Appeal By Sibcas Limited Against The Commissioners For Her Majesty's Revenue And Customs
| Jurisdiction | Scotland |
| Judge | Lord Bannatyne,Lord Drummond Young,Lord President |
| Neutral Citation | [2018] CSIH 49 |
| Date | 13 July 2018 |
| Docket Number | XA81/17 |
| Court | Court of Session |
| Published date | 13 July 2018 |
FIRST DIVISION, INNER HOUSE, COURT OF SESSION
[2018] CSIH 49
XA81/17
Lord President
Lord Drummond Young
Lord Bannatyne
OPINION OF LORD CARLOWAY, the LORD PRESIDENT
in the appeal by
SiBCAS LTD
Appellants
against
THE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMS
Respondents
Appellant: Simpson QC; Anderson Strathern
Respondents: Roxburgh; Office of the Advocate General
13 July 2018
Introduction
[1] This appeal is about whether the appellants’ supply of temporary school
accommodation to an educational institution is exempt from Value Added Tax as
constituting “the grant of [an] interest in or right over land or of [a] licence to occupy land”,
as interpreted to include “the leasing or letting of immovable property”. Unusually, it is the
respondents who maintain that the supply is exempt. The issue is of some importance since
there requires to be clarity, or at least firm guidance, for commercial enterprises on whether
they ought to charge VAT to customers to whom they supply a variety of different types,
2
shapes and sizes of accommodation modules which are, at least at the time of the initial
supply, intended for temporary use.
Statutory Background
[2] The Value Added Tax Act 1994 provides (s 1) that VAT shall be charged “(a) on the
supply of goods or services”; “supply” including (s 5) “all forms of supply”. The supply
requires to be by a taxable (registered) person (s 3) “in the course or furtherance of any
business” (s 4). The 1994 Act has its source in the Sixth Directive (EC 77/388) on the
harmonisation of ... turnover taxes”, which became the Principal Directive (EC 2006/112) on
the common system of VAT. The Act’s terms require to be construed in a manner
compatible with the 2006 Directive. Article 9 of the 2006 Directive refers to a taxable person
being someone carrying on “any economic activity”; meaning “any activity of producers,
traders or persons supplying services” (see also the Sixth Directive, Art 4). There is, for
other purposes, a definition of “a building” in Article 12; being “any structure fixed to or in
the ground”.
[3] The 1994 Act provides that “the grant of any interest in or right over land or of any
licence to occupy land” is exempt from VAT (s 31(1); Sch 9, part II, group 1 (land), item 1(l)).
This implements Article 135(1)(l) of the 2006 Directive, which requires member states to
exempt transactions involving “the leasing or letting of immovable property” from the
charge (see the Sixth Directive Art 13B(b)). Exceptions to the exemption in this group
include the provision of hotel, catering or holiday accommodation, caravan park or camping
facilities, and accommodation at a sports ground or other place of entertainment.
3
Facts found by the First Tier Tribunal
[4] The appellants’ business is the manufacture, supply and hire of relocatable, modular
prefabricated accommodation units. Single units are manufactured in different sizes, but are
generally 3 metres wide and between 6.8 and 9.2 metres long. They are rectangular boxes.
The units are transported by lorry to the customers’ sites by the appellants. The duration of
hire is typically between 1 and 13 months for a single unit; averaging 7 months. Multiple
unit hires will range from 4 to 36 months; averaging 20 months.
[5] Part of a secondary school in Stockton-on-Tees, which was operated by the Church of
England, had been condemned. Temporary school accommodation was to be supplied by
the appellants. The supply was for a minimum of 24 months, although it ultimately lasted
for 32 months.
[6] The appellants required to carry out foundation works, since the structure was to be
laid on an uneven tarmac playground/tennis court, which was adjacent to the condemned
school. The ground conditions were of insufficient strength to cope with the structure’s
predicted weight. The appellants cut the tarmac and dug three parallel trenches. They filled
each trench with compacted stone and placed large steel levelling beams on top of the stone
to provide an adequate and level base for the units. The beams were not attached to or
embedded in the stone. They simply rested on top of it. The trenches were about 30 metres
long and between 300 and 600 millimetres deep. The ground floor units rested on, and were
initially clamped to, the beams. The purpose of these friction clamps was not to secure the
structure permanently to the ground, since its mass and weight would do that. They were
used to stop the first unit moving as the others were positioned next to it and to do the same
with other units during the construction phase. The clamps could have been removed on
completion of the structure, although there was no need to do so.
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