HMRC are taking an interest people who ‘trade’ at car boot sales, festivals, craft fairs, agricultural/flower shows, collectors fairs and similar events with a view to establishing what VAT liability has been applied to charges for trader’s pitches. The reason for this focus seems to be as a result of HMRC altering its characterisation of what establishes ‘a licence to occupy land’ in its public notice on land and property, 742.
Many such businesses charging for pitches and other services without an option to tax in place, will treat the income, or at least the pitch fee as being VAT exempt, HMRC takes the view that where a licence to occupy is granted with other services, the VAT liability of the predominant supply has to be considered and it may be that VAT exemption does not apply. Where this is the case, HMRC will seek to raise an assessment for any VAT they feel is due where they believe that supplies have been incorrectly treated as being VAT exempt.
This is a complicated area of VAT legislation with much depending on the particular agreements regarding the letting of pitches/stalls that a business has in place. There are likely to be sound arguments that can be put to challenge any assessments made by HMRC.
If having read the above you feel that you would benefit from having a chat with someone regarding your circumstances, please do not hesitate to contact our Head of VAT Services, Gill Yates at 0845 177 5500 or using our on-line contact form.