In Julie Lalou T/A Dogs Delight v HMRC  TC08380, the First Tier Tribunal (FTT) found that the supply of dog grooming courses was not exempt from VAT as it was not demonstrated that it was a subject ordinarily taught in schools or universities.
- Ms Lalou ran a business providing dog grooming services and dog grooming courses. From 1 July 2006, she was Registered for VAT.
- Ms Lalou later formed the view that her supply of dog grooming courses was exempt from VAT.
- In October 2018, Ms Lalou submitted an Error correction notice to HMRC, seeking Repayment of £102,301 relating to historically treating the supply of dog grooming courses as standard rated rather than exempt.
- HMRC responded in July 2019, advising that the supply of dog grooming courses was in fact standard rated. In addition, HMRC notified Ms Lalou’s that her VAT registration would be reinstated, which it was in the following month.
- Correspondence between Ms Lalou and HMRC continued. A Review by HMRC in October 2019 upheld the decision that the dog grooming courses were not exempt. HMRC rejected the error correction notice accordingly.
- HMRC raised an assessment of £12,203 in relation to the VAT quarter ended September 2019 for which a return had not been made.
- Ms Lalou Appealed to the First Tier Tribunal (FTT).
The supply of Private tuition, in a subject ordinarily taught in a school or university by an individual teacher acting independently of an employer, is exempt from VAT under Item 2, Group 6, Schedule 9, VATA 1994.
The FTT found that:
- The dog grooming courses involved the supply of tuition: Ms Lalou transferred skills and knowledge to her students.
- The supplies of tuition were made on Ms Lalou’s own account and at her own risk: tuition was given privately.
- Ms Lalou was the only person supplying the tuition.
- The courses Ms Lalou provided were educational and not purely, or even predominantly, recreational. They generally lead to recognised qualifications.
This left the FTT to consider whether the teaching of dog grooming was commonly or ordinarily provided in schools or universities.
- It was found that 88 further education colleges in England offered courses that had a dog grooming element to them.
- 57 of these colleges offered dog grooming as a free-standing course that led to a qualification of some sort.
- While this gave merit to the argument that dog grooming is commonly taught in further education colleges in England, in Premier Family Martial Arts v HMRC  TC07509 it was indicated that the subject must be taught at a wide number of schools or universities in the European Union (EU), not just England.
- The necessary burden of proof that dog grooming is taught in a wide number of schools or universities in the EU was not met.
The FTT dismissed Ms Lalou’s appeal that her supply of dog grooming courses fell within the VAT exemption.
- It followed that Ms Lalou’s appeal against HMRC’s VAT assessment and refusal to accept the error correction notice failed, as these relied on the supplies being exempt from VAT.
- Similarly, as the level of Ms Lalou’s taxable supplies, including courses, was not in dispute, her appeal against HMRC’s reinstatement of her VAT registration failed.
Insufficient information was given for the FTT to consider whether HMRC’s actions had breached the principle of fiscal neutrality.
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