I provide tuition services to students in my local area – teaching maths, english, and sporting activities. My wife assists in some case and our income is now approaching VAT threshold. i understand that tuition is exempt but someone told me that i should register for VAT as we are not an institution like a school or college. Should i be worried if i dont register or should we register a company and provide these services through a company? Can you give me some correct advice.
You are obviously not an eligible body for the purposes of item 1, Group 6 VAT Act 1994, and therefore exemption not in point under this heading;
However you qualify for exemption under item 2, Group 6 VAT Act 1994 – income accruing from lessons provided by yourself personally or your wife (as self employed) is exempt and the subjects are ordinarily taught in schools and it forms part of the National Curriculum. These subjects include maths, English and any other sporting lessons you provide that is ordinarily taught at school. Recent cases concerning belly dancing, yoga and pilates make it clear that the subject matter should be commonly taught in schools or universities;
Therefore there is no obligation to register for VAT.
However if you teach these subjects under a company then you lose the “self employed” condition above and you will be required to register for VAT. You can form a partnership or a limited partnership if these interests you and you will still have no obligation to register for VAT.