Private college goes Dutch but says profits are taxed in UK

Student loan income at institution owned by BV holding company rises

April 17, 2014

The for-profit college with the fastest growth in income from taxpayer-funded students is owned by a holding company in the Netherlands, a structure that some companies have used for tax advantages, Times Higher Education has learned.

London-based St Patrick’s International College has more than 4,000 students on public-backed loans studying sub-degree level higher national certificate and higher national diploma courses – the highest number of any private college.

St Patrick’s is linked to the London School of Business and Finance. LSBF has the second highest number of students on public-backed loans studying HNCs and HNDs (1,354), according to government figures released in a parliamentary answer to Liam Byrne, the shadow minister for universities, science and skills.

Companies House documents show that St Patrick’s is owned by St Patrick’s Holdings BV. The “BV” structure, the Dutch equivalent of a private limited liability company, has been used by companies such as Starbucks. The Netherlands does not require company accounts to be made publicly available and its tax regime is regarded as favourable.

A St Patrick’s spokesman said the structure “does not affect the liability of UK subsidiaries for corporation tax on profits arising from trade or business conducted in or from the UK”.

In April 2012, St Patrick’s was taken over by Interactive World Wide Limited, owner of a wider group of colleges to which LSBF is linked via the Russian-origin Etingen family. IWWL’s majority shareholder is Arkady Etingen, also known as Aaron Etingen, the founder of LSBF. But since the IWWL takeover, ownership has been transferred, to St Patrick’s Holding BV.

The expansion of private higher education provision mounted by David Willetts, the universities and science minister, allowed St Patrick’s to boost its domestic income via the Student Loans Company. In 2012-13, the college grew its income from SLC-paid fees to £11 million, after being so small before that it was unlisted in the previous year’s figures.

Sally Hunt, the University and College Union’s general secretary, said: “The government has created a situation where companies that lack transparency and accountability are profiting from subsidies while public universities are seeing budgets slashed.”

LSBF and St Patrick’s are both listed as “partners” of Global University Systems, of which Mr Etingen is founder and executive chairman.

Asked who owned the Dutch holding company, a St Patrick’s spokesman said: “St Patrick’s Holdings BV is wholly owned by Global University Systems BV, also a Dutch company. Global University Systems BV is a privately owned operator in the global education market.”

He said it was “entirely appropriate for students attending UK colleges in which European or overseas investors have a significant or controlling interest to receive UK government-funded grants and loans”, provided those colleges met the government’s “stringent” checks.

The St Patrick’s spokesman added: “The scale of UK government support for UK students enrolled at institutions owned by overseas investors could usefully be compared with the scale of the income received by UK publicly funded HEIs from overseas students in receipt of scholarships, grants and similar aid financed or subsidised by their governments.”

john.morgan@tsleducation.com

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Reader's comments (8)

It is interesting that an HND in Law from St Patrick's college will allow entry to the *first* year of a University of London Law degree but the *final* year of a Business degree at a former Poly. Since both HND's are awarded by Edexcel, we must assume they are at the same level. Does it mean the *final* year of the business degree is at the same level as the *first* year of the law degree from London?
To Robert Slack, Probably what it means that the entry requirements bar at University of London is higher than at the former Poly. Moreover, the way Edexcel HND qualifications being awarded or distributed (I must say) by the private providers including the ones mentioned in the article above has completely devalued this course. Most of the students in these private colleges are not there to study but to gain access to public finance. These colleges are also not promoting education but they are selling the loans and grants to the students as their promotional tactic. Few of the students at these colleges including the ones mentioned above in the article are running their own businesses and are not fit to be on this course (HND). However, they have been admitted with the promise that they would be assessed via the coursework which can be purchased through various sources. It does not matter whether the students are from UK itself or Romanians or Bulgarians - there is lack of genuine intention to study and the lack of capability to complete this course on the part of the students and the providers ignore these facts as they focus only on the tuition fees received from SLC
I read the comments attached and it is nonsense based on a lack of understanding of academic mapping and qualifications. Different universities and different facilities map qualifications at their own discretion when it comes to APL. A level 5 award will allow you into some university top up programmes, but at others only into the second year. An award being QCF level 4/5/6 doesn't mean it translates into all universities as an equivalent they will accept or that any provider is devaluing them. Interestingly universities of varying levels take students from unrecognised foundation programmes globally into their first year, Nigeria being a typical example, in a rush for students. This devalues UK based international foundation programmes and to some extent A levels. This is a true example of a focus on tuition fees from the public sector no less.
It is important to make money and save them by paying as less taxes as possible by decreasing taxable amount. It is common in financial sector to create group of companies to issue invoices to each other to move money to zones where taxes are less. They only thing why is it happening in education field and why do they need to hide ownership by registering holding company in Holland?
Global University Systems now includes amongst its 'owned brands': LSBF St Patricks School of Fashion & Design London College of Contemporary Arts etc But things are fluid - Magna Carta College, Oxford, was listed, and now isn't. The two biggest outfits (LSBF & St Patricks) still haven't got course designation for 2014. Maybe all's now well in this exciting world of corporate HE structures?
Lsbf is going to turn out shocking lots of new comers to uk,looking for higher education....
I found this strange, that most commentators are calling LSBF, St. Patrick's all sorts of names. Is it mainly because they are private institutions? Some say these institutions are a "student visa mill". Honestly, what would you call UCL (33% of its students are foreign), LSE (with 42% of its students on visa and who famously sold the University's rights to the former Libya dictator Gaddafi and his sons), Imperial has over 38% of its students on visa and the list goes on? This is normal in my opinion. It is true LSBF sponsors students from the soviet states. i cannot see anything wrong with that. The sponsored bring in vital funds to the UK economy. LSE is bringing into the UK thousands of Chinese and Asians, more or less doing the same as LSBF. Why should this be wrong if done by LSBF or St. Patrick's? Because the majority of commentators cannot stand private enterprise?
The fact that 'emcontext' chooses to compare both the 'LSBF' and 'St Patricks' with either the LSE or UCL shows, in my opinion, just how far adrift from reality some academic commentators are.

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