Pandora owns a business called Ceramics for All. The business makes and sells ceramics at its premises, which include a shop and a cafe. The shop sells not only ceramics but also books on ceramics and display stands. Ceramics may be purchased individually or as part of a "gift package" which includes a book on the history of ceramics and a stand to display the item. The business advertises its activities in the local information centre where customers can obtain a discount coupon against any purchase of a ceramic or gift package. The business pays a set amount to the centre for each voucher used. The caf sells hot and cold drinks, cakes and (cold or heated) sausage rolls, which can be consumed on or off the premises.

Recently the business has opened a ceramics school. Customers attend a course which contains both practical and informational elements. It also provides specialised courses for disadvantaged children. Those courses are substantially subsidised both by a local charity and the business itself.

To provide the courses the business incurred considerable expense for taxable supplies to it, not only for the additional accommodation but also for consequential alterations to the shop. It used a professional fund-raiser to obtain the funds for that expenditure. Discuss the business' liability to VAT.