22 February 2022
In recent years, the events industry has seen several instances of HMRC challenging their VAT treatment of pitch fees charged to stallholders. Having previously won cases in the tax tribunals concerning pitch rentals to stallholders at antiques fairs and arts and crafts events, HMRC’s attention has now turned to the humble car boot sale.
Rufforth Park Ltd runs a large car boot sale every Sunday at its site just outside York which, in the busy summer season, can attract as many as 300 sellers who rent pitches. Pitch fees start at £9 for a basic area, marked out with white lines, on a first come first served basis. Advance booking is not possible, and the sellers cannot choose which pitch they use.
The company treated its pitch fee income as exempt from VAT, as it had granted its sellers a licence to occupy a small piece of land for the duration of the car boot sale. However, HMRC decided the company should have charged VAT, and raised assessments totalling £140,000. In HMRC’s opinion, the company had provided more than just a passive rental of land – HMRC thought that the sellers were in fact paying to participate in an expertly organised event, with various additional facilities that added significant value to the supply of the pitch.
The tribunal has now upheld Rufforth Park’s appeal, deciding that the pitch fees did in fact qualify for the exemption. In reaching this decision, the tribunal compared the facilities offered by Rufforth Park to those offered in earlier appeals by events organisers Craft Carnival and International Antiques and Collectors Fairs, whose charges to stallholders had been ruled to be VATable by the tribunal.
At the crafts and antique fairs:
- There was a contract between the organiser and the seller, entered into in advance, which obliged the organiser to put on the event.
- The activities of the organisers provided significant added value. The events were organised at prestigious and attractive venues intended to attract customers. The organisers actively sought a particular type of seller, targeting stallholders through existing contacts and adverts in trade publications. They also extensively advertised the event to customers and offered advance entry tickets. Stallholders were given a choice of indoor or outdoor pitches, with marquees, tables and chairs, electricity and generators available. There were toilet facilities, restaurant concessions, security guards and marshals onsite to ensure the smooth running of the event.
Overall, it was ruled that the fees charged to stallholders at those events was subject to VAT at 20% because the stallholders were paying to participate at an expertly organised and expertly run event, not just for the right to occupy a pitch.
In contrast, at Rufforth Park’s car boot sale:
- There was no formal contract between Rufforth Park and its sellers, so Rufforth Park had no obligation to put on the car boot sales, and sellers had no right to attend. If there was no event, the sellers would have no recompense. Nor were sellers selected - anyone who turned up and paid their pitch fee could get a space.
- The car boot sales are not held at carefully chosen venues designed to attract customers. They are held in a field which has basic toilet and refreshment facilities. No tables, chairs or electricity are provided for sellers, even for an extra fee, and there is no security offered at the event. While the car boot sales are efficiently run by an experienced operator, they are simple events involving only Rufforth’s land and its employees, and do not require any particular organisational or management skills, or the co-ordination of a variety of third-party contractors.
On that basis, the tribunal ruled that Rufforth had simply provided a licence to occupy a pitch at a car boot sale, without other services that generated any significant added value. Therefore, the pitch fee was exempt from VAT.
There will be winners and losers from this outcome. Most car boot sale operators and sellers are likely to welcome the decision that a pitch at a basic, no frills, car boot sale can qualify for exemption. Where pitch fees are their sole or main source of income, this could mean that the turnover of the car boot sale operator remains below the VAT registration threshold. Also, the majority of car boot sellers will not be registered for VAT, so would have been unable to recover any VAT charged to them on pitch fees. The ruling means they may not have to bear the VAT as a bottom line cost or pass it on to their customers.
On the other hand, the case law now draws a distinction between the VAT treatment of pitches at basic events (exempt) and more sophisticated events (subject to VAT), despite the fact that the stallholders are essentially buying the same thing – a chance to sell their wares at a public event. Businesses whose events sit on the borderline may have to gather detailed evidence to confirm their VAT position with HMRC.
Whatever the impact of this decision, its effects may be only temporary. HMRC is currently running a consultation process (Simplifying the VAT land exemption – initial consultation points to changes) which lists the compulsory application of VAT to all short term lets as one of its policy options. If this is adopted, it is likely to mean that all pitch fees for sellers and stallholders will be subject to VAT.
For now, event organisers should compare their circumstances to this latest case law to see if their VAT position might be affected and watch out for future changes.