Agricultural Show Wins £292k VAT Appeal – A Victory for Farming Businesses

The Yorkshire Agricultural Society is a charitable company that runs the annual agricultural show, the Great Yorkshire Show since 1838. The Society disputed an assessment of £90,776 in VAT payments, and a refusal by HMRC to allow net VAT repayment of £201,949, as HMRC claimed that the show should have been subject to VAT as it was not run for charitable purposes. A judge has criticised the Revenue officials for taking an agricultural show to court over a tax amount of hundreds of thousands of pounds, which the show did not actually owe.

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The Great Yorkshire Show v HMRC

The Great Yorkshire Show, located in Harrogate and held during the month of July, usually yields a sum of £3 million to £4 million. Roughly 35,000 individuals attend the event each day to observe various farm animals such as cattle, sheep, pigs, and goats. In addition, there are also demonstrations of showjumping and sheep shearing, exhibits aimed at educating children about food production, and a farmers’ market.

The VAT Tax Tribunal Appeal

HMRC took Yorkshire Agricultural Society to the First-Tier Tax Tribunal, claiming that it owed £292,725 from the takings of the Great Yorkshire Show, UK’s biggest. The Society argued that the show was in fact run for charitable purposes and should therefore be exempt from VAT. The Tribunal ruled in favour of the Society.

Legal Basis of the Tax Appeal

The Society’s appeal was based on the VAT Act 1994, which provides exemptions for “certain cultural services” provided by non-profit making organizations. The Society argued that its agricultural show was a cultural service that was provided for charitable purposes and should therefore be exempt from VAT.

What did the Tax Tribunal Decide?

Christopher McNall, the judge, called HMRC’s case ‘unattractive’ and dismissed it. The judge concluded that the case had no merit because the Great Yorkshire Show is a charitable event that raises funds, making its profits exempt from VAT. Additionally, the judge noted that the tax officials were mistaken in bringing the demand because it was made out of time.

The Tribunal agreed with the Society, stating that the agricultural show was “not run with a view to profit” and was therefore exempt from VAT. The Tribunal also noted that the show had a number of charitable objectives, including the promotion of agriculture and horticulture, and the support of education and research in these areas.

Implications for charities and non-profit organizations

This decision has important implications for charities and non-profit organizations that run similar events. It confirms that certain cultural services can be exempt from VAT when run for charitable purposes.

The ruling also emphasizes the need for organizations to have a clear understanding of VAT exemptions and to ensure that events are run for charitable purposes where appropriate. It further highlights the importance of appealing decisions made by HMRC where there is a strong legal basis for doing so.

Implications for HMRC

The ruling of the tribunal is especially frustrating for HMRC during the week of the King’s coronation as he has a close association with the Great Yorkshire Show, with his mother having been a patron for 45 years. In 2021, the King and the then Duchess of Cornwall visited the event and observed cattle sheds, sheep judging, and South Devon cattle. The judge criticized the HMRC officials for the pursuing the case, raising serious questions over why it wasted tens of thousands of pounds of taxpayers’ money pursuing it.

What did the VAT appeal case highlight?

Yorkshire Agricultural Society’s successful appeal against HMRC’s decision to charge VAT on its agricultural show is a significant win for the organization and others like it. The Tribunal’s decision provides important guidance on the interpretation of VAT exemptions for non-profit making organizations providing cultural services. It emphasizes the importance of organizations having a clear understanding of VAT exemptions and ensuring that their events are run for charitable purposes where appropriate.

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