Does personal trainer need to register for VAT?
My client is a personal trainer at a small gym he rents, operating as a sole trader. His total income from subscriptions (day fees to use the facilities), fitness/exercise classes and one-to-one training sessions has always been below the compulsory VAT registration threshold. However, he has introduced a new income flow, charging other self-employed personal trainers for the right to do sessions in the gym with their own clients, and it is likely that his total annual sales will soon exceed £90,000.
My question concerns the VAT liability of his own sessions: do they qualify as exempt under the private tuition legislation? My colleagues are divided: one says that it qualifies because fitness and exercise are an important part of school and university education, but another colleague says that the word ‘ordinarily’ in ‘ordinarily taught’ means the sessions are standard rated. He mentioned past cases about dog grooming classes and Pilates sessions. What do readers think?
I have suggested that an easy outcome would be to form a limited company for the fees charged to the other trainers – two businesses will each trade below the VAT threshold. Is this a viable option?
Query 20,755 – Motivator.
Calendar quarters?
The arrival of MTD has focused my mind on my clients with 5 April year ends. The software asks me if I want to make a ‘calendar quarter election’ to file MTD returns made up to 30 June, 30 September, 31 December and 31 March (still by the 7 August, etc deadlines); that makes a lot of sense, as dealing with the odd five days four times a year emphasises to me how silly it is even to do it annually. But if I make that election, are there complications?
The first quarter will run from 6 April to 30 June. I recall HMRC announcing that a change of accounting date from 5 April to 31 March would effectively be ignored, but I cannot find any reference to such a policy. I think it is reflected in HMRC’s Business Income Manual at BIM81020, which says that a business commencing to trade with a 31 March year end would not have to compute overlap profits for the five days to 5 April, because the profits of that period would be deemed to be nil.
To sum up: can I change my clients’ accounting dates to 31 March, file MTD returns to calendar quarters, and effectively report 2026-27 as based on a 360-day year?
Query 20,756 – Count To Five.
How to account for cryptocurrency?
Our new client is a limited company that holds its working capital in cryptocurrency form. It sells computers and associated crypto mining equipment and is paid by its customers in cryptocurrency.
The company accounted for the cryptoassets as intangible assets, but as this means that any losses were on capital account, they could not be offset against trading profits.
The company has since changed its accounting policy and now treats the cryptoassets as trading stock, as it believes that this results in a more commercially appropriate way of reflecting its results. However, it has not followed this treatment through for corporation tax purposes and it has continued to adjust the accounting profit by adding back or deducting the accounting gains and losses and calculating profits using an average cost (s 104) pooling method, which is then included in the tax computation.
I’ve recently taken on this client and am concerned that this might not be the right approach. As the cryptoassets are now accounted for as trading stock, should the corporation tax computation follow the accounting treatment, or is it right to continue to use calculations based on the s 104 pooling rules in substitution for figures in the profit and loss account.
Readers’ views on this would be appreciated.
Query 20,757 – Optimist.
Farming strife
My client is one of two equal partners in a farming partnership being dissolved following a dispute. The partners intend to divide the partnership assets equally, with each taking sole ownership of specific assets.
The partnership owns two residential properties, let to unconnected tenants for many years. The partners currently own an undivided interest in both properties, and the proposal is for each partner to become the sole owner of one property. No cash consideration is intended, although the properties will be allocated as part of the division of partnership assets. No valuations of the properties have been made. They are likely to be of broadly the same value but there could be a small difference (no more than 20%) between the two.
I think this will qualify as an exchange of joint interests relief under TCGA 1992, ss 248A–248E, deferring relief by retaining the historic base costs split between the two partners. However, I am not sure what the position would be if in fact there is a difference in values between the two properties: does that lead to an immediate CGT charge? As the properties are investment assets let to unconnected tenants, I assume they do not qualify for business asset disposal relief.
Finally, does the fact that the exchange is taking place on the dissolution of the partnership and forms part of the wider settlement of capital accounts make any difference to the analysis for CGT or SDLT purposes?
Query 20,758 – One Half.
