Readers' forum: VAT

I act for a partnership which is VAT registered and provides group dancing lessons to children as one of its activities. The client has just had a VAT visit from HMRC and the officer identified that my client has dealt with income from dancing sessions given by both my client and an employee incorrectly. The client treated these as wholly exempt from VAT rather than partly standard rated because the exemption applies only to lessons given solely by the partner under the private tuition rules.

My concern is that the HMRC officer has treated 50% of the income from these joint lessons as being subject to VAT. They are then seeking to assess tax going back four years but as my client pointed out most of the input in these lessons is from herself with the employee playing a minor role. My client thinks that 80%...