VAT: liability of private tuition

HMRC's policy on the liability of private tuition is set out in Notice 701/30 (Education and vocational training), section 6. This advises that the VAT exemption for private tuition only applies to sole proprietors and partnerships who teach a subject that is taught regularly in a number of schools or universities.

It has come to our attention that some businesses that supply private tuition have incorrectly exempted their supplies from VAT. This follows a Tribunal decision in the case of Empowerment Enterprises Ltd, which found that the exemption extended to tuition provided by directors of limited companies and those employed by sole proprietors, partnerships or limited companies.

HMRC appealed against the Tribunal's findings and the Court of Session allowed the appeal, confirming that exemption is only available to sole proprietors and partnerships.

Therefore, all suppliers of private education should ensure that they are applying the correct liability to their supplies. Additionally, if you have been using the incorrect liability, you will need to account for any unpaid VAT as follows (full details are given in VAT Notice 700/45: How to correct VAT errors and make adjustments or claims):

• where the total of previous errors does not exceed £2000 net tax, an adjustment may be made to your current VAT return, or
• where the total of previous errors exceeds £2000 net tax, a separate voluntary disclosure should be submitted to HMRC (in these cases the errors must not be corrected through your VAT returns).

Details of where to send your claim can be obtained from update 2 to VAT Notice 700/45: How to correct VAT errors and make adjustments or claims’, or from the HMRC National Advice Service.

Further information

For further information and advice, please contact HM Revenue & Customs’ National Advice.

Issued 7 February 2007.