Belly dancer loses VAT tribunal appeal

Rachael Power
Community Correspondent
Sift Media
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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...

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17th Jan 2014 18:01

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

Thanks (1)
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?


Thanks (0)
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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