This recent VAT case may have significant implications for exhibition organisers

A recent decision in the Upper Tribunal case of Kati Zombory-Moldovan t/a Craft Carnival has found that an exhibition organiser’s services went beyond the passive supply of a pitch or a licence to occupy land, which would have been exempt from VAT, and was actually the provision of ‘a service of participation as a seller at an expertly organised and expertly run antiques and collectors fair’ and, as such was liable to VAT at the standard rate of 20%.

Mrs Kati Zombory-Moldovan, organises craft and garden fairs in and around Dorset. Spaces are sold to businesses and individuals involved in various crafts to enable them to sell their products at a Craft Carnival fair to which the general public are admitted on payment of an entrance charge.
Mrs Zombory-Moldovan accounted for VAT on the admission fees paid by the public but not on the supply of spaces to stallholders, which she had treated as an exempt supply of land. HMRC argued that she was not supplying services which fell within the land exemption, but rather services which should properly be described as a ‘package of services’ taxable at the standard rate, as the purpose was to provide the stallholders with an opportunity to trade.

The First Tier Tribunal concluded that the supply constituted a single supply of land which was exempt from VAT. However, this decision was overturned by the Upper Tribunal which reviewed the contracts and concluded that the economic reality was that Mrs Zombory-Moldovan was supplying a high-quality, expertly organised event which was a taxable supply for VAT purposes.

Event organisers which operate in a similar way, should review the VAT liability of their supplies.  If they have been treating such supplies as exempt in the past, they may have a liability to account for VAT on income, but there should be scope to recover additional input tax. As an alternative, event organisers may wish to revise the contracts to ensure that they reflect the ‘economic reality’ of the service they provide.
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