In Kati Zombory-Moldovan (t/a Craft Carnival) v HMRC [2016] UKUT 0433 the Upper Tribunal (UT) has overturned the First Tier Tribunal’s (FTT) earlier decision and found that the supply of stalls at craft fairs is subject to VAT.
The case concerned the treatment for VAT purposes of fees paid for stalls and pitches at events organised by the taxpayer:
- These events were often held in the grounds of stately homes or historic properties.
- The taxpayer provided specific pitches to stallholders as well as providing other services such as portable toilets, generators and car park attendants etc.
Per Schedule 9 of the VAT Act 1994 the ‘grant of any interest in or right over land or of any licence to occupy land’ is an exempt supply.
The FTT had previously found that the supplies made by the taxpayer to stallholders were of licenses to occupy land and therefore exempt. See Stallholders pitch is exempt from VAT. At the heart of this was their finding that the taxpayer had no contractual obligation to organise the craft fairs.
The UT has now overturned this decision, finding that:
- The taxpayer provides the stallholder with a licence, not merely to use a plot of land, but to use a stall at a specific event.
- They are under an obligation to provide a fair: if no fair were held then the taxpayer could not fulfil its contractual obligations.
- The services provided to stall holders therefore go beyond a ‘licence to occupy land’ and the exemption in Schedule 9 does not apply.
The UT also found that supply made to stallholders was a single and not a composite multiple supply, meaning that the entire fee was subject to VAT.
Comment
As with the FTT, the UT placed great emphasis on the contents of the contracts agreed with the stallholders as well as the information provided in marketing material and on the taxpayer’s website. Had these been worded differently it is possible that a different conclusion could have been reached.
The decision provides a useful summary of the case law (both domestic and European) on the Schedule 9 exemption, as well as that on identifying and characterising supplies and single vs multiple supplies.
Links
Case reference: Kati Zombory-Moldovan (t/a Craft Carnival) v HMRC [2016] UKUT 0433
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