A major college group’s venture in Saudi Arabia has officially ended – but questions hang over whether millions of pounds in tax will need to be handed back.
Activate Learning has run The Oxford Partnership LLP – a group of four colleges for female students – in the Kingdom of Saudi Arabia as part of the country’s Colleges of Excellence programme since 2014.
But the college group failed to reach an agreement to renew the funding contract when it expired in 2020, so The Oxford Partnership LLP ceased trading and went into liquidation in April 2022, according to Activate’s recently published accounts.
At the point of liquidation Activate Learning wrote off a £31,500 initial investment, but there is concern that the Saudi Arabian tax authority could come knocking.
The group’s accounts said: “Prior to being wound up, The Oxford Partnership LLP was appealing against income tax and withholding tax determinations from the Saudi Arabian tax authority in relation to certain tax treatments adopted for the financial years 2015 to 2018.
“Although the group have received professional advice that the tax treatments used were appropriate and in accordance with relevant legislation, there is uncertainty over whether the group will be pursued for settlement.”
As a result, Activate Learning has held a £2.4 million liability within its latest financial statements, which represents the “remaining net assets of The Oxford Partnership LLP in case a future claim should arise”.
A spokesperson the college group added: “We have been prudent in providing for disputed legacy tax liabilities, should they materialise. Given the circumstances, it would be inappropriate for us to comment further on the matter.”
Colleges of Excellence was founded in 2013 to boost technical and vocational education and training in Saudi Arabia through partnerships with international providers.
However, a number of providers dropped out of the programme early on as challenges with operating in the region became apparent.
Several England-based colleges that were involved experienced various financial issues, and the number involved in the country has dropped significantly.
Activate Learning’s spokesperson explained that the group’s operation in Saudi Arabia ended when funding contracts came to a natural conclusion. The group was seeking a renewal, but at that time, the “local agency responsible for commissioning the delivery of teaching and learning in the region were looking to work with a local partner, rather than continuing their relationship with an international college”.
Just two England-based colleges appear to still operate in Saudi Arabia: Burton and South Derbyshire College and Lincoln College Group.
Burton and South Derbyshire College’s current contract expires in 2023.
A spokesperson said the college was in “meaningful dialogue with Colleges of Excellence, whilst also exploring other commercial opportunities in the country”.
The spokesperson added that the college would not expect its Saudi Arabian operation to be impacted by the recent reclassification of colleges to the public sector, as it has worked in the country “for over a decade and, for this reason, do not see this work as novel, contentious or repercussive”.
Lincoln College Group was unavailable for comment.