Legally their position would be quite good. The correct procedure for a sale where tax relief applies would be for them to raise an invoice to you for the full price of the course, have you pay the reduced price at point of sale and then claim from the IR for the tax relief. If the IR refuse the tax relief the liability for the full price is still yours. It might be difficult for them to get the money out of you but that's another story.
Have just spoken (anonymously) to the IR advisers at Bootle and their view is that a course with a compulsory study period of 30 hours a week constitutes the minimum for a 'substantially full time' course. I have also spoken to my counterpart at another school also not offering VTR on distance learning and he agrees with my interpretation and that the student could be pursued for the deficit.
There are some schemes around that attempt to include the ATPL course as part of some other qualification to gain the tax relief. Our accountants have advised us not to get involved with these. Is the LGU scheme one of those?