Universities were once easily defined institutions, but the increasingly diversified and commercial nature of the higher education estate has muddied the waters. In that context, the Court of Appeal considered the tax treatment of a private company that was accredited to provide degree courses on a university’s behalf.
The company ran an institute that was authorised to award degrees to its students under the university’s banner. Its close and trusted association with the university dated back to the 1990s and had been bolstered by a number of mutual cooperation and partnership agreements. As a vote of confidence in the institute, the university had granted it authority to validate, monitor and review its own degree courses.
The company claimed that the institute was entitled to benefit from the exemption from VAT afforded to ‘colleges, schools or halls of a university’ by the Value Added Tax Act 1994. Its arguments were successful before the First-tier Tribunal, but that decision was subsequently reversed by the Upper Tribunal.
In dismissing the company’s appeal against the latter ruling, the Court took a restrictive view of the exemption. Despite the closeness of their association, the institute was not a constituent part of the university, with all the rights and privileges for its students and other members that that entailed. It remained a separate commercial organisation that provided a small number of highly specialised degree courses on behalf of the university. Its students were not full members of the university and the institute could thus not be viewed as a college of the university.