TaxCorporate TaxTuition fees VAT decision overturned

Tuition fees VAT decision overturned

Tuition providers in limited companies are now not exempt from VAT, following a HMRC appeal

Professional training companies and providers of private tuition are set to
lose out, following an overturned VAT case decision.

HM Revenue & Customs had appealed a VAT tribunal decision that ruled it
had incorrectly interpreted EU law and that Empowerment Enterprises should not
have VAT levied on tuition given by companies.

HMRC argued that
tuition provided by limited companies is subject to standard rate VAT, although
that is not the case for sole traders and partnerships.

The Scottish Court of Session overruled the tribunal’s decision.

Nigel Roberts, head of indirect tax at
Campbell Dallas, described
the decision as disappointing.

‘[The decision] will have huge implications for both large organisations
which provide training, right through to the very smallest companies such as
riding schools,’ said Roberts.

‘In light of this ruling, it is now more vital than ever that providers of
private tuition give careful thought to the VAT implications of the way in which
they structure their business.’

An HMRC spokesman said: ‘The Court of Session confirmed HMRC’s view on the
exemption allowed for private tuition.’

Further reading

MPs debate VAT change

Training: taxing regime

Entrepreneurship: sniff out a good idea

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