Dancing around the treatment of VAT

“The bicycles go by in twos and threes -
There’s a dance in Billy Brennan’s barn tonight,”

- Inniskeen Road: July Evening, Patrick Kavanagh

Kavanagh may have envied the cyclists attending, engaged in the “wink-and-elbow language of delight”, but whether his envy extended to Billy himself is unclear from the 1936 sonnet. At least Kavanagh, unlike Brennan, did not have to contend with the question of whether this rustic knees-up constituted a VATable activity and, if so, had an obligation to register as a VATable person now arisen.

Thankfully Billy can now rest easy given the clarification provided by Revenue’s latest guidance on the subject “VAT Treatment of Dances” issued December 2012.

“There is no definition in the Value Added Tax Consolidation Act 2010 as to what constitutes a ‘Dance’” begins the Revenue missive, with what one can only assume was a wistful air of regret for a golden opportunity missed. Disappointingly for the reader too, the document is also sadly lacking in any diagrams, foot(work)notes or pictorial representations which may shed light on the matter.

In spite of these deficiencies, the memorandum manfully struggles on, deciding innocently that dances are “functions or gatherings where the principal activity is dancing, and which are open to the public on payment of an admission charge, or on pre-purchase of a ticket”.

Whether the principal activity at any such gathering in Ireland was ever “dancing” depends largely on the virtue of the perceiver. Revenue’s slightly archaic language is not confined to using “dance” as a noun but extends to the first recorded use of the word “discotheque” since the Village People split in ‘85, and while “dinner dance” may initially conjure up images of beautifully choreographed waltzing Disney delph, a quick search on Google suggests that this tradition is in fact being kept alive in a scattering of local GAA clubs throughout the country.

For VAT purposes, it is clear that Billy would have been regarded as a promoter and would have had to register and account for VAT at the standard rate where his annual receipts from taxable activities (inclusive of dances) exceeded, or was likely to exceed, €37,500.

In order not to be counted as such, Billy would have to satisfy Revenue that his barn-hall boppers were attending a live musical performance, the dancing at which was a) merely “incidental”(again, what an image)and b) was confined to an area smaller than that reserved for seating.

Of more relevance and comfort to the clubs and parish committees who are currently organising their annual charity event or fundraiser, Revenue have clarified that a specific exemption exists for “occasional” benefits like this. Such events are outside the scope of the provisions and VAT therefore should not be charged on the admission price or ticket.

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