Tax tribunal decisions rarely receive much publicity, but they can have a huge impact on the business models of entire industries. One such ruling established in principle that car boot sale operators bear no VAT liability in respect of pitch fees.
The case concerned a well-attended Sunday car boot sale, which had been held in the same field for over 40 years. The operator of the events argued that pitch fees it charged to sellers should benefit from VAT zero-rating. HM Revenue and Customs (HMRC) took the contrary view, however, and raised VAT assessments against the operator in excess of £80,000.
In challenging HMRC’s stance, the operator cited a section of the Value Added Tax Act 1994 that provides for zero-rating in respect of the grant of any interest in or right over land, or any licence to occupy land. HMRC asserted that the pitch fees should be subject to the standard rate of VAT on the basis that the supply of the pitches with other goods and services constituted a single overarching supply of a service, not merely the right to occupy land.
Upholding the operator’s appeal, the First-tier Tribunal (FTT) noted that it has no formal contractual relationship with sellers. It is under no obligation to put on events and sellers have no right to attend. Although well run and widely advertised, the events take the form of ordinary car boot sales. The operator’s business model was a simple one and it could not be said that sellers, in return for pitch fees, obtained an opportunity to participate in expertly organised and run events.
The FTT acknowledged that some basic facilities are provided to buyers and sellers, including car parking, a café, toilets and post-event rubbish clearance. However, sellers are not provided with tables, chairs, electricity or security, even for an extra fee. Pitches, marked out by white lines, are allocated on a first come, first served basis. Overall, the FTT was satisfied that the commercial and economic reality is that the relatively passive supply provided by the operator is a licence to occupy a pitch. The VAT assessments were overturned.
Case notes:
Rufforth Park Limited v The Commissioners for Her Majesty’s Revenue and Customs. Case Number: TC/2020/00973