Court of Appeal judges have rejected claims that the introduction of VAT to private school fees is incompatible with human rights law.
Several schools, children who attend them, and their parents, had previously brought legal action against the Treasury, claiming the policy is incompatible with human rights law.
Three judges had already dismissed the High Court challenge in June last year.
In a decision on Friday morning, the Court of Appeal dismissed the appeal to that decision.
In a 44-page judgment, Sir Geoffrey Vos, Lord Justice Singh and Lady Justice Falk said the government had provided reasonable grounds for not exempting low-cost private schools from VAT, including that it “would have serious detrimental consequences”.
They continued: “We acknowledge that the measure may have a serious impact on the group one claimants if they are unable to afford private education, which accords with their religious convictions, but it is important to bear in mind that they have the option of home schooling if free education in the state sector is not acceptable to them.”
The government’s policy, which levies 20 per cent VAT on private school fees, came into effect on 1 January last year.
At the appeal hearing in January, Bruno Quintavalle, from Emmanuel School in Derby, which educates children aged three to 11, alongside a group of Christian schools, claimed in their written submissions that: “The court was wrong to hold that there was no interference with the rights of the schools to the enjoyment of possessions.”
Mr Quintavalle added: “The court was wrong to view the introduction of VAT as simply diminishing the future income of the schools: the evidence before it was that this would render the schools unviable.”
He also claimed the court had wrongly found the introduction of the VAT measure did not impair the very essence of the right to an effective education.
He said: “What matters for the present claim is that individual rights, not necessarily those of a larger group, whether termed 'Evangelical Christians' or otherwise, have been interfered with.
“Since the evidence before the court is that the individual appellants' convention rights have been interfered with, this is a complete answer to the group detriment arguments.”
However, Sir James Eadie KC, representing the Treasury, HMRC and the Department for Education, argued that even with the introduction of VAT on private schools, parents still had the choice to send their children to free state schools or to home-educate them.
In written submissions, he said: “A tax on an optional service that a consumer can elect not to use – a fortiori where, as here, the state makes the same service available for free for all children – does not interfere with the property rights of a person who may, or does wish to, purchase the service.”
He added: “A tax is not unlawful or disproportionate merely because the taxpayer does not personally benefit from the service it pays for.”
Sir James also said the court “correctly held that, in deciding whether the challenged measure was proportionate”, should give Parliament a broad margin of discretion.
Sir James said: “That conclusion is unimpeachable.”
The Independent has contacted the government for comment.
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