VAT – driving schools who supplies services?
02/12/2021

The VAT liability of the supply of driving lessons is an interesting issue that can be of relevance to other supply scenarios such as hairdressers and other workers in the beauty industry. 

In HMRC’s internal manuals the guidance identifies three possible scenarios that can apply to someone providing driving lessons to the public:

  • The driving school employs its own instructors under contracts of service. HMRC comments that this method is probably only used in a minority of cases. When this is the case, the driving school is supplying the tuition to its pupils and must account for output tax on the full value of fees received. The driving school is making the supply of tuition to its customers and there is no supply by the individual instructors, who are simply receiving remuneration (wages) for their services as employees. 
  • The instructors supply their services to the school under a contract of services. They need only account for output tax on these supplies if the value exceeds the registration limits. The school must account for output tax on the full value of the fees received from pupils.
  • Each individual instructor supplies tuition services directly to their pupils using the driving school as an agent. Output tax is only due on the value of those supplies if an instructor exceeds the registration limits. However, payment made by each instructor to the school is consideration for a supply of agency services by the school, and the school must declare output tax accordingly. 

Membership

A member of the
ICAEW Practice Assurance Scheme

Newsfeed Search


Follow Us

Newsletter Sign up and Login

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!
Newsletter Sign up  |  Login

Contact Us

Clarkson Cleaver & Bowes Ltd
8a Wingbury Courtyard
Business Village
Wingrave
Bucks
HP22 4LW

01296 689430
This email address is being protected from spambots. You need JavaScript enabled to view it.

Follow Us