Last month, parents backed by the Independent Schools Council made a legal challenge against the Government’s decision to charge VAT on private school fees. We’re publishing the grounds of the challenge and our analysis.
The challenge is more political than legal – it cites no relevant legal precedents and has very poor prospects of success. But if it did succeed then the consequences would be far-reaching. It’s asking for ultra-orthodox Jews, very religious Muslims and foreign nationals to be exempt from VAT on private school fees. We’d have a tax system that discriminated on the basis of nationality and religion. We’d also have opened the door to challenges against many other features of the tax system.
I should say at the outset: I have no view on the question of whether the political decision to charge VAT on private school fees is correct. I can see arguments on both sides, and I have no expertise in education policy. My interest is in the legal question of whether the challenge has any realistic prospect of success, and the broader question of whether and when tax policy should be subject to judicial review.
Updated below with the full skeleton arguments.
The grounds
Here is the full “statement of facts and grounds” – the key document prepared by the Claimants. Right now we don’t have anything else – in particular we don’t have the Government’s defence, or the more detailed (“skeleton”) arguments. However this document will contain the fundamental legal and factual basis for the Claimants’ case:
The grounds are redacted in line with an earlier anonymity order to protect the identity of the children involved (the claimants) and their parents (the “litigation friends”).
The background – challenging tax legislation
My starting point is that I am uncomfortable with the idea of judicial review of tax legislation. Tax is political, and it is to be expected that most or even all taxes will be opposed by some people, many of whom will have a strong ideological and/or economic incentive to bring a challenge against the tax. If this were permitted (in any but the most extreme circumstances) then we would see a wave of such cases, as the cost of bringing a case would often be much less than the potential benefit of having a tax reversed. Our tax system would become even more incoherent than it is already.
This is absolutely something we saw during the UK’s membership of the EU. Taxes could be challenged, annulled and damages claimed, on the basis that the tax was contrary to EU law principles. We saw a wide range of such challenges, by taxpayers and the European Commission, either under general EU law principles (such as the free movement of capital or the freedom of establishment) or specific EU legislation (such as the capital duties directive). These claims cost the UK billions of pounds, and greatly complicated UK tax policy.
This was not anticipated when the EU was created; direct tax was reserved to Member States, with unanimity required before the EU could legislate on direct tax matters. The EU institutions have always disliked this unanimity requirement and, perhaps as a consequence, the CJEU showed little or no deference to Member States. The result was a mess of muddled and inconsistent jurisprudence.1The tax State aid caselaw is even worse. One of the benefits of Brexit is that a significant and unpredictable constraint on tax policy has been removed.
Human rights tax challenges have the potential to be even more disruptive to the tax system. Taxes by their nature impact the right to property, protected under Article 1 of Protocol 1 of the European Convention on Human Rights. Taxes also tend to treat similar things in different ways, and that is potentially discrimination, which is prohibited under Article 14 unless it can be objectively and reasonably justified. It’s easy to argue that there’s no objective/reasonable justification for (to take some examples) taxing employment income more than self-employment income, taxing labour income more than investment income, taxing commercial real estate transactions more than residential transactions, taxing bankers more than private equity executives, and taxing retired people less than working people. Each of these likely indirectly discriminates against certain groups, particularly people of different ages and ethnic backgrounds2For example, some ethnic groups are more likely to be employed, and less likely to own a business.
So we would have chaos if the ECHR was receptive to challenges to tax legislation. Fortunately it has not been. When it comes to tax legislation, the ECHR gives a wide “margin of appreciation” to national governments:
“in the field of taxation the Contracting States enjoy a wide margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment“.3Galeotti Ottieri della Ciaja v Italy
and:
“The Commission is of the opinion however that it is for the national authorities to make the initial assessment, in the field of taxation, of the aims to be pursued and the means by which they are pursued: accordingly, a margin of appreciation is left to them. The Commission is also of the view that the margin of appreciation must be wider in this area than it is in many others. The Commission recalls in this respect that systems of taxation inevitably differentiate between different groups of tax payers and that the implementation of any taxation system creates marginal situations.“4Lindsay v United Kingdom.
and:
“The Court has often stated that the national authorities are in principle better placed than an international court to evaluate local needs and conditions. In matters of general social and economic policy, on which opinions within a democratic society may reasonably differ widely, the domestic policy-maker should be afforded a particularly broad margin of appreciation.“5Berkvens v The Netherlands.
This “margin of appreciation” doctrine is not unique to tax, but is applied with what has been described as “extraordinary” stringency to tax matters. We can see how serious a rule this is when we count the number of substantive tax rules6By contrast tax administration and procedure is subject to a much lower threshold and has often been ruled contrary to the ECHR. that have been ruled contrary to the ECHR. I believe there are only two:
- The Netherlands exempted unmarried childless women over 45 from certain social security taxes; men were not exempt. That was successfully challenged. The Dutch Government had already changed the law and its defence was decidedly half-hearted.
- Hungary imposed a 98% tax on the retirement income of a civil servant only two months before they retired. The Hungarian constitutional court annulled the tax for being retroactive; the Hungarian Parliament amended the constitution, and the constitutional court annulled it again. In such extraordinary circumstances, the ECHR found the tax contrary to the ECHR, and awarded a small amount of compensation. Other attempts to challenge more modest increases in pension taxation have failed.
Every other case we’re aware of has failed. Various ECHR challenges against retrospective taxation in the UK and elsewhere have all failed.7The “bedroom tax” case went against the UK, but the measure in question was not in reality a tax and the ECHR did not treat it as one. Two elderly sisters failed in a challenge against the inheritance tax exemption which would apply to a married couple but not to them.8I am sympathetic to the dissenting judgments, which suggest this was discrimination but within the margin of appreciation. Philip Baker KC wrote a convincing critique of the majority judgment’s discrimination analysis. The fact The Netherlands taxed financial assets more favourably than business assets was not discrimination. The German tax system applies a church tax to irreligious spouses of churchgoers – but that wasn’t a violation. There are many others – there is an excellent introduction the caselaw by Philip Baker KC here (a little old but still very relevant) and a fascinating statistical analysis of ECHR tax caselaw here.
The UK courts have been similarly sceptical to attempts to challenge primary legislation.9There is a good summary of the historic relationship between Strasbourg and the UK courts in this 2011 speech by Lady Hale. Here’s Lord Bingham on the attempt to challenge the ban on hunting:
“The democratic process is liable to be subverted if, on a question of moral and political judgment, opponents of the Act achieve through the courts what they could not achieve in Parliament.“
All of this means that tax/ECHR specialists have been deeply sceptical of the idea that VAT on private schools could be challenged; I am unaware of any expert suggesting the JR has any realistic prospect of success.10Excluding, of course, those acting for the parties.11A further barrier is that, even in principle, the Human Rights Act cannot override primary legislation – all a successful challenge can do is provide a “declaration of incompatibility“, asking Parliament to think again (although it seems most unlikely that Keir Starmer would ignore a judgment which said the VAT change was an ECHR violation.
My assessment of the case
There are several odd aspects to the Claimant’s grounds. The document doesn’t cite any of the ECHR caselaw where tax legislation is challenged.12The closest is Guberina v Croatia, which concerned indirect discrimination in the application of tax legislation by a local tax office. It doesn’t contain the phrase “margin of appreciation”, much less grapple with that doctrine. There is no acknowledgment of how serious step it would be for primary tax legislation to be held contrary to the ECHR, or what the wider consequences would be.
The arguments they do make are more political than legal, and either based on no authority, or based on authority that is being cited out of context.
- Central to the argument is the claim that VAT hinders access to education. There is, however, no ECHR authority that “hindering” access to private education violates the right to education in A2P1. The only authority cited is (para 50) an obiter remark in a CJEU EU VAT case that looked at the purpose of the VAT exemption (in the very different context of the Commission successfully challenging a German *expansion* of the exemption to higher education research). The purpose and interpretation of the education exemption is of little or no relevance to the question of whether it’s permissible to restrict the exemption by statute.
- Paragraph 51 is where the leap is made that “hindering” education violates the right to education. No ECHR authority or other justification is given for this leap.
- “Hindering” is said to be so strong a principle that any “more than de minimis” impact on “at least some parents” is a violation (see paragraph 53). The authority given for this proposition is a Şahin v Turkey, where a student was suspended from a Turkish university for wearing an Islamic headscarf. This was, however, a case where the court found there was no ECHR violation. Far from establishing that a “more than de minimis restriction” is a violation, the court said that “Consequently, the Contracting States enjoy a certain margin of appreciation in this sphere, although the final decision as to the observance of the Convention’s requirements rests with the Court. In order to ensure that the restrictions that are imposed do not curtail the right in question to such an extent as to impair its very essence and deprive it of its effectiveness, the Court must satisfy itself that they are foreseeable for those concerned and pursue a legitimate aim“. This is a very different standard to “more than de minimis“. I do not know why the Claimants think Şahin helps their case.
- An obvious problem with the “hindering” proposition is that there are a great many rules and regulations which could be said to “hinder” private schools. There is also tax – private schools have historically borne VAT on the goods and services they buy, and paid PAYE/national insurance for their staff. Para 51 just hand waves this: “But VAT is different: it is a tax on the very provision of the educational services to which access is guaranteed by A2P1”. That’s rhetoric, not argument. What is the principled distinction? The Claimants don’t tell us. There seems a heavy status quo bias – everything that existed before January 2025 didn’t “hinder” education, but imposing VAT on private education does. Why?
- None of the cited cases relate to tax. None are even close to the facts of this case. For example, Memlika v Greece and Tarantino v Italy are cited as authorities for the proposition that access to educational facilities can only be consistent with A2P1 if it is proportionate to a legitimate aim. But Tarantino was a case where the “margin of appreciation” of the state was narrower because the state was trying to regulate autonomous private schools. Memlika was a case involving a complete denial of education, not a “hindering”.
- The grounds think it’s helpful to their case that no other EU state imposes VAT on private schools. But tax systems are very different across Europe, and every one has its unique features. The fact tax systems mostly work in a particular way is not evidence of a consensus that any other way is contrary to the ECHR. The uniqueness of the German church tax was not an argument for it being contrary to the ECHR.
- The discrimination argument is incoherent. A SEN child without an EHCP is massively disadvantaged compared to a child with an EHCP because they have to pay school fees. Is that an ECHR violation? If it is, that obviously has very wide implications. But if it’s not, then why is imposing VAT on top of the fees a violation? The grounds say that “It is accepted that the State is not obliged to subsidise or otherwise establish independent schooling“. But why? The grounds say it’s because VAT isn’t a subsidy – but economically there is no difference between a cash subsidy and a targeted exemption. It’s another distinction without basis in logic or ECHR caselaw.13The grounds also suggest that access to existing institutions is protected under A1P1. Quite how being at a school is a “possession” within the ECHR caselaw is unclear, and once more no authority is given.
- The real issue with SEN is that it is often very hard to obtain an EHCP. Many SEN parents would love to be able to send their children to state schools with better SEN provision. Others would love to send theirs to their private schools, but the main barriers are the cost (with or without VAT) and the fact that many private schools will not accept SEN kids. All of this would seem an excellent basis for a challenge to the SEN/EHCP system (either generally or in individual cases). The complaint here is misdirected.
- There are then a series of arguments that the VAT change is disproportionate because it causes some individuals financial hardship – it is “imposed without any regard to the income or wealth of the affected families and their ability to pay”, and wealthy parents whose children attend state schools won’t have to pay (paragraph 64). The proposition that this creates an ECHR violation is very ambitious – many taxes have this effect (including, some would say, the whole of VAT). It’s the kind of “marginal situation” which the ECHR accepted in Lindsay v United Kingdom was often inevitable. But the Claimants just breezily invent a new principle that taxes must be progressive in all cases, without any sign they’ve thought about the implications.
- The grounds go further. It’s claimed that that Guberina v Croatia means that tax legislation is required to include exceptions from general rules to prevent indirect discrimination against particular groups (see paragraph 68). So the UK is apparently required to facilitate foreign nationals’ desire for their children to be educated “in conformity with their home country’s requirements” (paragraph 78). Again, VAT seems the least of the problems here.
- The remedy sought is rather bold: “a declaration of incompatibility in respect of those individuals in the identified categories“. So children with special education needs (with no EHCP), ultra-orthodox Jewish and very religious Muslim families, and foreign nationals, would receive a VAT exemption, but nobody else would? That’s unworkable practically. More seriously, it would be discriminatory. Imposing VAT on private schools isn’t contrary to the ECHR – but the remedy sought by the Claimants would be.14 I expect the Independent Schools Association doesn’t remotely want this outcome, and they expect that the education VAT exemption would be restored if their case is successful. But that’s not how the law works – they are bringing a case on narrow grounds and the courts should take those narrow grounds seriously.
The real test that should be applied, based on the caselaw, is whether the imposition of VAT on private schools “impairs the very essence of the right to education or deprives the right of its effectiveness” – the test in the Turkish Sahin case which the Claimants cite out of context.
Once we’ve established that’s the test, then it’s clear there is no claim. It seems plausible that banning private education, or taxing it at 100%, would be a breach. But a 20% VAT (which in practice imposes a cost of around 15%) does not “impair the very essence”.
The best argument the claimants have is against the imposition of the tax in January, in the middle of the school year. I felt this was unfair as a practical matter. But given that ECHR permits retrospective taxation, it seems unlikely that hurried implementation is a violation.
I expect the judgment will follow the 2021 Supreme Court decision on the attempt to challenge the two-child benefit cap:
- The assessment of proportionality, therefore, ultimately resolves itself into the question as to whether Parliament made the right judgment. That was at the time, and remains, a question of intense political controversy. It cannot be answered by any process of legal reasoning. There are no legal standards by which a court can decide where the balance should be struck between the interests of children and their parents in receiving support from the state, on the one hand, and the interests of the community as a whole in placing responsibility for the care of children upon their parents, on the other. The answer to such a question can only be determined, in a Parliamentary democracy, through a political process which can take account of the values and views of all sections of society. Democratically elected institutions are in a far better position than the courts to reflect a collective sense of what is fair and affordable, or of where the balance of fairness lies.
- That is what happened in this case. The democratic credentials of the measure could not be stronger. It was introduced in Parliament following a General Election, in order to implement a manifesto commitment (para 13 above). It was approved by Parliament, subject to amendments, after a vigorous debate at which the issues raised in these proceedings were fully canvassed, and in which the body supporting the appellants was an active participant (para 185 above). There is no basis, consistent with the separation of powers under our constitution, on which the courts could properly overturn Parliament’s judgment that the measure was an appropriate means of achieving its aims.
There are several parallels with the attempt to challenge VAT on private school fees: a controversial measure which had been a manifesto commitment, impacting (in some cases) vulnerable children, and where the body supporting the claimants (here the Independent Schools Council) had been an active participant in the political debate.15Thanks to Michael O’Connor in the comments for pointing out those parallels.
The skeleton arguments
The main skeleton argument for the claim is here:
There’s a separate skeleton from the lawyers representing four Christian schools:
And another – the strongest – from the lawyers representing SEN parents:
The Government’s defence skeleton is here:
I didn’t have the skeletons when I wrote the article, and haven’t amended it. Reading through the skeletons, I’m struck by the Claimants’ failure to engage with any of the ECHR tax caselaw. “Margin of appreciation” gets a mention (paragraph 70 of the main Claimant skeleton), but with the incorrect claim that in this case it is “especially narrow”. The SEN Claimants’ skeleton makes a similar mistake (see paragraph 44).
The Government’s response correctly notes that test for A2P1 is whether “the very essence of the right” is impaired (paragraph 24.2) and that the margin of appreciation is in fact very wide (paragraphs 75.2 and 68.2). I expect the latter will be the issue that disposes of the claim (although the discrimination discussion will be interesting).
Finally, there was a side-issue involving the admissibility of Parliamentary select committee reports. Two submissions by the Speaker can be found here and here.
Many thanks to M for reviewing an early draft, and to K and T for their human rights expertise.
- 1The tax State aid caselaw is even worse.
- 2For example, some ethnic groups are more likely to be employed, and less likely to own a business.
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- 6By contrast tax administration and procedure is subject to a much lower threshold and has often been ruled contrary to the ECHR.
- 7The “bedroom tax” case went against the UK, but the measure in question was not in reality a tax and the ECHR did not treat it as one.
- 8I am sympathetic to the dissenting judgments, which suggest this was discrimination but within the margin of appreciation. Philip Baker KC wrote a convincing critique of the majority judgment’s discrimination analysis.
- 9There is a good summary of the historic relationship between Strasbourg and the UK courts in this 2011 speech by Lady Hale.
- 10Excluding, of course, those acting for the parties.
- 11A further barrier is that, even in principle, the Human Rights Act cannot override primary legislation – all a successful challenge can do is provide a “declaration of incompatibility“, asking Parliament to think again (although it seems most unlikely that Keir Starmer would ignore a judgment which said the VAT change was an ECHR violation.
- 12The closest is Guberina v Croatia, which concerned indirect discrimination in the application of tax legislation by a local tax office.
- 13The grounds also suggest that access to existing institutions is protected under A1P1. Quite how being at a school is a “possession” within the ECHR caselaw is unclear, and once more no authority is given.
- 14I expect the Independent Schools Association doesn’t remotely want this outcome, and they expect that the education VAT exemption would be restored if their case is successful. But that’s not how the law works – they are bringing a case on narrow grounds and the courts should take those narrow grounds seriously.
- 15Thanks to Michael O’Connor in the comments for pointing out those parallels.
25 responses to “The private school VAT challenge: weak arguments, but radical consequences”
The bottom-line principle is that discrimination can be justified if a proportionate means of addressing a legitimate aim. Protecting the economic well-being of the country is a legitimate aim for the purposes of the Convention e.g. as per the case of ‘Andrejeva’. This includes really any tax or spend decision by government. So the question is simply one of proportionality. On this, the case seems hopeless in light of the Supreme Court judgment last year on the Art.14 challenge to the ‘two child limit’ for certain benefits. Lord Reed said “The answer to such a question can only be determined, in a Parliamentary democracy, through a political process which can take account of the values and views of all sections of society. Democratically elected institutions are in a far better position than the courts to reflect a collective sense of what is fair and affordable, or of where the balance of fairness lies”. He then went on to say “The democratic credentials of the measure could not be stronger. It was introduced in Parliament following a General Election, in order to implement a manifesto commitment (para 13 above). It was approved by Parliament, subject to amendments, after a vigorous debate at which the issues raised in these proceedings were fully canvassed, and in which the body supporting the appellants was an active participant (para 185 above). There is no basis, consistent with the separation of powers under our constitution, on which the courts could properly overturn Parliament’s judgment that the measure was an appropriate means of achieving its aims.” As VAT on school fees was similarly a manifesto commitment, hotly debated in Parliament and with the issues fully canvassed there, one would think that there is similarly no basis to overturn it.
Thanks, Michael. I’d quite forgotten the two child policy had been in a manifesto. The case is indeed directly on point.
I see I’m not allowed to reply to your last comment directly, so I’ll leave this here, not trying to start another long thread.
Dan, thanks again, but you’ve overstated your position and overlooked key parts of the legal framework.
“Hindrance” to education isn’t some invention. It’s embedded in the caselaw. In Cam v Turkey, the Court made clear that where a state provides educational institutions, it must ensure effective access to them (§43). Similarly, SAE Education ([2019] 1 WLR 2219, §43) confirms that VAT exemptions in education exist precisely to prevent access being hindered by increased costs. That’s directly relevant here.
The claimants aren’t claiming total denial of education, they’re showing practical exclusion where children cannot access suitable provision due to a new financial barrier, and where no viable state alternative exists. That does engage A2P1. And once A2P1 is engaged, Article 14 follows, especially when the burden disproportionately affects protected groups (faith communities, SEND children). That’s discrimination law 101.
You say the “very weighty reasons” standard doesn’t apply here, citing SC and CB. But that case involved broad welfare policy, not interference with a fundamental right like education. This case also meets the Bank Mellat proportionality test, especially the availability of a less intrusive, facially neutral alternative (a low-fee exemption), which the government rejected without sufficient explanation.
On the SEND point, you haven’t addressed the legal core: VAT is currently a hindrance for children with SEND who don’t have EHCPs, not in theory, but in practice, because the system is broken. “Jam tomorrow” is no answer. When two children have similar needs and only one is protected from VAT due to procedural luck, that’s textbook indirect discrimination.
You also claim that all ECHR tax cases fail due to margin of appreciation. That’s just not right. Darby v Sweden is a clear example where Article 14 + A1P1 were successfully invoked in a tax context, and Guberina v Croatia is even closer: a tax exemption denied to a family with a disabled child, with the Court holding that failure to account for real-world needs in applying a facially neutral rule was discriminatory.
Look, I can see this isn’t really a two-way exchange, you’re sidestepping points like proportionality, SEND discrimination and viable alternatives. You’ve got a view, and that’s fine. Personally, I think you’ve misapplied the law and overreached in your dismissal of the case. Time will tell. Let’s leave it there.
no, Çam v. Turkey does not say that. It’s a case about someone being barred from an educational institution. SAE Education is as irrelevant as the VAT case cited in the grounds – we interpret a definition in line with its purpose, but that says nothing about whether it’s permitted to restrict or remove the exemption. “Hindrance” is an invented concept. It’s also an incoherent one – how far would it go? And what tax rules would survive it?
I certainly didn’t say all ECHR tax cases fail due to margin of appreciation. I said it is a formidable barrier. I also said Gubertina v Sweden is an case about tax administration. The claimants’ skeletons show a remarkable lack of interest in the ECHR tax case law. The reason is pretty obvious.
Dan, thanks, but again, I think you’re misreading or downplaying the actual relevance of these cases.
Çam v Turkey isn’t just about being “barred” from a school. It’s about effective access. Here’s the key quote from §43:“Although Article 2 of Protocol No 1 cannot be interpreted as requiring the Contracting States to set up or subsidise special education establishments, any State which does have such establishments has an obligation to provide effective access to them. In other words, access to educational institutions which exist at a given time is an integral part of the right set out in the first sentence of Article 2 of Protocol No. 1.”
The issue here is exactly that—effective access to existing education, which becomes impossible when VAT pushes SEND-reliant parents and low-fee independent schools out of reach and the state sector offers no viable alternative for these children. The point isn’t that the state must fund all options, it’s that where education is permitted to exist, the state can’t construct indirect financial barriers “hindrance” that render it effectively inaccessible to those with protected needs.
SAE Education matters because it reinforces a basic interpretive point: the purpose of VAT exemptions in education is to prevent cost from “hindering” access. You call that “just definitional,” but in legal terms, purpose-driven definitions matter, especially when interpreting how the removal of an exemption could disproportionately exclude certain groups from educational provision. This isn’t about reading fiscal rules in isolation, it’s about their real-world impact on Convention rights.
As for Guberina v Croatia, it’s plainly not “just” about tax administration. It’s a direct Article 14 + A1P1 ruling in a taxation context. The Court found that failing to accommodate a disabled child’s needs in the application of a neutral exemption breached the Convention due to discriminatory impact. That logic transfers squarely to the EHCP/DLA point in this case: if a tax rule ignores the protected needs of certain children and deprives them of practical access to education, it’s open to challenge.
You also said the claimants’ skeleton shows “a remarkable lack of interest in ECHR tax case law,” and that “the reason is obvious.” But that cuts both ways. Legal strategy is often focused, not deficient. When the core claim concerns discriminatory impact on access to education, not tax miscalculation, it’s entirely legitimate to centre fundamental rights over technical tax jurisprudence. Your framing assumes that absence of tax case law is a flaw, but in rights-based litigation, that’s a narrow lens.
And let’s not ignore Ponomaryovi v Bulgaria, which puts a hard limit on how far states can rely on the margin of appreciation where access to education and discrimination intersect: “Very weighty reasons would have to be put forward before the Court could regard a difference of treatment [as justified] … The State’s margin of appreciation in this domain increases with the level of education, in inverse proportion to the importance of that education for those concerned and for society at large.”
The Court went on to stress that education is not like other public services: it enjoys direct Convention protection, plays a fundamental role in democratic society, and is essential to the integration of minorities.
So when a tax policy hits SEND families and low-income religious minority children with no meaningful alternative, it’s not just fiscal policy, it’s a rights issue under Article 2 Protocol 1 and Article 14.
I wasn’t going to reply again, but I do wonder why you’re brushing this aside with so much confidence. There’s a very high chance you’ll be wrong, and given how publicly you’ve dismissed the claim, that might be more than a minor embarrassment. And frankly, your response has avoided the human rights issues, SEND access, proportionality, minority discrimination, altogether. Maybe it’s worth considering whether this case sits slightly outside your usual terrain. We’ll see what the court decides.
You clearly have some background in this, but you don’t appear to read the ECHR tax jurisprudence. The fact you describe it as “technical tax jurisprudence” shows a fundamental lack of understanding. I’m not aware of anyone with expertise in this area who thinks the challenge has any realistic prospects. If we’re all wrong there will be profound implications, and a plethora of future challenges to tax legislation. It’s possible, but very unlikely.
Dan, I think you’ve got a blind spot here. Tax law is absolutely your field, and you’re right that ECHR-based tax challenges are often difficult. But this case is fundamentally not about VAT per se. It’s about a direct interference with a core Convention right, the right of access to education under Article 2 of Protocol 1, taken together with Article 14. That materially changes the legal framework and narrowly constrains the margin of appreciation normally afforded to states in fiscal matters.
Where this case differs sharply from the ones you’re thinking of is precisely this: they likely didn’t involve a new tax rule that had the effect of undermining a fundamental protected Convention right like education. Here, the policy in question disproportionately harms children with special educational needs and religious minorities, groups for whom there is no viable state alternative. That’s a real-world, rights-based challenge, grounded in jurisprudence from Strasbourg (see Çam, Guberina, Ponomaryovi), which affirms that where a fundamental right is impaired, courts must scrutinise the justification more closely.
In Guberina v Croatia (2016), the Strasbourg Court held that a facially neutral tax rule violated Article 14 with Protocol 1, Article 1, due to its discriminatory impact on a family caring for a severely disabled child. The ruling confirmed that tax measures must account for real-world effects on protected groups, and that failure to do so can breach the Convention. Where tax policy disproportionately hinders access to education for SEND or religious minority children, Guberina supports the argument that this may cross the line into a human rights violation.
You also said you’re unaware of anyone with expertise who thinks this claim has realistic prospects. Well, three senior judges, including two from the Court of Appeals, granted permission and expedited it to a three-day Divisional Court hearing. That fact alone should prompt serious reflection. Judicial review permission is not granted “unless satisfied that there is an arguable ground for judicial review which has a realistic prospect of success”. If it were as hopeless as you suggest, it wouldn’t have survived the paper stage, let alone been escalated with such urgency.
And you’re also wrong to think this opens the floodgates. The courts have long held that discriminatory tax treatment needs robust justification. Where the legislation disproportionately burdens a vulnerable group, and no proportionate alternative has been considered, the Court is entitled, indeed required, to intervene.
Finally, while you’re fixated on the implications for tax policy, you’re missing the far more serious, human impact. If this claim fails, the message it sends is chilling: that a government can sidestep its human rights obligations under the guise of fiscal reform, even when the result is to deny tens of thousands of vulnerable children meaningful access to education. These are children with legal protections under the Human Rights Act. This isn’t an abstract tax policy, it’s a matter of real-world suffering, of futures being foreclosed. And it strikes at the very core of what the Convention exists to prevent.
So if you’re wrong, not only will the consequences for tax law be manageable and narrow, but your public dismissiveness will have overlooked a serious rights-based claim with significant human stakes.
That is not correct. Permission for JR has not been granted. This is a “rolled-up” hearing, combining the permission stage and final hearing, granted because of the urgency and importance of the question, irrespective of the merits.
There have been numerous tax ECHR cases where discrimination was alleged involving other Convention rights (I mention some of them in the article). The same approaches were applied across these cases, and I am reasonably confident will be applied here. When you described them as “technical tax jurisprudence” that tells me you haven’t read any of the cases – because I’m not aware of a single one that falls in that category.
Take your sentence “Where the legislation disproportionately burdens a vulnerable group, and no proportionate alternative has been considered, the Court is entitled, indeed required, to intervene.” Where does that principle end? What tax and benefit changes would courts quash? The two child benefit cap? The winter fuel payment income cap? Child benefit clawback? The regressive nature of council tax? Spending cuts? Tax cuts? Tax rises?
So what we’ll almost certainly see is a judgment which is sympathetic to the issues but says this is a political matter involving the implementation of a manifesto commitment, and it’s not the role of the court to substitute its judgment for Parliament. Which is exactly what the Supreme Court said in the two child benefit cap case.
Dan – this is a thorough tax analysis, but the challenge isn’t about tax, it’s about human rights. And on that front, I’d suggest Lord Pannick KC and his team probably have a deeper grasp of A2P1 and Article 14 than most tax commentators.
You argue the case has no realistic prospect of success, but it’s been granted permission by a three-judge panel and fast-tracked to an expedited hearing. That tells us there is clearly something to be answered. You can disagree with the arguments, but the court evidently thinks it’s serious enough to warrant a proper hearing.
You’ve also misrepresented the exemption being sought. It’s not based on religion or nationality, it’s for low-fee schools charging less than the government’s own state-sector per-pupil spend (£7,690). That’s a neutral, proportionate way to avoid disproportionate harm. It was proposed during consultation, with supporting evidence, and ignored.
On children with special educational needs: the exemption should also cover those receiving Disability Living Allowance, not just those with EHCPs. The EHCP system is widely acknowledged, even by the Government, to be broken and inconsistent. It would be deeply unfair if only children who manage to navigate that flawed process receive support, while others with equally significant needs are excluded.
The claimants have shown the policy disproportionately harms specific minority communities and children with SEND, particularly those relying on low-fee religious education unavailable in the state sector. That’s a textbook example of indirect discrimination under Article 14, and it deserves judicial scrutiny.
You say you’re “uncomfortable with the idea of judicial review of tax legislation” and warn that human rights challenges would create “chaos” in the tax system. But then you concede that even if successful, the most the court can do is issue a declaration of incompatibility, simply asking Parliament to think again. As you put it: “even in principle, the Human Rights Act cannot override primary legislation, all a successful challenge can do is provide a ‘declaration of incompatibility’.”
That’s not chaos. That’s constitutional modesty. It’s the built-in check our system offers when a law causes disproportionate harm. And if this Labour government, under Keir Starmer, who has built his brand on human rights and international law, chose to ignore such a declaration, that would be politically extraordinary.
You can’t have it both ways. If you believe the court’s remedy doesn’t override Parliament, then there’s no basis for the fearmongering about judicial overreach. The case may be ambitious (I don’t think it is!), but it’s working through exactly the democratic and constitutional process designed to test the limits of fairness under law.
P.S. Dan, while your analysis is appreciated, it’s important to note your role within the Labour Party. As a member of the National Constitutional Committee, the party’s senior disciplinary body, your perspectives on policies closely associated with Labour could benefit from a disclosure of this affiliation. Transparency in such matters ensures that readers can fully appreciate the context of your insights.
The points you’re making here are political. You’re not engaging with the caselaw.
Pannick is being paid to take a side. The fact he then takes that side is no evidence of its strength. I expect he advised there is a low chance of success.
Anyone who reads this website knows that my positions are more often contrary to Labour Party policy than they are in favour of it.
Dan – just to clarify, the challenge has three distinct grounds, with the last one being A2P1 read with Article 14. A2P1 is clearly engaged here. It protects the right to education, “No person shall be denied the right to education. In the exercise of any functions which it assumes in relation to education and to teaching, the State shall respect the right of parents to ensure such education and teaching in conformity with their own religious and philosophical convictions.”
That right applies equally to independent schools. As the Grand Chamber put it in Şahin v Turkey: “The fundamental right of everyone to education is a right guaranteed equally to pupils in State and independent schools, without distinction.” ([2005] 44 EHRR 99, §153)
It’s also engaged where access to existing schools is materially hindered. See Cam v Turkey: “any State which does have such establishments has an obligation to provide effective access to them.” (App. No. 51500/08, §43)
Here, many children, whether due to SEND or religious constraints, cannot access alternative state provision. A 20% VAT surcharge makes suitable education inaccessible for them, particularly where there is no practical state alternative. That clearly engages A2P1, even if it’s not breached in isolation. The moment a protected group is disproportionately affected, Article 14 is engaged, and “weighty” justification is required.
You claim this is all political. But the proportionality test, under Bank Mellat v HM Treasury, is well established. It includes the question: “Could a less intrusive measure have been used without unacceptably compromising the objective?” ([2014] AC 700, §74)
Here, the Government was offered one: a neutral exemption for low-fee schools charging below £7,690. This wasn’t about religion or nationality. It was about economic thresholds, evidenced, and entirely facially neutral. You’ve misrepresented that, and you haven’t responded to its legal significance and to the comment I made about this.
You also dismissed the SEND point as misdirected. But if a child receives Disability Living Allowance yet can’t secure an EHCP due to systemic failure (as even the Government admits), it’s discriminatory to exclude them from a benefit given to other analogous children. That’s precisely the sort of indirect discrimination Article 14 is meant to capture. And the impact is severe: families of SEND children being priced out of the only viable school setting.
You treat this as just another marginal tax complaint, but VAT on private education isn’t just about money. It affects a fundamental protected right. As the Supreme Court recognised in SAE Education v HMRC: “access to higher educational services should not be hindered by the increased costs that would result if those services were subject to VAT.” ([2019] 1 WLR 2219, §43)
You argue this opens the floodgates, but this is a narrowly framed, fact-specific challenge, and even you concede: “All a successful challenge can do is provide a ‘declaration of incompatibility’.” That’s not judicial overreach. It’s constitutional modesty. And if a Labour government under Keir Starmer, who has built his reputation on rights and rule of law, chose to ignore such a declaration, that would be politically extraordinary.
You may be a tax expert, but this isn’t a tax case, it’s a human rights case. And it’s noticeable that your piece doesn’t seriously engage with that. Frankly, I’d be surprised if a declaration of incompatibility isn’t issued. If you’re going to offer legal analysis on human rights grounds, it should be grounded in the relevant framework. Happy to continue the conversation if you’re willing to engage on the actual legal issues raised.
Dan, given you sit on the Labour Party’s National Constitutional Committee—the party’s senior disciplinary body, I trust that if a court were to issue a declaration of incompatibility with the Human Rights Act, you’d gently remind the government of its manifesto commitment to uphold international human rights. Would be a bit awkward otherwise.
It’s an ECHR tax case, and I have expertise in ECHR tax, and advised on it for many years. My article is pretty short but it engages with a bunch of relevant tax and non-tax human rights authority. Not sure why you think it doesn’t. Also not sure why you think Çam v Turkey is helpful. It’s another case about denial of education. It doesn’t establish any principle about “hindering”. So far as I can see, the principle was invented for this case.
If there’s a discriminatory failure to provide an EHCP then that could and should be litigated. VAT is a side issue.
Thanks Dan. But again, you’ve sidestepped the actual legal arguments raised.
You say Çam v Turkey is just about denial, but that’s exactly the point: where access is effectively denied due to financial barriers (as SAE has shown that VAT is) and lack of viable state provision, A2P1 is engaged. The judgment says the State must ensure effective access to existing educational institutions. That’s the issue here: for many children, especially those with SEND or from minority communities, there is no meaningful alternative in the state system, and VAT now makes independent provision inaccessible. That’s not political, it’s legal, and directly within the Strasbourg framework.
You also haven’t engaged with the combination of A2P1 + Article 14. Once A2P1 is engaged, even if not breached in isolation, any disproportionate impact on a protected group requires “very weighty” justification. You haven’t addressed that, nor explained how the Government’s refusal to adopt a facially neutral, less intrusive alternative (as required under Bank Mellat) could possibly be proportionate.
You also haven’t responded to the legal point on DLA. Excluding SEND children who don’t have EHCPs, due to well-documented failures in the system, isn’t a side issue. It’s precisely the kind of unjustified indirect discrimination Article 14 is designed to capture.
We’re not arguing about whether children could get EHCPs in future, we’re asking whether VAT is a hindrance to education now for children with comparable needs but no EHCP, because the system is broken. “Jam tomorrow” is no answer. When two children have similar (or even identical) needs, and only one is protected from VAT because the other fell through a failing system, that’s textbook indirect discrimination. You haven’t addressed that at all.
If your position is that this isn’t even arguable under A2P1 and Article 14, then you’re not engaging with the case law cited, or the factual matrix that a senior three-judge panel already found serious enough to grant permission and expedite. Still happy to hear your take on those actual legal issues, because so far, we haven’t really got there.
“Effectively denied due to financial barriers” is a concept that was invented for this case. It has no support in the caselaw. “Hindrance” has no support in the caselaw. The “very weighty” test isn’t applied in this context – see R oao SC and CB v SoS for Work and Pensions.
But the fatal point for this, as for almost all tax ECHR cases, is margin of appreciation. This is where almost every tax ECHR challenge has failed, and this one will too. To say I didn’t engage with the caselaw is very odd, when the article goes through the caselaw. The grounds don’t even mention any ECHR tax caselaw, and don’t use the phrase “margin of appreciation”. So describing the case as “weak” was kind of me.
I was more amazed that the Fox Killer wasn’t behind this, as he is the hopeless challenge to the Supreme Court recently on gender.
Oh to live in the fantasy world of the entitled, the world where only they exist and sod the general taxpayers. Unless such challenges are regarded as vexatious then the fueling of these issues through social media crowdfunding campaigns will carry on.
The High Court needs to send out a clear message, but doubt this will stop them. Messrs Sue, Grabbit and Run have never had it so good!
Dan, thank you for your detailed piece. It’s thought-provoking as always. That said, I think your argument underestimates both the legal seriousness and the human impact of the challenge to VAT on private school fees.
You argue that the legal basis is weak, but the case rests on more than just abstract principles. There is clear and growing recognition in UK and European human rights law that economic policies can have discriminatory effects, especially when they intersect with children’s rights, religion, and disability. The right to education under Protocol 1 Article 2 of the ECHR isn’t just about theoretical access. It requires that education be meaningfully available. If the state cannot meet the educational or religious needs of a child and the private alternative becomes unaffordable due to VAT, that’s not a trivial concern. It’s potentially a breach of a fundamental right (Kjeldsen, Busk Madsen and Pedersen v. Denmark, 1976; Campbell and Cosans v. UK, 1982).
You also treat tax uniformity as a near absolute good. But the tax system is full of deliberate exceptions. We zero rate children’s clothes, exempt charities, and support faith schools within the state sector. We already accept, as a society, that certain goods and services deserve special treatment when broader public interests are at stake. This is not about creating loopholes for the rich. It’s about protecting access for families who rely on private schools out of necessity, not luxury. Even the Charity Commission recognises educational access as a public benefit, which is why most private schools have charitable status to begin with.
Another key issue that doesn’t get much weight in your piece is the real world fallout. Even if you’re right that the legal case is unlikely to succeed, the impact of this policy is already being felt. Loretto School, for example, is planning to cut up to eight teaching positions due to declining enrolments attributed to the VAT threat (The Times, 1 May 2025). A Rathbones analysis suggests parents will need to find nearly £76,905 extra per child to cover fees from age 5 to 18 (The Times, 29 April 2025). SEN students may be particularly affected, with reports that many will be forced back into state schools unable to meet their needs (The Guardian, 1 April 2025). If even 5 to 10 percent of pupils move across, the cost to the state could cancel out the supposed £1.8 billion revenue.
Finally, I think it’s overly simplistic to suggest that courts should stay out of tax policy altogether. Judicial review doesn’t exist to manage the economy. It exists to protect legal and constitutional principles. The UK Supreme Court has affirmed this even in tax-related cases, such as SC and others v. Secretary of State for Work and Pensions [2021] UKSC 26, where the court accepted that indirect discrimination from economic policy can and should be subject to legal scrutiny. If the government enacts a policy that disproportionately harms specific groups, courts are not just entitled but obliged to examine whether it breaches protected rights.
You’ve rightly flagged the risk of courts overreaching into tax decisions. But the bigger risk is if we assume taxation is beyond challenge even when it hits certain communities unfairly. The legal challenge is not about undoing the whole VAT system. It’s about making sure this particular policy doesn’t cause unintended and disproportionate harm. That’s a worthy question for the courts to consider.
Most of that is political. The two cases you cite are, like those cited in the grounds, not on point. One concerns a child withdrawn from school because of sex education; another concerns a child withdrawn because of corporal punishment. Neither comes close to establishing the “hinder” principle that the grounds claim exists.
I have always loved the Margin of Appreciation ever since I first clapped eyes on it in the EU Law module. How did they think that one up? This application is the Culture Wars Come To VAT. Go to The Times homepage and there will almost certainly be an item about how families with a household income of < £100k will be at the food banks because of VAT on school fees. Yet I think I detect a little anxiety as to this application's prospects. Nice and clear, and great refs as usual. The child litigants and their lit. friend parents has a slightly creepy feel to it. I hope that their anonymity is durable.
Excellent article which clearly outlines the naive approach many in this sector have held since VAT was first mooted.
It’s also now proving, very quickly, not not be giving the returns first envisaged, with over 22 private schools now folded and those children subsumed into the state sector, and several hundred families moving into the state sector voluntarily. That brings an increase in cost, a reduction in availability and more pressure on an already broke state education system.
Projections sit at around 100 more schools are due to close in the next three years due to mounting financial pressures.
Farcical.
Thanks, Dan – not least for the opportunity to see the grounds of claim in more legal detail.
Overall my guess, like yours, is that the case will be lost…because of the state’s very wide margin of appreciation when it comes to tax matters. And I agree with you that it is odd that the grounds of claim don’t even seek to address this.
But I would disagree with you on two points.
First, that tax legislation shouldn’t be capable of being JR’d. Take – as an extreme example to make the point – a new tax that taxed blue-eyed people twice as heavily as brown-eyed people. That would clearly be discriminatory and it should be open to the courts to say so. But the outcome would (respecting Parliamentary sovereignty) merely be a declaration of incompatibility…the legislation would still stand. That seems to me to strike the right balance between Parliament and the Courts.
While we want to stop spurious claims, the not insubstantial costs of JR plus the need to have permission to bring the claim plus the state’s wide margin of appreciation are all suitable barriers to this. Like you, I got fed up with EU principles overriding UK tax legislation, but I think that JR challenges on HRA grounds are an appropriate way in which a democratic society can test the limits of the laws that Parliament passes – without infringing the principle of Parliamentary sovereignty.
The other point on which I disagreed was with regard to “hindering”. While I can see your point that hindering something does not prevent it, there must come a point at which – in effect – it does. Before I got to your final paragraph I wondered about a 300% VAT charge. You then said that 100% VAT would do so…but why is 100% a magic figure. It “only” doubles the cost. I can’t see that 100% has any more magic to it than 300%…or 20% (or effectively 15%). There must come a point on that spectrum where the hindering is sufficiently significant that it prevents access to the A2P1 rights…and it is surely open to the courts to decide where on the spectrum this particular case lies.
(In my view the court will likely say that 20% VAT is not far enough along that spectrum).
I don’t think the reference to 100% is to VAT but more general. Like in the Hungarian case cited with a 98% tax on specific income,
So if the provider was subject to 100% tax on its fee income with no deduction for costs, making it impossible to offer private education, that would be equivalent to banning it and subject to challenge as that would “impair the very essence of the right to [private] education.”
I think the fact that permission was given for JR in this case suggests that the existing “suitable barriers” are not preventing spurious claims. But I do agree with you that they can be an appropriate way to challenge decisions, including tax decisions, in certain circumstances.
I think there is a difference between income tax and VAT, though. With income tax, a tax of 100% would confiscate the whole of that income. But with VAT (as it is a sales tax), 100% tax merely doubles the price and there is no reason why (in theory at least) VAT rates shouldn’t be higher than 100% (witness Trump’s China tariffs which are >100%). So with VAT there is no natural threshold in the same way there is for income tax.
I agree, but Dan did not mention 100% VAT at all.
“ It seems plausible that banning private education, or taxing it at 100%, would be a breach.”
I think from the context he is referring to a tax rate that is the equivalent of a ban, so 100% for tax on income as an example. You are right that a 100% VAT rate would not be the equivalent of a ban, but I don’t think the article says it would be.
Apologies if the article comes across as overstating the point. In extreme cases, tax legislation absolutely should be subject to JR (think: the Hungarian tax). When a tax turns into a purely penal measure is a difficult question!
This is the most telling statement you have made, ‘When a tax turns into a purely penal measure is a difficult question!’. We are dealing with children and given the tax is not about raising revenue and really about political ideology, disclosure on the part of the state showed this, it is penalising disabled children. Your arguments look at this group as able bodied adults and not disabled children.