Let’s Dance

A group of dance and fitness organisations have secured a partial victory in a closely watched VAT case before the UK FTT, which could have implications for similar businesses across the country.

The case involved four appellants who challenged HMRCs’ decision to deny VAT exemption on the basis that their services did not qualify as private tuition in subjects ordinarily taught in schools or universities.

Background & Issues:

• The appellants argued that their dance and fitness instruction, ranging from ballroom and Latin to contemporary dance and performance coaching, should be exempt from VAT as private tuition in academic or school-taught subjects.

• HMRC, however, maintained that the services were commercial in nature and did not meet the criteria for exemption.

 The FTT considered:

• The qualifications and independence of the instructors.

• The educational content of the classes.

• The business structures of the organisations involved.

The tribunal found that while some of the instruction provided did resemble subjects taught in educational settings, not all services qualified for exemption. In some cases, the tribunal accepted that the instruction constituted private tuition and was therefore VAT-exempt. In others, it upheld HMRC’s assessment.

Key takeaways:

• The decision should be considered closely by anyone relying on the exemption ‘private tuition’, including (but not limited to) dance schools, fitness instructors, and other private education providers. It underscores the importance of how services are structured and delivered, and whether they align with the legal definition of private tuition.

• Similar businesses may be required to restructure or refine their set up in order to benefit from potential exemptions.