Agudas Israel Housinf Association Limited v The Commissioners of Customs and Excise, V 18798
| Jurisdiction | UK Non-devolved |
| Judge | Dr A Nuala BRICE |
| Judgment Date | 15 October 2004 |
| Respondent | The Commissioners of Customs and Excise |
| Appellant | Agudas Israel Housinf Association Limited |
| Reference | V 18798 |
| Court | First-tier Tribunal (Tax Chamber) |
18798
ZERO-RATING – construction of buildings – construction of eight residential units as a new third floor of existing building – each unit consisted of a bed sitting room with en suite shower room - whether supply in the course of construction of a building designed as a number of dwellings – whether each dwelling consisted of self-contained living accommodation – yes - appeal allowed – VATA 1994 Sch 8 Grp 5 Item 2 Note (2)
LONDON TRIBUNAL CENTRE
AGUDAS ISRAEL HOUSING ASSOCIATION LIMITED
Appellant
- and -
Tribunal: DR NUALA BRICE (Chairman)
MR M SILBERT FRICS
Sitting in public in London on 2 September 2004
John Voyez of Smith and Williamson Limited for the Appellant
Ian Hutton of Counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents
© CROWN COPYRIGHT 2004
The appeal
1. Agudas Israel Housing Association Limited (the Appellant) appeals against a decision of Customs and Excise contained in a letter dated 19 March 2003 addressed to the representatives of Springdale Limited. The decision was that the supply by Springdale Limited to the Appellant of services in the course of construction of a new third floor on an existing care home for the elderly owned by the Appellant was a standard-rated and not a zero-rated supply. The Appellant appealed because it was of the view that the supply was a zero-rated supply.
The legislation
2. Section 30(2) of the Value Added Tax Act 1994 (the 1994 Act) provides that a supply is zero-rated if the goods or services are of a description for the time being specified in Schedule 8. Group 5 of Schedule 8 specifies certain supplies relating to the construction of buildings. Item 2(a) of Group 5 specifies:
“2. The supply in the course of the construction of –
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a building designed as a dwelling or a number of dwellings …
of any services relating to the construction other than the services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity.”
3. Note (2) to Group 5 provides:
“(2) A building is designed as a dwelling or a number of dwellings where in relation to each dwelling the following conditions are satisfied-
(a) the dwelling consists of self-contained living accommodation … .”
The issue 4. The third floor extension constructed for the Appellant by Springdale Limited contained eight residential units each of which the Appellant claimed were self-contained living accommodation. Customs and Excise argued that the residential units were not self-contained because they did not contain adequate cooking facilities; it followed that the building was not designed as a number of dwellings within the meaning of Note (2)(a) and so the supply of services in the course of its construction could not be zero-rated under item 2(a) of Group 5 of Schedule 8. 5. Thus the issue for determination in the appeal was whether each residential unit was designed as a dwelling consisting of self-contained living accommodation. The evidence
6. A bundle of documents was produced by the Appellant and another bundle was produced by Customs and Excise. Oral evidence was given on behalf of the Appellant by Mr John Stebbing RIBA and by Mrs I Cymerman (formerly Mrs I Symons) the Chief Executive of the Appellant since 1982.
The facts
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From the evidence before us we find the following facts.
The Appellant and its work
8. The Appellant is a registered social landlord and an industrial and provident society with charitable status. Its activities include the provision of supported housing for people with special needs and general housing for elderly members of the community. Its main areas of operation are in the London Boroughs of Hackney and Barnet and in Salford, Greater Manchester. The Appellant’s services are tailored to the needs of the Orthodox Jewish community.
9. The Appellant has premises at Schonfield Square in North London. The premises include sixty houses and flats for general needs and a large building which provides housing for the elderly. This building is split vertically into two. One part is known as Fradel Lodge and this provides twenty-seven sheltered flats for the elderly. The other part is known as Beis Pinchos and was constructed in the 1990s.
10. Before the construction the subject of this appeal Beis Pinchos was used only as a registered care home for the elderly. The residents were physically frail and were likely to need nursing intervention. They were looked after all day and some were looked after at night. They were assisted with getting up in the morning and were taken to a communal dining room on the ground floor for their meals. They could also use a communal day care or sitting room. Their bedrooms had en suite shower rooms but they could also use communal bathrooms. Each bedroom had a front door with a window for staff to monitor their well being.
The need for additional accommodation
11 In late 1998 the Appellant identified the need for additional accommodation and Mr John Stebbing was instructed as architect. The brief to Mr Stebbing was for eight or ten residential units for people with Alzheimer’s disease, dementia or similar illnesses. The residential units were to provide permanent accommodation and were to be constructed to lifetime standards as funding was to be provided by the Housing Corporation which would provide financial support on the basis of ”lifetime homes”.
12 The brief to Mr Stebbing also required the design of residential units which would allow for flexible independent living for the residents. Flexibility was required because of the variety of care provision which could be needed. The accommodation also had to be secure and safe, bearing in mind the illnesses of the residents, although it was expected that the residents would be supported by the social services, their families, the Orthodox Jewish community and care staff. Plans were initially prepared on the basis that the residential units would be built on the ground floor of a new site.
13 However, it proved impossible to identify a new site on which the new construction could take place and so Mr Stebbing suggested that the proposed new residential units be constructed on top of Beis Pinchos. Accordingly the original design was adapted to be built as a new third floor of Beis Pinchos and an application for planning permission was made on 17 May 2000.
14 On 11 July 2001 Hackney Borough Council gave conditional planning permission for the “erection of a new third floor to existing building to provide additional care accommodation” at Beis Pinchos, Schonfield Square. Paragraph 8 of the conditions read:
“8. As your proposals contain a flat, and/or a dwelling in the building where previously it did not, the requirements in the Building Regulations 1991, with regard to the resistance to the passage of sound, may have major implications on your proposals. You are therefore advised to undertake an early consultation with the Building and...
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