The Upper Tribunal has rejected an appeal from HM Revenue & Customs over whether a charity should pay tax on entry fees to a show. 

The Yorkshire Agricultural Society, which organises and runs the annual Great Yorkshire Show in Harrogate, has been involved in a long-running legal dispute with HMRC over admission fees to the show in 2016 and 2017. 

The charity said the fees were exempt supplies for VAT purposes but HMRC disputed this. 

It rejected the charity’s claim for overpaid VAT and at a First Tier Tax tribunal in 2021, HMRC sought £292,725 from the charity’s takings from the Great Yorkshire Show in 2016 and 2017. 

This was made up of £90,776 in VAT payments for its 2017 show and £201,949 as a net VAT payment for its 2016 show, which the charity argued should have been treated as exempt for fundraising purposes.

The charity appealed to the First Tier Tribunal which, in a decision published on 25 April 2023, allowed the charity’s appeal against both the 2016 repayment claim and the 2017 assessment.

Last year, HMRC appealed to the Upper Tribunal against the 2016 repayment claim and hearings were held between October and November.

But in a judgment published on 9 January, the Upper Tribunal dismissed HMRC’s appeal against the FTT’s decision to allow the 2016 repayment claim by the charity.

A Yorkshire Agricultural Society spokesperson said the financial implications of the case were significant for the charity.

“We hope this recent decision marks a conclusion for the society after a long legal journey,” the spokesperson said.

“The financial implications are significant for the society, and this decision comes as a welcome boost to us and our continuous year-round work to support the farming community and promote agriculture.”

But Richard Bray, chair of the Charity Tax Group, said the decision would not “open the floodgates” for other charities. 

He said there were still conditions to be met to ensure all charity events are exempt from VAT.

“The decision brings a certain amount of clarity to a difficult area in that an event which simultaneously raises funds and delivers the charity’s objectives falls within the VAT exemption,” Bray said.

“However, this does not open the floodgates such that any charity event which incidentally makes a surplus will be exempt. 

“There are still conditions to be met and one of the key reasons that the Yorkshire Agricultural Society prevailed was ultimately because it had the right documentation and evidence in place.

Bray said the most important condition in applications for VAT exemption was that the event was “clearly organised and promoted to raise money for the benefit of the charity”.

He said: “This is one of the things that the Yorkshire Agricultural Society got right, helping to secure the favourable decision.”

A spokesperson for HMRC said the government department was “carefully considering” the judgment.