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Revenue reaffirms the grey areas in vocational training and retraining

Wednesday, May 16, 2012

by Nick Ryan

Recently Revenue released its e-brief 22/2012 which was to reaffirm the position on the VAT treatment of education and vocational training and retraining services as detailed in their revised leaflet issued in April 2012.
The leaflet reaffirms that VAT treatment as previously outlined though is seen by Revenue as providing the clarity required in determining the VAT liability of these supplies. Unfortunately it fails to fully deliver on this leaving the position on vocational training still erring on the grey side.
This leaflet is important for a number of businesses that provide coaching and training though which may, or may not, qualify for VAT exemption. Over the past years there has been an upsurge in outsourced training aimed at professionals, businesses and self help sectors. The problems largely found has been where a training provider provides a range of services that cross over the boundary of what is deemed to be vocational training and what is not.
What we needed from this new leaflet was greater clarity in the form of a definition and a shift from the “sitting on the fence” guidelines approach commonly used by Revenue. Although the guidelines do provide for clarity they also provide for interpretation which leads to risk.
A question, if I provide VAT training workshops is this vocational training or not. If I provide the workshop to members of an accounts team and this is used by them in managing their VAT reporting and accounting systems then we could safely argue that this is vocational training. What if I provide the same training to a public audience that could comprise of accountants, CEO’s and company secretaries? Can I argue that the latter two groups are going to use this training to improve their skills? Will it be essential for their employment? How do I therefore deal with this difference and am I required to confirm with those attending that they require this training as per the vocational training guidelines? Starting to get messy?
What about a business life coach who provides parenting guidance training. Is this vocational if the training is provided to teachers for use in their approach in the classroom or, as it is designed as parenting counselling does it by its own definition therefore fail to meet the guidelines as set out by Revenue and bring it within the VAT net?
I think that businesses which are either currently providing types of training or, are considering doing so, need to tread carefully. There is a need to apply these guidelines on a case by case basis to determine whether, or not, the training they provide can qualify as vocational and is therefore exempt.
Finally, where it is concluded that the training is exempt businesses need to ensure that they manage their entitlement to VAT recovery of business operating costs. Consideration should be given to the use of an appropriate method for the determination of recovery on dual use costs and the attribution of costs against activities.
Should you require further information on this or have a particular question on VAT then please contact Nick Ryan at the VAT Practice. Alternatively please leave your comment below.