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Overview of the HE sector

»Ê¹ÚÌåÓýappre are approximately 210 HEIs registered in the UK and these consist of HE universities and HE colleges. »Ê¹ÚÌåÓýappir size and activities vary greatly, which is why their partial exemption methods have to be considered on an individual basis.

HE bodies are self governing and regarded primarily as independent of Government although given the funding they receive, there are close links. »Ê¹ÚÌåÓýapp HE sector is represented by two bodies:

1. Universities UK (UUK) - representing the vice chancellors
2. British Universities Finance Directors Group (BUFDG) - representing UUK for all tax discussions

Over 60% of HEIs� income comes from UK or EU government sources.

Higher education funding

This is provided by four funding bodies in the UK:

1. Higher Education Funding Council for England (HEFCE)
2. Higher Education Funding Council for Wales (HEFCW)
3. Scottish Funding Council (SFC)
4. for Northern Ireland, the Department for Employment and Learning (DEL).

»Ê¹ÚÌåÓýapp total amount of money available for higher education is decided by central government. It is the responsibility of the funding bodies to allocate money to specific institutions, which is done through the use of formulae. »Ê¹ÚÌåÓýapp block or main grant (the “recurrent grantâ€�) is split into two elements: T grant for teaching (based on the number of students and subjects taught), and the R grant for research (based on the quality and volume of research). Once determined, the funding is provided in the form of this ‘block grantâ€�, which the institutions are free to spend according to their own priorities.

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»Ê¹ÚÌåÓýapp history of the HE sector and Partial Exemption

In 1972 universities argued that they would have difficulty meeting the potentially complex record keeping requirements demanded by the VAT system to deal with taxpayer’s obligations under the legislation. »Ê¹ÚÌåÓýapprefore the Commissioners agreed a simplified partial exemption methodology with the Committee of Vice Chancellors and Principals (CVCP) (the predecessor to UUK). This was known as the CVCP Guidelines or CVCP Concordat. This agreement allowed universities to keep simplified records in return for flat rates of VAT recovery and used a method known by the sector as ‘tunnellingâ€�.

»Ê¹ÚÌåÓýappse guidelines were used by the sector for nearly 20 years, but were withdrawn from 1 September 1997. From that date the universities were required to propose and receive approval for individual partial exemption methods. Some HEIs:

• remain on methods based on the CVCP Guidelines - which then became de facto partial exemption special methods; or
• are using the standard method; or
• have approval (de facto or formal) to use special methods.