Hi all,
I have a friend (sole proprietor) who runs a drama school and is dangerously close to the current VAT threshold. I have searched the 'Net' and it appears that any income generated by my friend's private teaching may be exempt as it can be clearly shown to be a subject taught normally in many schools. This part is easy to prove. However, there are some assistants and I understand that any income generated for the 'business' from their teaching would be standard rated.
My question is whether in calculating the turnover it is necessary to include BOTH my friend's private teaching income plus that of the assistants. I have studied Education and vocational training (VAT Notice 701/30) and this does seem to suggest that one only calculates the income from assistants to see whether to be VAT registered or not. The problem is that when completing the next SA return he will show a turnover exceeding £85000 and also indicate that he is not VAT registered.
Am I correct that there is no necessity to register? If so, will this automatically get flagged up for a VAT enquiry? What can he do in advance to mitigate unnecessary questions?
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