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THE WAYS in which school buses can avoid VAT have been outlined in the Commons by Mr Peter Rees, Minister of State to the Treasury.
He pointed out that the transport of passengers in any vehicle designed or adapted to carry not less than 12 passengers was zero rated for VAT purposes.
Local authorities could normally recover the tax charged on all supplies of taxable services invoiced to them, either under the normal credit mechanism, or under the special provisions of section 15 of the Finance Act 1972.
No tax was chargeable on the onward supply to children of these services if they were supplied free of charge, or if the journey was undertaken for strictly educational purposes and the charge made by the local authority did not exceed the full cost.