Agricultural show entry exempt from VAT

In Yorkshire Agricultural Society v HMRC [2023] TC08803, the First Tier Tribunal (FTT) found that entry fees to an annual agricultural show were exempt from VAT and HMRC had raised a VAT assessment out of time.

• The Yorkshire Agricultural Society (the society) is a charitable company which organises and runs the annual Great Yorkshire Show, an annual agricultural show.
• The society had originally treated admission income for the show as VATable at the standard rate.
• In April 2020, the society made a voluntary disclosure to HMRC of overdeclared output and overclaimed input VAT tax in respect of the 2016 show, on the grounds that the show's entry charges should have been treated as VAT exempt under the fundraising exemption.
  • In May 2020, an Error correction notice was submitted to HMRC accordingly, claiming a repayment of £202,000.
• In November 2020, the society confirmed that it had treated the 2017 show as exempt from VAT.
• HMRC refused the repayment claim in May 2021. On 5 December 2021, HMRC raised an Assessment in respect of the VAT period ending December 2017.
• The society Appealed to the First Tier Tribunal (FTT).

Schedule 9, Group 12, Item 1 of VATA 1994 provides a VAT exemption for the supply of goods and services by a charity in connection with an event:

1. That is organised for charitable purposes by a charity or jointly by more than one charity,
2. whose primary purpose is the raising of money, and
3. that is promoted as being primarily for the raising of money.

The FTT found that:

• HMRC’s December 2021 assessment was out of time.
  • The assessment had to have been made within one year after evidence of facts, sufficient in the opinion of HMRC to justify the making of an assessment, came to their knowledge.
  • HMRC argued that a letter sent from the society’s advisers in May 2021 started the one-year clock running.
  • The FTT found that this letter did not contain any new information or material to warrant it being the start of the one-year period and, as the assessing officer had not been called to give evidence, the FTT could not assess what had crystallised in their mind on receipt of the letter to displace that finding.
• The supply of admission to the show was an exempt supply for VAT purposes.
  • Both parties agreed that the show met condition (a).
  • Condition (b) means ‘a’ primary purpose, not ‘the’ primary purpose. In turn, a primary purpose means a purpose which is important.
    • The show had two interdependent main purposes: fundraising and education.
    • If fundraising were taken as a discrete purpose, it was the main purpose of the show. If it were not taken as a discrete purpose, it was a main purpose of the show. In either case, this met the condition for VAT exemption.
  • The show was promoted for fundraising purposes within condition (c).

The society’s appeal was allowed.

Comment

The FTT struggled with HMRC’s stance that the show was not promoted as being primarily for the raising of money, given that the show’s fliers and tickets all stated: "The Great Yorkshire Show raises funds for the Yorkshire Agricultural Society to help support farming and the countryside."

The FTT said: “That part of HMRC's challenge which sought to focus on the word ‘primarily’ was, in any event, very hard to understand. We were not able to readily apprehend, despite submissions, what the four corners of this challenge really were.”

The FTT was also critical of HMRC’s approach to the VAT assessment being within time limits.

HMRC appeared to argue that the society had effectively brought the assessment on itself by not providing the information which HMRC wanted. The FTT commented: “That is not the same as HMRC being in possession of information which justified it in issuing the assessment. It is an inversion of the statutory test.”

Useful guides on this topic

Assessments: Best judgement
What is a 'best judgement' assessment for VAT? When can HMRC raise one? What are your rights of appeal? How do you displace a best judgement assessment?

Appeals: VAT
How do I appeal a VAT penalty?  How can I request a Statutory Review? How do I appeal an HMRC decision?

Correcting VAT errors
What are the VAT error correction time limits? Can you correct errors through the VAT return? Do you have to notify HMRC?

Partial exemption & input VAT
How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?

External link

Yorkshire Agricultural Society v HMRC [2023] TC08803