A Recent Case for Four Separate Defendants Provides Clarity

Recently, four different dance businesses – Rushby Dance and Fitness Centre, Jagers Dance and Events (both trading partnerships), Dance Consultants International (DCI, an LLP) and Karen Maria Hilton (a sole-trader) – argued their classes should be exempt. Their logic? They were providing private tuition, not just recreational sessions. The tribunal disagreed.

Here’s The Key Issue:

Although dance is taught in some schools and universities, not all dance classes qualify. The tribunal looked at whether the classes were formal tuition or just for fun—and whether the subject matter was something typically found on a school curriculum.

Karen Hilton’s tuition came closest. She teaches high-level ballroom students, many training for competitions or qualifications. The tribunal accepted her classes weren’t purely recreational. But it still ruled that ballroom and Latin dance aren’t “ordinarily taught” in schools, so the exemption didn’t apply.

Judge Robin Vos said: ‘As far as DCI is concerned, the issue is whether the members of the LLP who were giving the lessons were doing so as private tuition meaning that they were doing so at their own risk and for their own account.’

For Jagers and Rushby, it was clearer. Jagers’ classes were partly recreational. Rushby’s were mainly exercise-based (including kettlebells), so the tribunal saw them as fitness sessions, not education.

The Result

None of the four businesses could rely on the VAT exemption and so should adhere to the compulsory VAT registration threshold of £90,000 in any twelve consecutive months. All their appeals were dismissed.

What This Means For You

On Exit:
You’re selling shares in the company, or the company sells its trade/assets. Share sales may qualify for BADR (10% tax on first £1m lifetime gains).

However, asset sales within the company can trigger double taxation — once in the company, then again when profits are extracted.

If you run classes in sport, dance, or the arts, and you think they count as private tuition—make sure you can prove they’re educational, based on subjects commonly taught in schools or universities, and that tuition is delivered by independent individuals, not business partners or employees. Otherwise, you could face unexpected VAT bills.