VAT on private tuition

VAT on private tuition

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I started a thread a little while ago about the 'WJB Scheme' which I have since found out it's not called anymore!

Basically I have a client who's a dance teacher and he thinks that he can set himself up as a 'not-for-profit organisation' under the 'private tuition' banner and therefore be VAT exempt - the original company then charges the not-for-profit organisation for use of the name, hire of the equipment and a licence to occupy the premises.

The profit is then taken out of the original company whilst not having to register the new organisation for VAT.

Has anyone come across this at all?

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By Steve Kesby
03rd Sep 2012 13:59

Who advised him to incorporate in the first place?

If he were self-employed, the supply of private tuition would already be exempt.  have you considered disincorporation? Any goodwill is likely to be personal goodwill. Who owns the premises?

He only needs to be an eligible body in order to exempt education or vocational training.

The charges you're proposing to make to the "not for profit body" all appear to be potentially standard-rated.

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By Taxbreak
03rd Sep 2012 14:18

The arrangements described would probably be challenged by HMRC

on grounds of abuse. There is also a question of whether the NFP is a not for profit - payments to the original company could be viewed as disguised distributions - see decision of CJEU in Kennemer.

Supplies of private tuition are exempt when supplied by a sole prop or partners but exemption would not extend to such tuition provided by employees of the sole prop or partners.

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