Overview

• Over £500 million was paid in advance to the top 50 independent schools in 2024, up from £121 million the previous year
• HMRC has begun scrutinising prepayment contracts and will seek to reclaim VAT on arrangements it deems legally unsound
• Internal Treasury documents obtained by The Telegraph show officials expected to raise only £90 million in VAT from fee prepayments made after the July 29 deadline
• More than 50 smaller independent schools have closed under financial strain linked to the VAT policy, with industry insiders warning that up to 100 more could collapse
• The government maintains that Office for Budget Responsibility forecasts already account for prepayment schemes and still project £1.8 billion a year in VAT revenue by 2029–30