School closed over VAT on fees ordered to pay teachers' lost wages
Kilgraston School in Perthshire closed in August last year with debts of more than £910,000 despite campaigning by parents and alumni to save it.
The boarding school claimed it was a victim of the chancellor Rachel Reeves's decision to end the VAT exemption for fee-paying schools.
At tribunals brought by teachers and staff who lost their jobs Judge Ian McFatridge ruled that wages had been unlawfully withheld by school management in the months leading up to Kilgraston's closure.
His judgment, first reported by The Courier, also stated that staff who made claims should be awarded damages for being 'dismissed in breach of contract' in two instances.
• Magnus Linklater: We all lose from Labour's VAT on school fees
Kilgraston, in Bridge of Earn, failed to recruit enough pupils to stay afloat and its historic estate will be auctioned this month, having been valued at more than £1.6 million.
McFatridge ordered Kilgraston School Trust to pay a total of £23,430 in unpaid wages and subsequent damages to three former members of staff.
Kilgraston School Trust, which is now sequestered by PwC, did not respond to any of the claims brought to the tribunal.
George Heriot's School has just agreed a 6 per cent increase in fees
ALAMY
In a letter to parents and former pupils sent last year, the school claimed the potential impact of changes to VAT exemptions for private schools and a roll of only 173 pupils were factors in its closure. It claimed it would need 210 pupils to break even and would have to plug an £860,000 black hole in its finances.
The school also had £3.4 million of loans and finance commitments to pay. It was left with 'no choice' but to close, the board of trustees said.
• Private schools VAT plan will benefit England over Scotland, says head
Labour's controversial introduction of VAT on private schools was estimated to raise an extra £1.7 billion for the Treasury and to generate £150 million for Scotland's budget. However, head teachers warned it could have unintended consequences, such as the closure of private schools and overcrowding in state schools accommodating new pupils.
Fee-paying schools across Scotland have raised concerns about the rising costs of private education and the impact on parents. Governors at George Heriot's School in Edinburgh agreed a 6 per cent increase in fees for this academic year while George Watson's College, also in Edinburgh, put fees up by 9 per cent, an increase of nearly £2,000.
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