational investment, and they are an enormous community resource. The
department and HM Treasury should seek to reach rapid agreement on an
appropriate mechanism that would enable academies to raise community usage above
the 10 per cent threshold allowed under the regulations governing eligibility
for VAT relief.’

Further reading:

Academies programme slammed
by NAO

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