VAT on Co-Investment Payments

Hi,

VAT registered companies must add VAT on top of these fees.

Paul.

Hi I have referred this to the DfE and this is their response below, basically you must seek advise from HMRC or a Tax Accountant before making any decisions:-

Your enquiry (CI-0353293) has been sent from the DfE Customer Help Team through to us at the Apprenticeship Service Support Team in order to assist you further.
 
I understand from your email you would like some clarification in regards to VAT on Co-investment Payments.
 
Using the Apprenticeship funding rules 2025 to 2026 as guidance,
 
The price of an apprenticeship
 
177. The provider must agree a contract for services with the employer and this must include a price for the total cost of each apprenticeship (including the cost of the end-point assessment).
 
177.3. The agreed price that is entered into the ILR and the apprenticeship service must be the same. These prices must not include any VAT (although VAT may be charged on employer co-investment).
 
Value added tax (VAT)
 
192. Supplies of training or end-point assessment, which are paid by government funding, including the apprenticeship levy, are exempt from VAT. This includes additional payments (see paragraphs 104 to 111). Providers must not include VAT in the prices they enter onto the ILR (see paragraph 195).
 
193. Main providers must determine the VAT treatment on their invoices to employers.
 
194. We do not provide advice on VAT. Providers must always seek their own advice on VAT from HMRC if they are in any doubt about VAT treatment.
 
195. If main providers add VAT to invoices and the employer is VAT registered, the employer may be able to recover that VAT through its VAT returns. In determining the costs of training or end-point assessment, an employer will need to check with their main provider if VAT will be added and verify, internally or with HMRC, if it can be recovered.

I hope this helps.