I understand that HMRC has recently asked some authorities about the treatment of cases where a third party maintains bus shelters in return for advertising rights thereon.
I have looked at this situation within my district council and found an agreement whereby:
Third party has title of the bus shelters and maintains them. There is no charge from the Council to the third party for this. Subject to planning laws, the third party places advertisements on some of the bus shelters and receives income.
The Council does not receive a share of this income or a charge for the maintenance of the shelters.
The agreement does not mention VAT and there is no mention of the value of any non monitary consideration.
Presumably the district council is receiving a supply of maintenance as it is exercising it's power to provide bus shelters and obtaining maintenance from the third party in exchange for advertising rights, even though the third party has title.
Should the council and the third party be exchanging VAT only invoices in this case?
Can I ask please if others have similar arrangements and whether such arrangements are treated as separate supplies subject to VAT? Any thoughts on how to value the supplies would also be gratefully received.