Dance away

My client runs a dance studio and has received a large repayment of VAT together with interest under VATA 1994 s 78.

The provision of private dance tuition is zero rated and the claim spanned 1973 to 1995.

I am concerned with the income tax liability on this. Do readers have any experience of similar claims?

My research indicates that the whole amount will be taxable at the time of receipt.

I cannot see how I can spread the amount back to the relevant years although I have seen suggestions that there is an argument that such repayments are not taxable.

Query 17 381 – Dancer

Reply from Gardener

The repayment should have been made on the basis that private dance tuition falls within ‘tuition given privately by teachers and covering school or university education’ and is therefore exempt not zero-rated.

The application of the education exemption...