VAT – Exempt supply – Value Added Tax Act 1994 – Respondent organising craft fairs – Respondent entering into licence agreement with stallholders for use of stall or pitch at specified event in return for fixed fee – Whether supply to stallholders exempt from VAT as supply of licence to occupy land within Schedule 9 to 1994 Act – Whether single composite supply involving participation in well-run craft fair – Appeal allowed
The respondent organised a craft fair about five or six weekends per year in locations in Dorset, usually close to a stately home or historic property. Stallholders entered into a licence agreement with the respondent for the use of a stall or pitch at a specified event in return for a fixed fee. They had the choice of taking either an indoor stall or outdoor pitch.
Indoor stalls were located inside a marquee or building and comprised a 10ft by 6ft area with a trestle table and two folding chairs, with the option of an electricity supply in return for an extra fixed fee. Stallholders did not have to take the trestle table and chairs but could, alternatively, choose to use their own display fittings and furniture within the space provided. Indoor stalls were allocated at the respondent’s discretion although she would attempt to accommodate requests where possible. Outdoor pitches comprised 20ft square patches of ground demarcated by posts, with a sign stating the name of the stallholder. The stallholder was free to erect a tent or gazebo on the pitch and arrange their items for display. An electricity supply was not usually available for outdoor pitches.
The respondent arranged publicity for the events and organised the erection of the marquees, which were hired for the occasion. She also arranged for the provision of other temporary facilities including portable toilets, electrical generators and security fencing, and employed staff to act as ticket sellers and car park marshals.
An issue arose as to whether the supplies of the stalls and pitches were liable to VAT or were exempt as supplies of licences to occupy land within Schedule 9 to the Value Added Tax Act 1994. The appellants took the view that VAT was payable but the first-tier tribunal (FTT) reversed that decision and concluded that the supplies were exempt. In reaching that decision, it found that the respondent was under no contractual obligation to a stallholder to organise the craft fair but that that was simply the context in which the licence agreement was made. The appellants appealed.
Held: The appeal was allowed.
(1) The FTT had erred in holding that the respondent was under no contractual obligation to organise craft fairs. Under the terms of the licence agreement, she agreed to provide a stallholder with a licence not merely to use a plot of land for a particular period but to use a stall or pitch at a specified event to offer certain goods for sale. It followed that if no event corresponding to the relevant description were held at which the stallholder could offer his goods for sale, then the respondent would not have fulfilled her contractual obligations.
(2) The supply made to stallholders was properly characterised as a single, rather than a multiple supply. As a matter of social and economic reality, there was a single indivisible supply to a stallholder and it would be artificial to attempt to split it into more than one supply: Commissioners for HM Revenue and Customs v Bryce (t/a The Barn) [2010] UKUT 26 (TCC); [2011] STC 903; [2012] PLSCS 161 applied.
(3) In circumstances where the respondent was obliged to ensure that a fair took place, the single supply made by the respondent could not be characterised simply as a licence to occupy land. The stallholders were paying for participation in a high-quality, expertly organised and run craft and garden fair, one element of which was the provision of a pitch. The transaction did not involve a relatively passive activity, linked simply to the passage of time and not generating any significant added value. The respondent had very real and significant responsibilities beyond the bare provision of an appropriately sized plot with, potentially, a table and chairs. It followed that the VAT exemption in Schedule 9 to the 1994 Act did not apply and the supplies were accordingly subject to VAT: International Antiques & Collectors Fairs Ltd v Revenue and Customs Commissioners [2015] UKFTT 354 (TC) and Belgium v Temco Europe SA (Case C-284/03) [2005] STC 40 applied.
Hui Ling McCarthy (instructed by the General Counsel and Solicitor to HM Revenue and Customs) appeared for the appellants; Owain Thomas QC (instructed by Cubism Law) appeared for the respondent.
Sally Dobson, barrister
