Keith Harris, chairman of IACF (International Antiques and Collectors Fairs Ltd), alerted the trade to the threat of a price hike in July.
He told how HMRC argued 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.
IACF and Nelson Fairs, who had been told to charge VAT on previously exempt pitch rentals, had planned to hold off doing so pending the outcome of a legal appeal. However, a leading specialist barrister has now advised them to start charging straight away because any ruling is unlikely before at least next June and if the appeal fails they will not only be liable to pay VAT on all pitch rentals from when the rules changed in November 2012, but they could also face a large fine.
Even with this warning, however, Mr Harris and Nelson Fairs have not confirmed that they will, indeed, introduce VAT on pitch rentals immediately, and they want to consult other fair organisers before pressing ahead.
IACF who rent out over 30,000 pitches a year at Newark, Ardingly, Shepton Mallet, Swinderby and Newbury, are concerned that other organisers may not be sufficiently aware of the implications of not complying with the new rules as soon as possible.
Any organiser who thinks they may be affected and would like to take part in a summit meeting with IACF, Nelson Fairs and others on the issue can contact ATG via email at email@example.com