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VAT on martial arts classes

Should I be registering my client for VAT

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Hi, I have a client who provides MMA classes to individuals.

He has now gone over the VAT threshold and I cant decide if I should be registering him or not.

His income consists of - class income, products ( gloves etc ) and insurance for the athletes.

I have read notice 701/45 and its not exempt as its not a "non for profit" company

the classes are for adults and kids. Should the kids classes be exempt? I know insurance is exempt so would this income be included when calculating the turnover for registration?

Does anybody have a similar client as this trade is new to me and the VAT office seem to be of no help what so ever?

I would appreciate any advice or where I could find out

Thank you

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By spidersong
12th Jun 2019 16:10

O.K. You need to get a few thoughts in order. First thing with VAT is who is supplying what to whom:

So who is the client: a company, or a sole proprietor/partnership?

What are they supplying: are they an insurance provider. a reseller, agent for an insurance company, or is the insurance actually just part of the charge they make for training? Is insurance purchased with the trainee as a named insured party or is it the provider that's insured and the cost just passed on?

Whether the trainees are kids or adults is unlikely to make a difference unless this is some kind of government funded training scheme, and that seems a bit of a reach.

Looking at your query you do say it's not exempt as they're not a not for profit company, so can we assume the provider is a company, but a for profit one? If so then there's little that would likely be exempt that they'd do. Although 'not for profit' isn't necessarily the end of it, but I take it we can assume that they're not a state regulated institution either.

The most likely exemption in law would be Item 2 of Group 6 to Schedule 9 of the VAT Act and that's only: "The supply of private tuition, in a subject ordinarily taught in a school or university, by an individual teacher acting independently of an employer." So if that doesn't cover it then the only thing you'd need to establish is the liability of the insurance, whether it's part oft he wider taxable supply, and exempt supply in its own right, or an outside the scope disbursement.

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Replying to spidersong:
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By Dawnmacca
14th Jun 2019 12:38

Thank you so much for answering.

Its a Limited Company with a husband and wife as directors.

They supply training in a gym where they train children and adults.
They supply products like gloves, belts, mouth guards etc again for children and adults, they are brought in bulk and make a profit on each item.
They arrange insurance for the people that train competitively but they also make a profit on this. they are not a provider but they purchase the insurance on behalf of the athlete and add on a profit.
They are not a government funded scheme and they are not a regulated institution either.

the insurance does add on a profit so I don't think this is a disbursement.

With this information would you be thinking that they need to be registered and everything should have VAT on it? even the insurance and children's lessons and products?

I really appreciate your time.

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By pauld
12th Jun 2019 17:59

Are you saying the classes turnover over £300 per day i.e. £85K per year. That's a lot of people interested in Martial Arts. Can they get clients to pay for products and insurance themselves? Can these be classed as disbursements if no profit made on resale?

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Replying to pauld:
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By Dawnmacca
14th Jun 2019 12:43

Thanks for answering

Yes they have just turned over 90k in this last year but they have only gone over the threshold because of the insurance and products. The insurance and products both have a profit on them so I don't think they can class them as disbursements.
Would the insurance still need to be included in the total turnover if it included a profit?

Thanks for your help

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