Help with VAT on private tuition

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I have a client who is self employed providing private tuition on subjects regularly taught in school. The client obtains the work and then uses subcontract teachers to deliver most of the sujects. The turnover has now gone above the VAT limit and I'm struggling to ascertain if they need to be VAT registered. I have looked at VAT Notice 701/30 and am just not sure how to proceed. At paragraph 6 it says a sole proprietor will not be liable for VAT if it's a subject regularly taught in schools. It then goes on to say that "If a teacher takes on another teacher (or several others) to assist, either:

  • there should be an apportionment of supplies of tuition between exempt and taxable elements (using any fair and reasonable method)
  • all supplies of tuition should be treated as taxable regardless of who actually delivers it

Does 'taking on' apply to subcontract teachers? They are not employees, all of the teachers run their own businesses and are not VAT registered. 

Any help greatly appreciated, thank you.

Replies (12)

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By David Ex
20th Apr 2024 11:12

I vote yes.

“ … tuition that others deliver is standard-rated.”

As a VAT non-expert, I’m guessing the logic is your client is delivering tuition when he/she carries it out themself. When others are involved, your client isn’t delivering tuition.

Usual VAT question, who is supplying what to whom.

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Replying to David Ex:
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By Paul Morton
20th Apr 2024 11:34

That was my initial thought as well, thank you.

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By I'msorryIhaven'taclue
20th Apr 2024 12:19

Employees and self-employed subcontractors are regarded as one and the same.

https://www.taxadvisermagazine.com/article/lessons-be-learned

"If private tuition is provided by employees or subcontractors on behalf of the business, it is always standard rated. And if a session is provided jointly by both employees and a sole trader or partner, output tax can be apportioned in any fair and reasonable way."

Of course, your client's apportionment should be easy if there are no joint-sessions.

That last bullet point in your post "all supplies of tuition should be treated as taxable regardless of who actually delivers it" is an either / or: either you apportion between taxable and exempt supplies; or you can treat all supplies of tuition as taxable regardless of who actually delivers it.

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Replying to I'msorryIhaven'taclue:
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By Paul Morton
20th Apr 2024 14:34

Thanki you, very much appreciated

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By Jason Croke
20th Apr 2024 13:26

Agree with everyone else.

Private tuition delivered by the sole trader personally would be exempt.

Anything else is standard rated.

The apportionment should be straight forward, any income earned by sole trader is exempt/not Clint towards threshold, any income earned from subbies Clint's towards threshold and taxable once registered.

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Replying to Jason Croke:
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By I'msorryIhaven'taclue
20th Apr 2024 13:41

Because the OP's client uses subcontractors to deliver "most" of the lessons I guess the £85k/£90k threshold might have been breached by subcontractors alone.

In which event, I wonder whether a restructure whereby the subcontractor contracts directly with the end client might work (with the OP's client charging the subcontractor a commission). Or is that too much of a rabbit hole?

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Replying to I'msorryIhaven'taclue:
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By Paul Morton
20th Apr 2024 14:36

Interesting thought, thank you.

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Replying to I'msorryIhaven'taclue:
VAT
By Jason Croke
20th Apr 2024 17:26

I'msorryIhaven'taclue wrote:

Because the OP's client uses subcontractors to deliver "most" of the lessons I guess the £85k/£90k threshold might have been breached by subcontractors alone.

In which event, I wonder whether a restructure whereby the subcontractor contracts directly with the end client might work (with the OP's client charging the subcontractor a commission). Or is that too much of a rabbit hole?


You could engineer it such that the subby contracts directly with customer and sole trader take a commission, but then if customer is injured or sues then the subby is the principal and might not want the risk of that...possibly easier to engineer for teaching maths or English as no risk of injury or dissatisfied customers, but trickier if doing karate or pilates where injury is higher, plus do you want to give your subby direct contractual access to your customers, if the subby is too good they might steal them!
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Replying to Jason Croke:
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By FactChecker
20th Apr 2024 18:08

Is pilates "a subject regularly taught in schools" nowadays?
In my schooldays (when dinosaurs roamed outside), if I'd written 'pilates' in an essay ... the teacher's response would have been a cross in red ink, with a cryptic comment along the lines of 'is that what your mum serves your food on?'

But good point re customer retention - and presumably a greater risk of subby defaulting on payment of commission.

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Replying to FactChecker:
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By adam.arca
22nd Apr 2024 13:23

FactChecker wrote:

In my schooldays (when dinosaurs roamed outside), if I'd written 'pilates' in an essay ... the teacher's response would have been a cross in red ink, with a cryptic comment along the lines of 'is that what your mum serves your food on?'

Ah, the good old days of the sarky teacher! Bet that would be severely frowned upon now as some form of classroom bullying.

My first thoughts whenever I see 'pilates' in print veer more towards the classical: firstly 'Pontius' and then by some form of analogy to 'Pontus' and I'm off into the realms of ancient history. Much more interesting than FRS snooze.

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Replying to Jason Croke:
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By Paul Morton
20th Apr 2024 14:35

Thank you Jason, very much appreciated.

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Replying to Jason Croke:
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By Paul Morton
20th Apr 2024 14:37

Thank you Jason, very much appreciated

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