SAE Education v HMRC [2019] UKSC Supreme Court found that an independent and private body providing education for profit was integrated with a university that its education services could benefit from the education exemption in Group 6 Schedule 9 VATA 1994.
- SAE Education ('SEL') contended that its supplies of education to students in the United Kingdom were and are exempt from VAT because it was and remains a college of Middlesex University ('MU').
- SEL is a subsidiary of SAE Technology Group BV. Both are part of the SAE group of companies which trades around the world under the name 'SAE Institute' ('SAEI').
- MU is a United Kingdom university within the meaning of the VAT Act, Group 6, Item 1, Note 1(b). It has never had any financial interest in any SAE group company. The relationship between MU and SAEI has been very close and is a reflection of a series of agreements addressing the nature of that relationship, the validation by MU of SAEI programmes of education and the accreditation of SAE group companies.
The Supreme Court considered that:
- The proper interpretation of Note 1(b) to Schedule 9, Group 6, Item 1 of the VAT Act makes clear that member states must exempt transactions involving the provision of, among other things, university education by bodies governed by public law having such education as their aim.
- EU member states must also exempt transactions by other organisations which they have recognised as having similar objects to those governed by public law and which also have education as their aim.
- The general objective of the exemptions is to ensure that access to the higher educational services is not hindered by the increased costs that would result if those services were subject to VAT.
It allowed the appeal.
This overturned the decision of the Court of Appeal (CA), see SAE Education Limited v HMRC [2017] EWCA Civ 1116, the CA decided that the requirement to be a college of a University, and therefore an eligible body, should be more strict than that envisaged by the High Court in its 2002 decision in School of Finance and Management.
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