Stallholders’ pitch fees at comprehensively organised trade fair subject to VAT

In the First-tier Tribunal (Tax) case of International Antiques and Collectors Fairs Ltd v Revenue & Customs (VAT – EXEMPT SUPPLIES : Land) [2015] various site owners up and down the country normally granted the Company five year licences to use their properties to hold antiques fairs on agreed dates, on an exclusive basis.

The antiques fairs were large scale events which the Company’s marketing materials described as some of the biggest and best attended of their kind in Europe – which clearly required extensive and expert organisation. It took almost 90 staff at Newark and over 40 at Ardingly. Each Exhibitor paid for the benefit of a fully organised fair provided by the Company.

The Company performed all organisation of the fair, including stewards, first-aiders, cleaners, security, parking marshals, electricity, some police attendance, and some availability of banking facilities.

The Company also undertook prior advertising in both trade publications and the local press. This involved one full-time employee, one PR consultant, two other consultants, a graphic designer and two bloggers.

The Tribunal said that the Company’s supply to an Exhibitor was not “a relatively passive activity linked simply to the passage of time and not generating any significant added value”.

In fact, the Company’s activities in organising and running the fair did generate significant added value and were “other activities which are … commercial in nature, … or have as their subject matter something which is best understood as the provision of a service rather than simply the making available of property”.

The test was “whether the contracts, as performed, have as their essential object the making available, in a passive manner, of premises or parts of buildings in exchange for a payment linked to the passage of time, or whether they give rise to the provision of a service capable of being categorised in a different way”.

The economic and social reality was that the over-arching single supply by the Company was not to be treated as a supply of a licence to occupy land, but rather a supply of the opportunity to participate as a seller at an expertly organised and expertly run antiques and collectors fair, one element of which was the provision of the pitch. Accordingly, the correct VAT treatment of the booking fees was a standard rated supply.

The VAT treatment of the supply was self-evidently standard rated once it was established that the other service elements were not ancillary to the provision of the licence.

That was sufficient to decide the appeal against the Company.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.