In Mandarin Consulting Limited v HMRC [2020] TC07714, a career coaching service to Chinese students was found to be a supply of consultancy services and not of education. The place of the supply for VAT turned on whether the supply was made to students staying in the UK or their parents in China.

  • Mandarin supplies career coaching and support to students of Chinese origin.
  • Prior to July 2016 contracts were made between Mandarin and the students. After that date, the contract was made directly with their parents.
  • The company did not account for VAT as it thought that its supplies were outside the scope of UK VAT.
  • HMRC raised VAT assessments of £1.3million on the basis the Mandarin was making supplies of educational services.
  • The company appealed HMRC’s decision on the basis that it was making supplies of consultancy.

Mandarin contended that:

  • If the services supplied constitute consultancy services, under an exception to the general Place of Supply rules, the supply is where the recipient belongs, therefore they are outside the scope of UK VAT as the recipients of the supplies do not have their usual residence in the UK.

HMRC argued that:

  • If the services constitute educational activities then they are treated as performed where the activities take place and, thus, are within the scope of UK VAT.

There was then a dispute as to whether the recipients of the supplies are the parents of the students or the students themselves.

The First Tier Tribunal (FTT) found that:

  • The services provided by Mandarin do not constitute educational activities but rather "specialised tuition which does not amount, in itself, to the transfer of knowledge and skills covering a wide and diversified set of subjects or to their furthering and development which is characteristic of school or university education". The supplies were not educational.
  • In considering whether the supplies were of consultancy, the term 'consultants' is not limited to persons who are members of the liberal professions but to persons who are in ordinary usage 'consultants' and typically act in an independent manner. Mandarin satisfied these tests.
  • It concluded that the services supplied by Mandarin constitute consultancy services for the purposes of Article 59 and not educational activities within Article 54 of the Principal VAT Directive.

Where Mandarin entered into contracts with the candidates (mainly before July 2016), the question becomes where the candidates had their permanent address or usually resided.

  • Prior to July 2016, Mandarin had failed to establish the usual residence of the candidates.
  • From July 2016, from which time contracts were systematically entered into with the parents, their residence could be established.

The FTT, therefore, allowed Mandarin’s appeal for periods commencing in July 2016  but was dismissed in respect of earlier periods.


Education and VAT
When considering what the VAT rate on income associated with education is, it should be considered whether it is a single or multiple supply.

Place of supply for VAT
The place of supply (POS) of a service determines whether the supply is within the scope of UK VAT and whether VAT is payable on that supply.

External links

Mandarin Consulting Limited v HMRC [2020] TC07714