Dance instructors lose VAT exemption appeal

Will Drysdale, Senior Reporter, Business & Accountancy Daily

Dance teachers who ran private lessons appealed against VAT assessments by HMRC as they argued their classes were commonly taught in schools.

Rushby Dance and Fitness Centre, Jagers Dance and Events, Dance Consultants International (DCI) and Karen Maria Hilton considered their exercise classes to be exempt from VAT as the classes were run effectively as private tuition.

Rushby and Jagers were both issued VAT assessments and penalties, but the First Tier Tribunal (FTT) appeal was not against these. These two operate as partnerships while DCI is a limited liability partnership (LLP) and Karen Maria Hilton is run by Karen Hilton with her as the sole trader.

All four appeals were heard together as they were linked to the same VAT exemption, but the tribunal found there to be no overlap with the DCI and the main point of the other three appellants.

Judge Robin Vos said: ‘As far as DCI is concerned, the issue is whether the members of the LLP who were giving the lessons were doing so as private tuition meaning that they were doing so at their own risk and for their own account.’

HMRC’s view of the appeal was that dance is not a subject primarily taught in schools or universities. The exemption for private tuition to VAT is in Item 2 of Group 6 in Schedule 9 of VAT Act 1994, and states: ‘The supply of private tuition, in a subject ordinarily taught in a school or university, by an individual teacher acting independently of an employer.’

There is an equivalent provision in the Principal VAT Directive which states a further exemption is for ‘tuition given privately by teachers and covering school or university education’.

Prior to 1 January 2025, private education was exempt from VAT, which meant all the relevant periods of the appeals were before the 20% VAT charge.

The tribunal had to determine whether the appeals from Rushby, Jagers and Hilton were teaching a subject that was commonly taught in a school or university, whether the classes were primarily recreational, and if there was a transfer of education from the teacher to student.

Judge Vos said: ‘Members of the LLP are on their own account and at their own risk’, but could ‘potentially fall within the exemption from VAT’.

Richard Chapman KC, representing the appellants, brought data to the tribunal showing dance was commonly taught in schools and universities. Two thirds (66%) of universities in the UK offer dance courses, and 10,000 students take a GCSE, AS, or A level in dance.

The tribunal accepted that dance was commonly taught in schools, but Chapman agreed that there was no evidence for the classes taught by the appellants were commonly taught in schools.

Chapman described several genres of dance such as ballroom, Latin, classic and modern, saying they were ‘all examples of ranges of dance which are sufficiently wide to be treated as analogous to generalised dance rather than a specific style or form of dance’.

Paul Marks, litigator for HMRC said: ‘If a single dance does not qualify, unless there is evidence that the particular dance is commonly taught in schools, there is no reason why a collection of single dances should qualify without such evidence.’

Marks argued that the classes offered by the four appellants are ‘purely recreational’ as they relate ‘only to performance rather than having any academic content’.

However, Judge Vos said: ‘If there were evidence that, for example, ballroom and Latin dancing was commonly taught in schools (but not with a view to participating in competitions), we cannot see why private tuition in ballroom and Latin dancing with a view to participation in a competition would not qualify for the exemption.

‘Looking first at the tuition provided by Mrs Hilton, it is clear that this is at a high level, the evidence being that Mrs Hilton only teaches students who have already gained a dance qualification and that she also teaches individuals intending to participate in ballroom dancing competitions or for the purposes of vocational training. We are satisfied that the tuition provided by Mrs Hilton is not purely recreational.’

The tribunal decided that the classes on offer by Jager were not purely recreational, but decided Rushby’s classes were as they were predominantly exercise classes using kettle bells.

Despite deciding that not all the appellants classes were recreational, the four appeals were dismissed as ‘none of the classes in dispute offered by Rushby, Jagers and Hilton are in a subject which is ordinarily taught in schools or universities and the supplies are therefore standard rated’, Judge Vos explained.

The appeals were dismissed.