Parents are increasingly prepaying up to seven years of private school fees in response to Labor’s proposal to impose a 20% VAT on such fees. This surge in prepayments is viewed as a strategy to avoid potential future tax hikes. However, tax experts caution that these schemes could lead to legal disputes with HM Revenue and Customs (HMRC) in the future, potentially leaving schools with hefty tax bills that may be passed on to parents. The schemes involve parents paying deposits to cover future term fees, complicating the timing of when VAT would be applicable. Critics argue that parents may be unaware of the risks involved and could face financial repercussions if disputes arise years later.
Paying Private School Fees Years Ahead may Create VAT Disputes, Experts Warn
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