Extended schools and children’s centres hit by VAT

    Funding shortages have hit local authority run extended schools
    and children’s centres because they are not automatically
    exempt from VAT, a conference heard, writes Amy
    Taylor.

    Speaking at a conference on childcare and regeneration,
    Julia Gault, assistant director of the Sure Start Unit, said early
    years, chilcare and extended schools were not automatically exempt
    from VAT, unlike statutory services, because there was no legal
    requirement to provide these services and therefore different rules
    applied.

    She said she knew of “various local authorities” that
    were having difficulties. These happen when councils exceed the
    limit on the amount of VAT that is allowed to be disregarded for
    them by tax officials.

    A delegate from Gloucester Council said that the local authority
    had worked out that the problem could cost them over £1m. She
    said she had sent a letter to children’s minister Margaret
    Hodge six months ago outlining the issue but was yet to hear
    back.

    Gault said that the Sure Start Unit was lobbying the Chancellor and
    that she hoped some measures to ease the situation would be
    contained in this summer’s Spending Review. However, she
    added that part of the problem was due to EEC VAT rules.

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