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bigduckontax
bigduckontax, Accountant
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Vat Exemption QueryOur business is a partnership.Myself

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Vat Exemption Query
Our business is a partnership.
Myself and my wife 'trading as' XXXX
We provide '********* ********* classes for children' in group weekly sessions and soccer schools.
We are looking to expand and turnover the basic £82 VAT threshold
Are we VAT exempt for the work we undertake as 'partners' but standard rate VAT for any work undertaken by employees or assistants?
If so and that is correct, do we use a 50% ratio in terms of calculating the work undertaken by staff. i.e. The partners do most of the coaching, but we use assistants in classes. Therefore in theory when helpers are present they are providing 50% of the coaching work. This is why we have specified the 50% ratio.
Does this mean to calculate VAT turnover we disregard 50% of the turnover for VAT purposes (as it is VAT exempt). i.e if we turn £100K in total, we have only turned £50K in terms of VAT taxable turnover?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.
Here is the advice from the Gov UK web site:
'Your partnership must register for VAT with HMRC if their VAT taxable turnover is more than £82,000.'
Your supplies are not exempt from VAT as your partnership is not an eligible organization. Here is the Gov UK definition of an eligible body:
'Your organisation is an eligible body when:
•it is non-profit making
•its constitution includes a non-distribution clause or limits any distribution of profits or surpluses to •another non-profit making club or
•its members on winding up or dissolution
•it actually uses all profits or surpluses from its playing activities to maintain or improve the related facilities or for the purposes of a non-profit making body
•it is not subject to commercial influence nor part of a wider commercial undertaking'
Your partnership would appear to fall out with these conditions.
You should read VAT Notice 701/45 very carefully.
https://www.gov.uk/government/publications/vat-notice-70145-sport/vat-notice-70145-sport
Exemption is important as exempt supplies do not count towards the VAT Threshold, only standard, reduced and zero rate ones do.
I am so sorry to have to rain on your parade.
Customer: replied 1 year ago.
Hi Keith, please can you advise though, as 'sports coaching' falls under the 'private tution' and 'educational training' as a subject as Association Football is itself a VAT exempt sport. I have read this information in VAT notice 701/45 and 701/30
Customer: replied 1 year ago.
701/30 refers to sports coaching
many thanks
Expert:  bigduckontax replied 1 year ago.
VAT 701/30 does not apply. Please note [edited]:
'This notice does not cover:
•the exemption of certain sporting and physical activities - see Notice 701/45 Sports' so you have to fall back on VAT Notice 401/45.
I do not dispute that soccer is a VAT exempt sport, but only if it is conducted by an 'eligible body' which does not appear to be the case here. If you were a non profit making business then that is an entirely different kettle of fish. This is the key to the whole exempt status caper.
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Customer: replied 1 year ago.
Thank you Keith, I am still somewhat confused as to what this statement would have been made in 701/45
3.3.2 Sports coachingSports coaching by professionals is not within the exemption as it is not supplied by an eligible body - see section 4 below.However, such coaching may fall within the scope of VAT exemption for education. Notice 701/30 Education and vocational training, gives more information on coaching/ tuition.This is what lead me to this notice?
Please advise
Customer: replied 1 year ago.
Therefore, Does sports coaching by a 'partner' in a business fall under 'private tuition'? and therefore Education and vocational training
Expert:  bigduckontax replied 1 year ago.
I accept that VAT Notice 701/30 states:
'Private tuition is provided by a sole proprietor or partner (see section 6). The VAT consequences are:
•the tuition carried out is exempt; and
•the tuition that employees or other helpers carry out is standard-rated'
However the initial part of this Notice specifically excludes 'sporting and physical activities' and I am of the opinion that HMRC would make the same interpretation.
I agree that there is a conflict of Notices here and it might be a good idea to approach HMRC for an interpretation.
Expert:  bigduckontax replied 1 year ago.
However, further research indicates that the coaching must be undertaken by an 'eligible body' as I have already intimated and it seems unlikely that ** ********* ********* ********** so complies; sorry.
bigduckontax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thanks Keith. I feel it is not clear in afraid as I cannot possibly understand what the point of that statement would be as if it has to be an eligible body there would be no need to check a further notice.
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.
If you are not an 'eligible body' then your services are not exempt, but standard rated.
Customer: replied 1 year ago.
Hi Keith. Sorry to just a further point. Are you saying that if the work undertaken by myself is for an eligible body 'non profit' organisation such as a youth football club registered under the FA, money paid to me in respect of that would be VAT exempt?
Expert:  bigduckontax replied 1 year ago.
********* ******** is only exempt from VAT if it is conducted by an eligible body, the principle feature of which must be a non profit making status. Any moneys paid to you, which might in themselves put the non profit making status at risk, would be taxable as income in your hands. Also, if you were personally registered for VAT it would also be subject to that tax at the standard rate also. Furthermore VAT exempt activities preclude a reclaim of input tax on that proportion thereof also.
Customer: replied 1 year ago.
ok thank you, ***** ***** taken further advice today from a further professional, regarding the vat exemption for 'sports coaching'.The advice from a 'chartered accountant' is in fact that it would be VAT exempt under VAT notice 701/30 subject to 'private tuition' for work undertaken by a sole trader / partnership. any work undertaken by an employee or assistant would however be subject to VAT if it exceeded the VAT threshold.An eligible body as mentioned in Notice 701/45 would be a different situation.Therefore the following would apply:'Private tuition is provided by a sole proprietor or partner (see section 6). The VAT consequences are:•the tuition carried out is exempt; and
•the tuition that employees or other helpers carry out is standard-rated'If this was not the case, then Notice 701/45 would NOT lead you to notice 701/30 as it would not be of any relevance.
I understand that it states in 701/30 that it does not cover 701/45 for sporting activities, but the reason is because it makes the assumption that 701/45 already covers this topic. However, as you confirmed already 701/45 specifically instructs and directs you to 701/30 for 'sports coaching that is not provided by an eligible body.'3.3.2 Sports coachingSports coaching by professionals is not within the exemption as it is not supplied by an eligible body - see section 4 below.
However, such coaching may fall within the scope of VAT exemption for education. Notice 701/30 Education and vocational training, gives more information on coaching/ tuition.701/30 then goes on to say:5.2 Sports coaching
In the sports sector, education includes classes that are led and directed, rather than merely supervised.
It gives an example of a swimming instructor.This therefore confirms that sports coaching is covered, as it is clearly stated and mentioned in the notice itself.6.1 of 701/30 then confirms the 'private tuition' definition and details of working in a 'personal capacity' which would confirm it applicable to a sole trader / partner.
Expert:  bigduckontax replied 1 year ago.
I have already warned you that VAT Notice 701/30 is precluded by VAT Notice 701/45. In any event to be exempt from VAT for coaching you must be an eligible body, probably non profit making and your payment to yourself may breach that status.

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