The First-Tier tribunal recently heard a case of Rufforth Park Ltd, who have treated the supply of car boot sale pitched as exempt from VAT. This was on the basis that this was a “grant of an interest in or right over land or any license to occupy land” and fell within Item 1 of Group 1 of Schedule 9 to the Value Added Tax Act 1994 (VATA), therefore ensuring it is exempt for VAT purposes.

 

HMRC contended that the pitch fees received should have been treated as standard-rated income due to the license to occupy being granted alongside other goods/services, ensuring the predominant supply was that of a service and was therefore subject to VAT and consequently, an assessment for output tax was raised.

 

Rufforth sold pitches to sellers (these consisted of both members of the public and traders), however no advance booking can be made, and pitches are assigned on a first come first served basis – a seller cannot choose which pitch they want. No table/electricity/lighting is provided and there are no formal contracts with the sellers, although a receipt with conditions is provided. For example, the following conditions apply;

  • Rufforth held no responsibility for the sellers stalls/property those operating the stalls.
  • Being assigned a pitch did not give a licensee exclusive possession of any part of the car boot, i.e. the seller could only use the pitch assigned for that day and had no right to of return.
  • Restrictions on goods that can be sold at the car boot, i.e. illegal/stolen goods.

 

In addition of a right to occupy caravan pitches, HMRC contended that the following supplies were made by the business and meant the overarching supply was more than a passive supply of land;

  • Due to 40 years of running car boot sales, the business had established a reputation which benefited the stall holders. As such, the reputation of regular events is part of the supply the stall holder receives.
  • Advertising to bring buyers to the site for the benefit of stall holders is part of the supply made by Rufforth.
  • Amenities provided on site (café/toilets/parking) provide benefit to buyers and are part of the supply.

 

As part of the case, the law surrounding supplies comprising of more than a single element were considered in the context of whether any of those listed above can be considered ‘ancillary’, with these supplies being subject to the same VAT liability as the principal supply. Alternatively, consideration was also given to supplies of two or more elements and whether these formed “a single indivisible economic supply which it would be artificial to split…” with VAT treatment determined by the “overarching supply”.

 

      1. the context of this case, this means; was the supply a single supply of a licence to occupy land (with ancillary elements), and therefore exempt, or was there an indivisible composite supply with an overarching nature.

 

The FTT concluded that, whilst there were multiple elements to the supply made by Rufforth, the “commercial and economic reality” is that a licence to occupy a pitch at a car boot sale or auto jumble was provided and therefore the supply made is exempt from VAT.

 

If you or your client provides supplies with multiple elements and are unsure what effect this has on the VAT treatment of these supplies, or if you are in disagreement with HMRC over the treatment of your supplies, please call our free VAT helpline without delay and speak to one of our export consultants to obtain the clarity you require.

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