Dance Teacher Scores VAT Exemption in Guideline Education Case

Death and taxes may be inevitable, but HM Revenue and Customs (HMRC) are not infallible and if you are on the receiving end of a wrong decision, you should consult a lawyer right away. A dance teacher who did just that was relieved of a substantial VAT bill after the First-tier Tribunal (FTT) recognised that the services she provides are not just recreational.

The woman taught Ceroc – an eclectic form of dance combining elements of several others, including ballroom, salsa, jive, hip hop and tango. HMRC hit her with the bill on the basis that her students should have been charged VAT over a period of about two years when she was operating as a sole trader. She also received a penalty in respect of failing to register for VAT.

Her publicity promised students a fun night out and an opportunity to meet members of the opposite sex. However, in upholding her appeal, the FTT found that her classes were not purely recreational and included a strong educational element. The services she provided thus benefited from an exemption from VAT, contained within the Value Added Tax Act 1994, that applies to private tuition in respect of subjects ordinarily taught in schools and universities.

In previous decided cases, the exemption was denied to other disciplines – including belly-dancing, yoga and Pilates – on the basis that they were too narrow to be viewed as something which is commonly taught in schools. However, the FTT found that the breadth of the generic techniques involved in Ceroc – which includes about 900 different moves derived from other forms of dance – placed it in a different category. Both the VAT demand and the penalty were overturned.