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International Antiques and Collectors Fairs Ltd (IACF), who have led the challenge against HMRC's new interpretation of the rules, say a final decision could still be months away.

The tribunal comes 18 months after IACF, Nelson Fairs and ATG chaired a crisis meeting of fair organisers in London to debate the threat which they fear could put them and their stallholders out of business.

The issue initially arose in July 2013 when HMRC announced that the supply of space at fairs (antiques & collectors, craft, vintage, art deco etc) should be subject to VAT, backdated to November 2012.

The change aimed to reduce the charging of cross-border VAT at European level, and the reinterpretation of the rules was an unforeseen side effect of this.

Although standholders at fairs staged indoors are already subject to VAT on their rental, up to that point rental of pitches at outside fairs had been exempt from VAT. When HMRC reviewed the rules they decided that any add-on service, such as promoting the fair or providing power or security, that does attract a VAT charge, is indivisible from the pitch rent, which means VAT must be charged on the whole deal.

Stallholders Survey

IACF, who rent out over 30,000 pitches a year at Newark, Ardingly, Shepton Mallet, Swinderby and Newbury, conducted a survey at Shepton Mallet and found that close to 90% of stallholders, many of whom work to very narrow profit margins, were not VAT-registered, meaning they could not reclaim the extra 20% charge.

It is a similar story for other fair organisers, who fear that adding the VAT charge to pitch rents will be enough to put many dealers out of business.

The threat was such that, after taking legal advice, IACF reluctantly introduced a reduced-rate VAT charge on pitches at the beginning of October 2013. They were prepared to cover any backdated VAT charge to the previous November, but could not afford to make up any ongoing shortfall because of the uncertain outcome of the tribunal, which could take months if not years to be completed, as it has proved.

Robert Thomas, managing director of IACF, told ATG: "The wheels of British bureaucracy have finally turned and a date has now been set. IACF has invested heavily into this appeal and hopes that the outcome will mean that antique fairs will not have to charge VAT on stalls in the future."