The tribunal gets itself into a difficult position, writes Graham Elliott (Withers)
Tribunal decisions sometimes make you wonder whether the arguments miss their mark altogether. I thought that within a paragraph of starting the decision in Stuart Tranter t/a Dynamic Yoga [2014] UKFTT 959 (TC), a VAT case concerning yoga lessons.
Paragraphs 2 and 3 of this decision run as follows.
‘[2] The appellant argues his supplies of yoga meet the statutory definition. Yoga is taught in a large number of schools and universities and the yoga taught there corresponds to the yoga taught by the appellant.
‘[3] HMRC disagrees. Yoga is not educational but recreational. It is not a subject which is ordinarily taught in schools or universities…’
In my view, the phrase ‘yoga is not educational but recreational’ is superfluous. The case was about whether Mr Tranter’s supplies were exempt from VAT by virtue of VATA 1994 Sch 9 Group 6 item 2: ‘the supply of private tuition, in a subject ordinarily taught in a school or university, by an individual teacher acting independently of an employer’. This exemption only applies to lessons of a kind normally taught in a school or university. There was no need to consider whether yoga is recreational or educational. Had this limitation been observed, we would have been spared the comparing and contrasting of yoga with transcendental meditation and belly dancing. But the tribunal, having made such comparisons, concluded that learning ‘to do’ yoga was not educational. Since the tribunal also decided that yoga was not a subject normally taught in school or university, nothing was achieved through deciding that yoga is recreational.
Unfortunately, this decision could encourage HMRC to argue that yoga classes are not educational, even when provided by an eligible body, as defined in Group 6. What would be the result of that? Thankfully, HMRC regards yoga as a sport under VATA 1994 Sch 9 Group 10. Thus, when supplied by a not-for-profit body, the activity ought to be exempt as sport.
That seems fine, but a body which is not a school, college or university, and which relies on the note 1(e) qualification for non-profit bodies, would then need to be careful not to use a surplus from their genuine education activities to cross-fund the yoga classes, since that would disable the exemption for all their education supplies.
The tribunal then wandered into a comparison with golf. Part of Mr Tranter’s defence was that golf was treated as a school subject, so must be a form of ‘education’, and there was no reason to favour golf over yoga. Such arguments are usually intended merely to soften up a tribunal, since it cannot make a favourable decision on the basis of equality of treatment in another context. But far from simply dismissing the point, the tribunal heartily agreed with Mr Tranter that there was no distinction, and that golf ought to be treated as purely recreational and not educational. It said:
‘Even if golf was described as taught in a huge number of schools, nothing in the further explanation given by HMRC explains why private tuition in the skill of playing golf as commonly understood would correspond with the subject as they have described it taking place in schools. (Would a private golf coach teach coaching and psychology? Would they teach golf in the same structured way that HMRC rely on for it to be educational? Would they teach tri-golf to adults? If not then it is not clear why it would fall within education.) But the point is not before us and we shall say no more on it.’
If only they had said nothing on it at all.
Again, as with yoga, the point is of most relevance to private golf coaches, since golf is covered by the sporting exemption. But is it helpful to have gone beyond what was needed to decide about yoga, both regarding whether it was ‘education’ and whether its case was similar to golf? In my view, neither was helpful.
The tribunal gets itself into a difficult position, writes Graham Elliott (Withers)
Tribunal decisions sometimes make you wonder whether the arguments miss their mark altogether. I thought that within a paragraph of starting the decision in Stuart Tranter t/a Dynamic Yoga [2014] UKFTT 959 (TC), a VAT case concerning yoga lessons.
Paragraphs 2 and 3 of this decision run as follows.
‘[2] The appellant argues his supplies of yoga meet the statutory definition. Yoga is taught in a large number of schools and universities and the yoga taught there corresponds to the yoga taught by the appellant.
‘[3] HMRC disagrees. Yoga is not educational but recreational. It is not a subject which is ordinarily taught in schools or universities…’
In my view, the phrase ‘yoga is not educational but recreational’ is superfluous. The case was about whether Mr Tranter’s supplies were exempt from VAT by virtue of VATA 1994 Sch 9 Group 6 item 2: ‘the supply of private tuition, in a subject ordinarily taught in a school or university, by an individual teacher acting independently of an employer’. This exemption only applies to lessons of a kind normally taught in a school or university. There was no need to consider whether yoga is recreational or educational. Had this limitation been observed, we would have been spared the comparing and contrasting of yoga with transcendental meditation and belly dancing. But the tribunal, having made such comparisons, concluded that learning ‘to do’ yoga was not educational. Since the tribunal also decided that yoga was not a subject normally taught in school or university, nothing was achieved through deciding that yoga is recreational.
Unfortunately, this decision could encourage HMRC to argue that yoga classes are not educational, even when provided by an eligible body, as defined in Group 6. What would be the result of that? Thankfully, HMRC regards yoga as a sport under VATA 1994 Sch 9 Group 10. Thus, when supplied by a not-for-profit body, the activity ought to be exempt as sport.
That seems fine, but a body which is not a school, college or university, and which relies on the note 1(e) qualification for non-profit bodies, would then need to be careful not to use a surplus from their genuine education activities to cross-fund the yoga classes, since that would disable the exemption for all their education supplies.
The tribunal then wandered into a comparison with golf. Part of Mr Tranter’s defence was that golf was treated as a school subject, so must be a form of ‘education’, and there was no reason to favour golf over yoga. Such arguments are usually intended merely to soften up a tribunal, since it cannot make a favourable decision on the basis of equality of treatment in another context. But far from simply dismissing the point, the tribunal heartily agreed with Mr Tranter that there was no distinction, and that golf ought to be treated as purely recreational and not educational. It said:
‘Even if golf was described as taught in a huge number of schools, nothing in the further explanation given by HMRC explains why private tuition in the skill of playing golf as commonly understood would correspond with the subject as they have described it taking place in schools. (Would a private golf coach teach coaching and psychology? Would they teach golf in the same structured way that HMRC rely on for it to be educational? Would they teach tri-golf to adults? If not then it is not clear why it would fall within education.) But the point is not before us and we shall say no more on it.’
If only they had said nothing on it at all.
Again, as with yoga, the point is of most relevance to private golf coaches, since golf is covered by the sporting exemption. But is it helpful to have gone beyond what was needed to decide about yoga, both regarding whether it was ‘education’ and whether its case was similar to golf? In my view, neither was helpful.
