HMRC ‘looking at’ organisations which run festivals, shows, fairs etc.
We are aware that HMRC appear are having a focus on the above with a view to establishing if charges for traders pitches have been treated as VAT exempt. The premise of this focus seems to be as a result of HMRC changing its definition of what constitutes ‘a licence to occupy land’ in its public notice on land and property. Public Notice 742 paragraph 1.2
Many organisations make charges for pitches and other services and without an option to tax in place will treat the charges or at least the pitch fee as VAT exempt. Essentially, HMRC say that where a licence to occupy is granted with other services the VAT liability of the over-arching supply has to be considered and it may be that VAT exemption is incorrect. Where this is the case, HMRC will seek to raise an assessment for VAT they view as being due on exempt supplies made previously.
This is a complex area of VAT law and depending on an organisations particular arrangements regarding the letting of pitches/stalls we are of the opinion there are strong arguments to challenge HMRC if assessments are made.
Please contact firstname.lastname@example.org if you have concerns in this area.