In recent months, subcontracting partnerships have been changing their business models and reassessing deals with outside companies after the Government decided to end the service's VAT exemption (YPN, 9-15 June, p2).
David Brace, policy officer at the confederation's education group, said: "The problem stems from a decision made by Customs & Excise to not make education providers exempt from VAT. With the move to direct delivery, it has been like an aggressive merger with partnerships taking on staff and resources from careers companies."
Nord Anglia, CfBT and VT Careers are among the firms that have lost deals as a result.
Barry Hitchins, chief executive of Connexions York and North Yorkshire, said his partnership had switched from subcontracting to a local authority lead body to avoid paying about 850,000 a year in VAT.
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