The First-tier Tribunal has dismissed an appeal that a company supplying driving lessons/experiences to junior drivers on private land should be eligible for the Covid-19 temporary reduced VAT rate for admission to shows and certain other attractions (The Young Driver Training Ltd v HMRC [2023] UKFTT 271 (TC)).
The legislation
Under the now repealed VATA 1994, Grp. 16, Pt. 2, Sch. 7A, “supplies of a right of admission to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas and exhibitions and similar cultural events and facilities” were eligible for the reduced rate.
The appellant had previously described its activities for VAT purposes as “Other Personal Services not elsewhere classified – Provision of driving lessons off the highway for under 17 year olds” but had now amended its registration to “Activities of amusement parks and theme parks – Driving experience for under 17 year olds”. As such, it sought to claim the reduced rate arguing that customers paid for right of admission to the fenced off area where the activity took place and what they experienced there was similar to a circus or funfair.
With respect to the issue of “admission”, the tribunal judged that:
“Whilst what is supplied by the Appellant is not a driving lesson with the objective of passing the driving practical test, the main supply is plainly a supply of driving tuition over and beyond the physical admission to the fenced off area. Therefore, we do not accept that the Experience can be construed as a right of admission.”
While that decision precluded a claim, for completeness the tribunal went on to consider the second leg of the test, whether the experience qualified as one of the activities listed, and judged that:
“both a circus and a fair offer a range of attractions and amusements and a customer who has purchased an entrance ticket is able to freely wander around to view all the available attractions. This can be contrasted with what the Appellant offers: a specific pre-booked Experience in a fenced off area. Mr Mulingani’s evidence, which we accepted, was that it was possible to turn up on the day and “take your chance” but that the majority of the Experiences are pre-booked. Unlike a circus or fair, there are no other available amenities or attractions within the fenced off area to view or enjoy. … Accordingly, we do not accept that there is sufficient similarity between the Experiences supplied by the Appellant and the events or facilities contained in Group 16. Similarly, we do not accept that it can argued that the Experience is a cultural event of sufficient similarity to fall within Group 16.”
Fiscal neutrality
The appellant had also argued that if the legislation as written did not apply then it should be challenged on the grounds of fiscal neutrality. This precludes treating similar goods and supplies of services, which are thus in competition with each other, differently for VAT purposes. The Appellant submitted that if the supplies it made could not benefit from the reduced VAT rate provided for by Grp. 16, it would be unfairly disadvantaged in relation to its competitors.
The tribunal judged:
“In reliance upon our own experience of the world, we do not accept that a typical consumer would regard the Appellant’s supply of one-to-one driving tuition as identical or sufficiently similar to be interchangeable with a supply of admission to a theatre, zoo, fair, circus, etc.”
Validity of assessments and quantum
While the appellant did not challenge either the validity or the quantum of the assessments, the tribunal considered them and was satisfied that the assessments, as varied, were validly raised.
https://www.bailii.org/uk/cases/UKFTT/TC/2023/TC08748.html
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