£5M taxpayer success as VAT assessments cancelled and HMRC concede appeals concerning student financing
Joshua Carey and Max Schofield have helped secure victory for their client in the student finance sector.
Their client provided regulated credit facilities to students who might otherwise not be able to secure credit. These facilities had a restricted use for the paying of training providers for specific courses.
The credit facility allowed students to pay the finance provider in stages. The finance provider itself secured funding and would discharge the students’ obligations to the training provider with the benefit to the training providers of an indemnity (as well as a s.75 Consumer Credit Act 1974 liability to students).
Occasionally, in bearing the risks of default, external debt recovery agencies would be required if students failed to meet their payment obligations to the credit provider, but the training provider was paid subject to a deduction for the provision of the credit facility.
Joshua and Max’s client was assessed by HMRC for sums exceeding £5 million claiming that the supplies were not exempt for VAT purposes. HMRC contended the supplies were taxable debt collection.
Appeals were lodged with the Tax Tribunal arguing that the supplies were exempt supplies of credit or management of credit under Items 2 or 2a of Group 5 of Schedule 9 to the Value Added Tax Act 1994. The assessments also failed to account for input tax resulting from HMRC treating the supplies as taxable.
Following two ADRs and lengthy correspondence, in May 2025 HMRC withdrew all their assessments and their opposition to the appeals, inviting the Tribunal to close its case file without the need for a hearing.
Joshua and Max were instructed by Rob Bedford and Lisa McCreath of Astraea Group.
If you would like to instruct Joshua or Max in relation to a VAT (or any other indirect tax) matter, please contact Rob Adams.
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