ASSISTED
INSTRUMENT PURCHASE SCHEME
What is A.I.P.S?
Is it available in my area?
Tuning up for success – but
are parents of musical children here paying more for
instruments than they need to?
The only way to learn an instrument
is to start young
and for many youngsters that means playing the recorder in school.
But some take their music further and move on to other instruments,
and
that can be expensive. We heard from a father of 15 year old twin
girls, both very musical – one plays the violin, the other
the flute. And he’d like to be able to benefit from an Assisted
Instrument Purchasing scheme being operated by local education
authorities in GB.
So is the scheme operating here? Or are parents have to pay more
than they need?
HM Customs and Excise provided this information
1. Such schemes to provide
pupils of local authority schools with musical instruments to
be used in
school music lessons (at cost
and net of VAT) are operated by local authorities but they are
not approved by HM Customs & Excise.
2. Education taught in schools, universities and colleges is
free of VAT, regardless of whether fees are charged. In the state
sector, education is a non-business activity because no fees
are charged. Where fees are charged, the activity is carried
on by way of business but it is exempt from VAT.
3. In EC legislation, the sale by one of these institutions of
goods closely related to education that is being supplied (ie
taught for payment) is exempt from VAT. Thus the VAT treatment
of the goods mirrors the VAT treatment of the education. The
policy has been to provide comparable treatment for any goods
sold in local education authority (LEA) schools that are closely
related to a subject being taught to pupils in those schools.
The sale of these goods is a non-business activity, mirroring
the treatment of the education, provided there is no intention
to make any profit from the sale proceeds. Otherwise, the goods
are subject to VAT.
4. To prevent VAT from falling as a burden on local taxation
LEAs can benefit from refunds of the VAT incurred on their non-business
activities. In England and Wales this is done under section 33
of the VAT Act 1994. For Departments of the government in Northern
Ireland recovery would be by section 99.
5. Many LEAs operate an Assisted Instrument Purchase Scheme (AIPS).
Under this scheme, the pupils attending LEA schools can purchase
musical instruments through the LEA, provided they are being
taught to play that instrument in the school. The sale of the
instrument by the LEA to the parents of the pupil is a non-business
activity, so no VAT is charged on it, but the consequence of
this is that the LEA can recover the VAT charged to it by the
dealer selling the instrument.
6. Although Customs do not approve individual schemes, we would
expect the following rules to be applied to determine whether
goods and services supplied by an LEA are closely related to
education:
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the goods
and services must be an integral part of the education provided;
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the pupil
must receive education from the LEA - either an LEA maintained
school or in connection with some other LEA run educational
activity, such as an orchestra
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the goods
and services required must be purchased from the LEA. The
delivery address and point of distribution of those goods
and services is entirely up to the relevant LEA
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payment must
be made to the LEA
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evidence
must be kept to show that the recipient of the goods and
services has been receiving education from the LEA, and that
what has been supplied was essential to that education
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the price of the goods
and services supplied must be at or below cost. "Cost" means
the full overhead-inclusive price of supplying the goods
and services to the pupil and includes, for example, the
costs associated in administering the AIPS scheme
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in certain cases goods
may be leased. In such cases the same rules as above will
apply
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these rules will apply
to all items of goods and services closely related, and essential,
to education
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7. There is a common misconception that AIPS
permits parents to purchase VAT-free musical instruments from
retailers. This
is not the case, although we do accept that parents will need
to select the most suitable instrument from the retailer's
stock (LEAs do not hold stocks of musical instruments).
8. Education in Northern
Ireland is provided via 5 Boards.
For information on whether the Assisted Instrument Purchase Scheme,
or another like it, is available in your area call your local education
and library board.
Belfast Education & Library Board
Curtis Street
Belfast
028 9032 2435.
South Eastern Education & Library Board
Grahamsbridge Road
Dundonald
BELFAST
BT16 2HS
028 3833 2371
Southern Education & Library Board (NI)
3 Charlemount Place
The Mall
Armagh
BT61 9AX
028 9756 2030
Western Education & Library Board (NI)
1 Hospital Road
Omagh
Co Tyrone BT79 0AW
028 8241 1412
North Eastern Education & Library Board (NI)
County Hall
182 Galform Road
Ballymena
Co Antrim BT42 1HN
028 9448 2230
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