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VAT Free Assisted Instrument Purchase Scheme

Something every parent should know... Read on and find out how AIPS works.

• First, check with your School or Music Centre that they operate the 'Assisted Instrument Purchase Scheme'.
• You come into our shop and hand pick your own instrument from a large selection or telephone and reserve an instrument.
• Obtain the necessary form from your School/Music Centre - if they do not have a form you can download a copy of our Assisted Instrument Purchase Scheme form here.
• Complete your details on the form and the choice of musical instrument. Please note that the form contains provision for an 'Administrative Charge' so you will need to check with your School/Music Centre to establish if they make such a charge.
• After completing your details and instrument choice, you need to pass the form along with your payment to the School/Music Centre for them to complete their details and send the form to us as an official order.
• The instrument will then be dispatched to the School/Music Centre at no extra charge.
• Finally, you collect your chosen instrument from your School/Music Centre.

The AIPS - Assisted Instrument Purchase Scheme - Changes in the 1995 VAT (Education) Order now enable School pupils to purchase musical instruments free of VAT. The procedure for this scheme has been approved by HM Customs & Excise and was reviewed in September 1995 by the VAT Office. To comply with HM Custom and Excise rules the following criteria must be satisfied:

• The student must be in full time education at an LEA School.
• The student must be receiving music tuition at the School/Music Centre.
• The instrument must be appropriate for the student's needs.
• The instrument must be portable.
• The instrument must change hands on Educational premises.

There are two major issues which often arise concerning the Assisted Instrument Purchase Scheme:

Firstly, many LEA Schools ask if the scheme is really legal.
Secondly, parents of children attending Independent Schools often ask if there is some way in which their children can be eligible for the scheme.
The answer to both issues is yes.

Although the instrument is purchased by the School/Music Centre, Dawkes Music retains all the purchase and serial number details for warrantee purposes. If you need further information about the Assisted Instrument Purchase Scheme please telephone us on 01628 630800 or contact your child's instrumental teacher at the School/Music Centre.
Many Education Authorities have their own AIPS form and can only use their own AIPS form - so please check with your relevant authority before using the form provided here.

The AIPS form has been produced in Adobe Acrobat (PDF) format. You will need to have Adobe Acrobat Reader installed on your computer to print it.
It can also be downloaded from the Adobe web site by clicking here.

Below is an extract from a letter from HM Customs to the Music Industries Association clarifying the legality of the scheme.

Vat: Assisted Instrument Purchase Scheme (AIPS)

I would like to turn first to the question of why the scheme applies only to LEA-maintained schools.
Local authorities are refunded any VAT they incur in delivering their non-business statutory activities, including the provision of education.
The object of this is to prevent VAT falling as a burden on local taxation.

Independent schools are not publicly funded bodies and, therefore, when such schools provide musical instruments to their pupils as part of a music course, they must either bear the VAT costs themselves, or pass it on to students in the price they charge for instruments.
Nonetheless music courses provided by independent schools are free from VAT.

With regard to AIPS, many local authorities have introduced voluntary schemes under which they are prepared to subsidise the cost of musical instruments - AIPS being the umbrella term for such schemes.
AIPS enables qualifying students to purchase musical instruments through their LEA music service or school (often at reduced prices and net of VAT) for use as part of the normal school curriculum.

The operation of AIPS varies according to the policies of the LEA involved, but the following basic conditions will apply in most cases.

• The LEA or school must place the order for the instrument and accept the delivery;
• The LEA or school must be invoiced - enabling them to recover the VAT;
• The transaction between the student and the LEA or school must take place on LEA or school premises in a room that is normally used for teaching;
• The instrument must be appropriate to the student's needs and ability;
• The instrument must be portable and taken to LEA premises or school on a regular or weekly basis for use during lessons (from either the school or the local authority's education department); and the LEA or school must sell the instrument to the student at or below cost.

Where local authority schools meet these criteria and are therefore able to obtain a VAT benefit, they may choose to reflect this benefit in the price they charge on to students for what are essentially items to be used in class. However, this is entirely up to the local authority concerned. When a student receives regular tuition from the LEA's music service there is usually no requirement for him or her to be a student of one of the local authority's schools. If their local authority operates such a policy, this may enable students of independent schools to take advantage of musical instrument purchase under AIPS.

To summarise. It has always been a feature of the VAT system that local authorities can recover the VAT they incur on their non-business activities, including the provision of education. This explains why schools that are not publicly funded cannot be part of AIPS. However, although open only to LEAs and LEA-maintained schools, AIPS itself is a purely voluntary scheme which different local authorities are free to operate in different ways.

Although the instrument is purchased by the School/Music Centre, Dawkes Music retains all the purchase and serial number details for warrantee purposes.