Martial Arts Centre Vat Threshold

KPM

Hi

I would appreciate any help with this one. I have a friend that runs his own martial arts training centre and the turnover is near reaching the current vat threshold. Are there any vat exemptions for clubs that train children, and how does it work when charging membership fees.

Thanks

Bluewednesday

If you request it you can go for partial exemption on the basis that the tuition is educational and any other sales are standard rated.

That's what we've done with one of our martial arts teachers, this is presuming that they sell other items along with just tuition.

KPM

Thanks for the information.

Can you confirm the following: The centre sells martial arts equipment and refreshments. So would the partial exemption include all training classes including mixed adults and kids. Therefore no vat will be added to membership fees, only on the goods sold and reclaim vat on purchases relating to those goods. What about heating, rent etc would the owner of the business be able to claim the vat element of those costs incurred.

Bluewednesday

Partially.

I will have to check on the files as to how we got this agreed with HMRC However with partial exemption anything related to the tuition only could have no vAT claimed on it, anything to do with sales of refreshments could have full VAT reclaimed and anything that could relate to either of those things had the partial percentage applied.

whiterose

You will have to check on the HMRC site carefully - have a read of VAT Notice 701/30 - but my understanding is that if your client is a sole trader or in a partnership, then any tuition/training that they personally provide is a VAT exempt activity. Membership fees and sales etc are not exempt. Therefore if your client is doing a lot of the teaching/training themselves you may find that if you deduct these amounts from the turnover the balance is well below the VAT registration threshold and there is no need to register.