I believe that a CT return can be filed using software without the need for agent authorisation. In fact a cowboy firm will prefer it that way as they can keep their name out of it.
I experienced this with a client who was tempted by the blandishments of an R and D "specialist". They filed an amended CT return without reference to me (or the client apparently), and the first I knew about it was when HMRC wrote to ME acknowledging MY amended return.
Steps were immediately taken to put everything straight.
Client is asking that question of the school and the other teachers that she knows. The school however is VAT registered (subs out to the self employed teachers so can't claim the exemption) so has no skin in the game. The other teachers might just say "my accountant told me it was OK".
As things are presently constituted client can't throttle income enough to make a difference.
I'll answer your questions as best I can. The word the school uses is "licence", but franchise would do just as well. She uses the brand, contracts with the students on a self employed basis (as do all the teachers, nobody is employed) and pays the school a percentage of turnover. The school sets the fees and arranges external verification. To be clear, I'm using the word "school" as in "driving school", to denote the brand in whose name the instruction is given. This takes place in a hired room, not a school building. None of the teachers employs anyone else, they all teach on their own account.
I agree this has probably run its course without reaching a conclusion, but I'm grateful to everyone here who has contributed to the discussion. I'll lay out the conditions to the client as clearly as I can and if she thinks she meets them fine, but with the usual caveats about uncertainty.
I've been wondering whether sections 5 and 6 are mutually exclusive in that a vocational subject (as defined for this purpose) would not ordinarily be taught in schools or universities?
I started from the premise that the training would be vocational on the grounds that the students would be intending to become hypnotherapists themselves. Is that too simplistic? In any case, an exemption for vocational training looks like a dead duck as the conditions aren't met.
That leaves the private tuition exemption. Thanks Dragon for pointing out 1.2 of the notice, which is at least clear about the sole trade exemption. So, does it boil down to whether hypnotherapy is a subject ordinarily taught in schools or universities? Here's this from VATEDU40200:
"What is school or university education?
In A & G Fahrschul-Akademie GmbH (Case C‑449/17), the Court of Justice held that school or university education generally referred to
“an integrated system for the transfer of knowledge and skills covering a wide and diversified set of subjects, and to the furthering and development of that knowledge and those skills by the pupils and students in the course of their progress and their specialisation in the various constituent stages of that system.”
Driving tuition for the purpose of obtaining a licence was specialised tuition provided by a driving school that did not fulfil those criteria and could not be exempted under Item 2 of Group 6.
This confirms our view that car-driving lessons, carried out on public highways, are not a subject ordinarily taught in a school or university, so are not covered by this exemption."
I find this a little confusing because the "integrated system" part implies that a range of subjects must be involved, which doesn't apply to a hypnotherapy school. But the case specific bit about driving lessons being carried out on a public highway implies that if you could teach driving in a classroom it might be all right?
I recall my kids attending a weekly High School class entitled "Critical Thinking" (until they figured out not to bother)
Mission accomplished then :-).
I take your point. What gets my goat even more is the inclusion of that sentence in par 5.5 of the VAT notice, when it's clearly going to be read by someone in the client's shoes as "Well, I'm a sole trader so I must be exempt." Just makes life harder than if they had left it out.
Actually that's me joining the dots incorrectly. The client just said externally verified, it was me that came up with the NCFT idea from another search, so mea culpa. I'll find out who does verify the diploma, but it's all starting to look a bit rarified.
I appreciate your remarks on the potentially slippery nature of the contract between teacher and student, and I may need to address this if we can pass the test of hypnotherapy being ordinarily taught in schools and universities. If we can't it's game over.
I also agree that this isn't a particularly easy thing to prove. A cursory search of t'internet suggests that A levels and degrees in hypnotherapy are not common coin, but then there are FE colleges. I know it's not the law but there's an attempted definition in VATEDU40200.
"What does ‘ordinarily taught in a school or university’ mean?
In Simon Newell t/a Chiltern Young Riders (TC04689), the FTT referred to the guidance in both Haderer and Hocking (see VATEDU40300) on the meaning of “ordinarily taught in school or university”. In those cases, it was held that the activity must be one in which instruction is commonly given. Although an activity might be included, exceptionally, as part of a school curriculum this would not be sufficient for it to be regarded as part of school or university education. The tribunals found it helpful to ask themselves the question whether the activity was only taught infrequently. (School or university education includes education ordinarily provided by further education colleges.)"
I like your suggestion about checking with examining boards, starting I suppose with the specific diploma being awarded. But I'm starting to get the feeling I'm never going to be quite convinced about this.
My answers
Fair point. I may have let the anecdote take over there.
I believe that a CT return can be filed using software without the need for agent authorisation. In fact a cowboy firm will prefer it that way as they can keep their name out of it.
I experienced this with a client who was tempted by the blandishments of an R and D "specialist". They filed an amended CT return without reference to me (or the client apparently), and the first I knew about it was when HMRC wrote to ME acknowledging MY amended return.
Steps were immediately taken to put everything straight.
Client is asking that question of the school and the other teachers that she knows. The school however is VAT registered (subs out to the self employed teachers so can't claim the exemption) so has no skin in the game. The other teachers might just say "my accountant told me it was OK".
As things are presently constituted client can't throttle income enough to make a difference.
Many thanks Jason.
I'll answer your questions as best I can. The word the school uses is "licence", but franchise would do just as well. She uses the brand, contracts with the students on a self employed basis (as do all the teachers, nobody is employed) and pays the school a percentage of turnover. The school sets the fees and arranges external verification. To be clear, I'm using the word "school" as in "driving school", to denote the brand in whose name the instruction is given. This takes place in a hired room, not a school building. None of the teachers employs anyone else, they all teach on their own account.
I agree this has probably run its course without reaching a conclusion, but I'm grateful to everyone here who has contributed to the discussion. I'll lay out the conditions to the client as clearly as I can and if she thinks she meets them fine, but with the usual caveats about uncertainty.
I've been wondering whether sections 5 and 6 are mutually exclusive in that a vocational subject (as defined for this purpose) would not ordinarily be taught in schools or universities?
I started from the premise that the training would be vocational on the grounds that the students would be intending to become hypnotherapists themselves. Is that too simplistic? In any case, an exemption for vocational training looks like a dead duck as the conditions aren't met.
That leaves the private tuition exemption. Thanks Dragon for pointing out 1.2 of the notice, which is at least clear about the sole trade exemption. So, does it boil down to whether hypnotherapy is a subject ordinarily taught in schools or universities? Here's this from VATEDU40200:
"What is school or university education?
In A & G Fahrschul-Akademie GmbH (Case C‑449/17), the Court of Justice held that school or university education generally referred to
“an integrated system for the transfer of knowledge and skills covering a wide and diversified set of subjects, and to the furthering and development of that knowledge and those skills by the pupils and students in the course of their progress and their specialisation in the various constituent stages of that system.”
Driving tuition for the purpose of obtaining a licence was specialised tuition provided by a driving school that did not fulfil those criteria and could not be exempted under Item 2 of Group 6.
This confirms our view that car-driving lessons, carried out on public highways, are not a subject ordinarily taught in a school or university, so are not covered by this exemption."
I find this a little confusing because the "integrated system" part implies that a range of subjects must be involved, which doesn't apply to a hypnotherapy school. But the case specific bit about driving lessons being carried out on a public highway implies that if you could teach driving in a classroom it might be all right?
Mission accomplished then :-).
I take your point. What gets my goat even more is the inclusion of that sentence in par 5.5 of the VAT notice, when it's clearly going to be read by someone in the client's shoes as "Well, I'm a sole trader so I must be exempt." Just makes life harder than if they had left it out.
Actually that's me joining the dots incorrectly. The client just said externally verified, it was me that came up with the NCFT idea from another search, so mea culpa. I'll find out who does verify the diploma, but it's all starting to look a bit rarified.
Qualifications search result from NCFE: There are 0 results for [hypnotherapy].
I appreciate your remarks on the potentially slippery nature of the contract between teacher and student, and I may need to address this if we can pass the test of hypnotherapy being ordinarily taught in schools and universities. If we can't it's game over.
I also agree that this isn't a particularly easy thing to prove. A cursory search of t'internet suggests that A levels and degrees in hypnotherapy are not common coin, but then there are FE colleges. I know it's not the law but there's an attempted definition in VATEDU40200.
"What does ‘ordinarily taught in a school or university’ mean?
In Simon Newell t/a Chiltern Young Riders (TC04689), the FTT referred to the guidance in both Haderer and Hocking (see VATEDU40300) on the meaning of “ordinarily taught in school or university”. In those cases, it was held that the activity must be one in which instruction is commonly given. Although an activity might be included, exceptionally, as part of a school curriculum this would not be sufficient for it to be regarded as part of school or university education. The tribunals found it helpful to ask themselves the question whether the activity was only taught infrequently. (School or university education includes education ordinarily provided by further education colleges.)"
I like your suggestion about checking with examining boards, starting I suppose with the specific diploma being awarded. But I'm starting to get the feeling I'm never going to be quite convinced about this.