The argument started when it was discovered that no value- added tax was being paid on courses run by the WI at its residential Denman College in Oxfordshire. Legislation may be necessary to settle the issue.
The National Institute of Adult and Continuing Education (Niace) said that imposing VAT would deter people on low incomes. Funding for adult classes is already under intense pressure as local authority budgets are squeezed.
Alan Tuckett, director of Niace, said it was impossible to draw a line between vocational courses, which would be exempt from VAT, and liable leisure courses, on which it would be charged. 'Students use floristry and cake- decorating courses for vocational purposes,' he said. The institute is pressing for all adult classes to be exempt.
Customs and Excise has embarked on a review of the situation, but it has warned Denham College that there is a 'strong possibility' that many of its courses will not be VAT exempt.
Graham Jones, principal of Denman College, said that imposition of 17.5 per cent VAT would double their costs from pounds 6 a night to pounds 14.
Sir John Cope, the Paymaster General, admitted in a letter to Robert Jackson, Conservative MP for Wantage, that 'this is not an easy area of the tax to administer'. He said academic or training courses would not be taxed but recreational and sporting activities would be.
'Flower arranging and bridge would be taxable while accountancy and business studies would be exempt. However, there are some borderline types of course where the title or description may not in itself show whether or not there is a taxable recreational activity. Domestic science and music are examples,' wrote Sir John.
Mr Tuckett said Niace was concerned about VAT inspectors' ability to make judgements on the educational merits of study programmes.
He added that adults often progressed to academic or vocational courses after gaining confidence on a leisure course.Reuse content