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VAT: HMRC gets the boot at tribunal


HMRC assessed a landowner for VAT on pitch fees from its weekly car boot fairs, contrary to the guidance in its land and property notice. James Johnson explains why. 

1st Mar 2022
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HMRC’s Notice 742: Land and Property, has highlighted car boot sales as an example of an exempt licence to occupy land for as long as I can remember. So why did it assess a company that had been running such events for over 40 years for unpaid VAT?   

Fortunately for the taxpayer in Rufforth Park Limited v HMRC [TC08395/V] the FTT allowed the appeal but is this the end of the story?

Car boot tradition

Car boot sales are a part of everyday life in Britain. Some, like Rufforth Park, are a business activity, but others are run by the charitable sector or schools to raise funds.

Rufforth Park runs car boot sales all year round, as well as an auto jumble sale once a month. Pre-booking is not required and pitches are allocated on a first-come first-served basis. In the summer as many as 300 sellers pay to sell their goods. There are both outdoor and indoor pitches and a flat rate is charged according to type of vehicle and whether goods are second-hand or new, with indoor pitch fees slightly higher. There are no formal contracts between Rufforth Park and the sellers but on entrance they are given a receipt setting out the conditions that apply, which also appear on the Rufforth Park website and Facebook page.

HMRC review

HMRC undertook a desk review of Rufforth Park’s VAT records, including a telephone interview with the taxpayer and his accountant, referring to the recent Upper Tribunal case Zombory-Moldovan (t/a Craft Carnival [2016] UK UT 433.

HMRC decided that Rufforth Park provided more than just a passive exempt licence to occupy but rather a standard-rated supply of services, which included the taxpayer’s 40-year reputation for running car boot sales, advertising, amenities on site including toilets and a five-star café. HMRC also took into account the capital improvement on site to make it more attractive, parking and cleaning of the site afterwards.

HMRC considered the expertise of the taxpayer to be a key factor and that the economic reality was that the car boot sales were expertly organised and run. Rufforth Park had significant responsibilities over and above the passive supply of land resulting in an overarching supply of services being an expertly organised event.

Taxpayer’s arguments

The taxpayer argued there was a single supply of a pitch, which fell within the VAT exemption VATA 1994 Sch 9, item 1, being the grant of any interest in or right over land or of any licence to occupy land. The facts in the Craft Carnival case were distinguishable and a car boot sale is a passive activity generating no added value.

FTT view

The FTT referred to the EU case: Belgian state v Temco Europe SA, [2005]. This found that the leasing or letting of immovable property is a passive activity that over time does not add significant value but that there is no statutory definition. HMRC interpreted this in Notice 742, para 2.6 by including the pitch at a car boot sale, among others, as an exempt supply of a licence to occupy land.

The FTT asked whether there was a single supply of a licence to occupy land. If there was more than one element, was there a single element with ancillary elements, or an indivisible composite supply that required identification of the overarching nature of the supply.

The FTT concluded that Craft Carnival had an obligation through its advance contract with sellers to run an expertly organised event targeting certain types of seller, providing prestigious and attractive venues. This included access to marquees with electricity, tables and chairs and indoor and outdoor pitches, as well as toilet and restaurant facilities and marshals on site.

Rufforth Park by comparison had no contracts and conditions of entry were available only after payment. Any seller can enter, advertising is limited to basic information and events take place on the Rufforth Park land just off the highway. There are no tables, chairs, or electricity, no security and only basic toilet and refreshment facilities. Rufforth Park provided a ‘well run’ event but very different from that of Craft Carnival.

The FTT concluded there was a single indivisible supply consisting of the pitch and basic facilities but that the commercial and economic reality is that there is an overarching exempt supply of the licence to occupy a pitch. The basic facilities provided alongside does not change that.

The appeal was therefore allowed.


It remains to be seen whether HMRC will appeal this decision but it does leave landowners with some uncertainty. Will HMRC review its position on car boot sales and similar events?

My hunch is that to do that HMRC will need to take this case to the Upper Tribunal, before it can change its approach to market pitches. Currently the main distinction appears to be that the more sophisticated the event, the more likely it will fall to be standard-rated for VAT as per Craft Carnival. Either way the guidance in Notice 742 is struggling to make sense.

Replies (7)

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By johnjenkins
02nd Mar 2022 09:58

Just another scenario that HMRC try to extort money. Instead of looking at ways of increasing the take, perhaps HMRC should look at all the flawed scenarios they already have. Government should sort out HMRC whilst sorting out Companies House.

Thanks (4)
Replying to johnjenkins:
By towat
02nd Mar 2022 10:28

johnjenkins wrote:

Just another scenario that HMRC try to extort money. Instead of looking at ways of increasing the take, perhaps HMRC should look at all the flawed scenarios they already have. Government should sort out HMRC whilst sorting out Companies House.

Long established successful well run businesses are easy targets for HMRC, they should spend more effort tackling the black economy.

Thanks (4)
the sea otter
By memyself-eye
02nd Mar 2022 10:25

Not just any old extortion... 40 years worth!

Thanks (1)
By Paul Crowley
02nd Mar 2022 13:56

FTT gets it right, yet again
HMRC VAT do not know the law on VAT, yet again.
Do the people at HMRC VAT need to undertake CPD, or are they even expected to learn the rules?

Thanks (3)
By JamesDS
02nd Mar 2022 14:49

Another example (there seems to be one of these every few days) where HMRC issue guidance stating something, issue an online manual stating something (often something else), and then go to FTT with a position the differs from one or both documented positions.

They call this their "view" and as usual, their "view" differs from the law/established practice at the time. As usual, the taxpayer has to fund proving them wrong without recourse to costs. Indeed, there is a wealth of evidence of HMRC deliberately making court action expensive in order to exhaust the funds of those forced to fight them.

This is a perfect example of a situation where HMRC's fishing should include an automatic order for 100% costs against them when they lose, and an apology for the taxpayer and Judge who's time they wasted.

Thanks (2)
By Catherine Newman
03rd Mar 2022 15:06

I do the accounts for a car boot sale on a racecourse. HMRC undertook a "raid" one day re VAT. We have always shown it on the "Land and Property" pages. The only provision is toilet hire and advertising.

Thanks (0)
By Rammstein1
03rd Mar 2022 16:39

I had the same issue with HMRC a few years ago. They had been to see a client (without us knowing) who let out a floor of a building room to traders and didn't charge VAT. HMRC then arranged to meet at our office with the client and said they were going to backdate VAT registration a couple of years. I remember it was February 1st so I had only had an hour to prepare after the Tax Return deadline before the meeting. I mentioned a couple of cases that HMRC should refer to and they looked totally non-plussed. They went away to look at everything again and then dropped everything a few months later. I got a nice hamper of wine from the client to say thanks.

Thanks (1)