The issue has been discussed at QAG and Round Table several times. My feeling
is that DfES are unlikely to take up the VAT challenge. I feel that
government probably regard it as accounted for within the allowances set. There is also
the issue that VAT only effectively reduces the allowances for a relatively
small number of students at the upper limit of the allowances.

As I understand it, LEAs cannot reclaim VAT now - this came up at a
presentation to W Mids LEAs by Student Loans Company (SLC) who are taking over all
payments of DSAs. The LEA is NOT spending any of 'their' money now and it's
doubtful they ever were as DfES assured me that there was an element within the
funding paid to LEAs to account for any VAT charged.

Personally, as someone who has to charge VAT and pay it to Customs I spend a
lot of time sorting it out and I regard it as a big nuisance circulating money
between government departments. However, it is made worse by the insistence
that I then try to reduce the VAT charged on equipment when in 99% of
assessments it makes no difference at all to the students. This attempt at reducing VAT
as a paper exercise takes up my time and the time of suppliers that would be
better spent helping students.

There are obviously cases where some students at the upper limit are
adversley affected. It's my view that it would be better to have a discretionary
additional allowance in such cases. However, this is unlikely unless the DfES have
absolute faith in the DSA system. Therefore our energies are best expended on
getting that right. Personally, I would not want QAG or Round Table to spend
any time on this but, rather get the system working so that DfES have enough
faith in it to increase the allowances where necessary.

As of this term DSAs are being handed over to SLC. LEAs are no longer in the
equation as a source of 'blame' so to speak. If you feel strongly about the
VAT issue you could write directly to DfES and SLC to get them to resolve it.
You COULD ask your MP to take up the matter and ask why the figures published
for DSA are sometimes reduced by VAT and sometimes not, therefore the allowances
could in fact vary between students.

Regards,
Mick Trott


In a message dated 24/04/04 14:19:39 GMT Daylight Time,
[log in to unmask] writes:

<< OK...thought this might be the case but wondered if anyone had indeed
 successfully argued the point - seems not...would this be the sort of issue
 the Round Table could take up? Perhaps in the age of joined up government it
 surely should be possible for the DfES people to talk to the VAT people and
 establish some ground rules? Does anyone know how to get an item on a Round
 Table agenda?

 We do need to be careful though that we are talking about the same thing
 because as I understand it there is both a Zero rating rate and an exemption
 from VAT which are actually different things...albeit resulting in same
 end...

 But finally is the widespread belief that LEAs who pay VAT able to claim it
 back actually true and if this is the case is there any way they are able to
 recycle this funding for student support...of coure where I'm heading is a
 concern that as we are moving into a system which is much more transparent
 and above board in terms of employment legislation / rights etc by moving
 support workers onto contracts with all that entails - tax / employers NI /
 benefits + 17.5% VAT on all of that etc the VAT levied can make considerably
 limit the amount of support available for some students. Exemption from VAT
 would do much to stretch this support out as far as is possible without
 having to resort to not entirely legal or satisfactory methods...
  >>