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Belly dancer loses VAT tribunal appeal

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17th Jan 2014
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A belly dance teacher must repay more than £50,000 in VAT, after she lost a first-tier tax tribunal against HMRC.

Audrey Cheruvier, owner of Fleur Estelle Dance School, had appealed an HMRC decision to register her business for VAT.

She accepted that she was liable to register for VAT in respect of the the six freelance contractor instructors she employs, but said that her own services as a belly dance teacher were VAT exempt under the VAT Act 1994, as they were educational.

But HMRC argued against this, saying that there is no evidence belly dancing is taught in schools or universities - but rather, the broader subject of dance.

It added that the course Cheruvier teaches is short, with no written element, not taught to an external syllabus and not examined.

According to item two of Group 6 of Schedule 9 of the VAT Act 1994, the supply of private tuition in a subject ordinarily taught in a school or university by an individual is VAT exempt.

Cheruvier, who has belly danced before Middle Eastern royals and on UK television, designs the course syllabus and curriculum herself - which progresses through various levels depending on student demand.

The courses are all practical, the tribunal heard, with the option for students to look over technique  notes and no exams.

The teacher - who has a lifelong interest in belly dance and has studied it from an early age in Egypt, France and the UK, started her business as a teacher, choreographer and performer of belly dance in London in 2006, expanding by training instructors to take the growing number of dance classes, and trading under the name of Fleur Estelle Dance School as from 2007.

After examining various elements of Cheruvier’s course, the tribunal ruled that it was not one normally taught in schools or universities, nor to a published curriculum or assessed by an external body.

“She does not teach dance as such, but one form of dancing only, and that to the limited extent of performance,” Judge Edward Sadler said.

“Whilst we do not in any way wish to detract from or cast doubt upon the seriousness with which the appellant both pursues her chosen field and teaches it to others, our conclusion is that she is engaged in providing recreation rather than education to those who attend the courses she runs.” 

Cheruvier had not registered for VAT purposes not because of an intention to avoid the tax, but because she had been advised by a professional that her supplies were exempt from VAT, the tribunal heard.

HMRC has registered the dance teacher compulsorily, and she will now have to repay more than £50,000 in VAT dating back to 2009. 

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By Sheepy306
17th Jan 2014 18:01

Oh dear, I hope the "professional advisor" is well insured

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By Mark Lee
19th Jan 2014 10:54

The dangers of advising on VAT when you're not an expert

By all accounts this seems to be a case that will result in a negligence claim being made against the 'professional' referenced in this quote above:

"Cheruvier had not registered for VAT purposes not because of an intention to avoid the tax, but because she had been advised by a professional that her supplies were exempt from VAT, the tribunal heard".

For such a claim to success the professional will need to have owed the lady concerned a duty of care. If she simply asked a friend of a friend and/or did not present all of the facts honestly the professional may not be liable.

And, as ever, whether the insurers pay out will depend on whether the 'professional' had complied with the terms of their policy. For example, did they disclose the challenge by HMRC and the fact that this was going to the tribunal/court as a circumstance that could lead to a claim?

Mark  

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By thomask1
22nd Jan 2014 12:44

I would interpret 'Professional' to mean that the appellant sought and paid for advice, and relied on that advice when conducting her VAT affairs.  If she had gotten advice from a friend or someone else not not qualified, the court would surely have said so.  I would echo the first responder, I hope the Professional is adequately insured.

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