Arnold
| Jurisdiction | UK Non-devolved |
| Judgment Date | 16 January 1996 |
| Date | 16 January 1996 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
British Teleflower Service Ltd VAT(LON/94/1325) No 13,756; [1996] BVC 2587
Purdue VAT(EDN/94/511) No 13,430; [1996] BVC 4138
Refund of tax - DIY scheme - Conversion of barn into dwelling - Extra-statutory concession - Tribunal's jurisdiction - Whether tribunal had jurisdiction to review commissioners' exercise of discretion - When building completed - Whether appellant within terms of concession - Whether claim submitted within three months of completion - Whether Customs acted unreasonably in refusing to exercise discretion in appellant's favour - Value Added Tax Act 1983, s. 16(2), 21(2), 40(1) and Sch. 5, Grp. 8, item 2 (Value Added Tax ActValue Added Tax Act 1994 schedule 8 group 51994, ss. 30(2), 35(2), 84(10) and Sch. 8, Grp. 5, item 2); Value Added Tax ("Do-It-Yourself" Builders)(Refund of Tax) Regulations 1989 (SI 1989/2259), reg. 3; VAT Information Sheet 4/94 - "Changes to the Liability of Buildings: VAT Act 1983 Schedule 5 Group 8".
The issues were whether: (1) the tribunal had jurisdiction to consider whether the Customs should have applied extra-statutory concession of 21 July 1994, allowing the appellant a refund of tax under the DIY scheme; (2) the appellant came within the terms of the concession, in particular whether the claim had been submitted no later than three months after completion of the building; and (3) Customs had acted unreasonably in deciding not to grant the concession on the facts.
In 1992 the appellant began to convert a barn into a dwelling for his own occupation. Most of the goods and services used in the conversion were supplied during 1992 and 1993. By the time he entered into occupation in August 1993 three bedrooms and two bathrooms had been completely finished but he continued to carry out work on the property. The final work to be carried out was the testing by the council of external drains from the house and this was carried out on 25 November 1994. On 30 November 1994, a completion letter in respect of the property was issued by the local building control officer.
On 12 December 1994, the appellant submitted a claim on form VAT 431 for a refund of the tax charged to him in respect of the conversion of the barn, following the issue of the extra-statutory concession granted by Customs to permit the zero-rating of the conversion of a non-residential building to form a new dwelling with effect from 21 July 1994. The claim for a refund was accompanied by a copy of the planning permission and the certificate of completion dated 30 November 1994. The terms of the concession stated that it would only apply to DIY conversions completed after 21 April 1994, a date which took into account the fact that under the DIY scheme a claim for a refund had to be made within three months of the completion of the building.
On receipt of the claim an officer visited the appellant and formed the conclusion that the conversion had been completed before 21 April 1994 and therefore refused to grant the concession.
The appellant contended that he had done all that he was required to do to claim a refund under the scheme and to comply with the terms of the concession. He had supplied proof of the date of completion of the building and submitted a claim within three months thereafter as required. Customs were acting unreasonably in refusing to allow the claim.
The commissioners contended that the tribunal had no jurisdiction to consider the exercise by them of the concession and that, in any event, the circumstances relating to the work were such that the appellant did not fall within the terms of the concession. The date of the completion of the work was a question of fact and the appellant had occupied the house in 1993 when the work was substantially completed.
Held, allowing the taxpayer's appeal:
1. The present appeal was with respect to the amount of a refund under s. 35 of Value Added Tax Act 1994 and this depended on a prior decision which was not an appealable matter, namely the decision not to grant an extra-statutory concession. The tribunal had the jurisdiction to consider the matter, pursuant to s. 84(10) of Value Added Tax Act 1994.
2. The announcement of the concession included the statement that a claim would be accepted in a suitably amended Form VAT 431, if submitted within three months after the completion of the building. This time limit came from reg. 3 of the Value Added Tax ("Do-It-Yourself" Builders) (Refund of Tax) Regulations 1989 (SI 1989/2259), which implemented the DIY scheme. Regulation 3 did not define when a building is completed but it did contain a requirement "to furnish … a certificate of completion obtained from a local authority or such other documentary evidence of completion of the building as is satisfactory to the Commissioners". The letter of completion was dated 30 November 1994 and this represented the date of completion of the building. The claim was made on 12 December 1994, which was within three months of completion, thus the claim was within the terms of the concession.
3. The commissioners had erred in law in taking the view that the property was completed for the purposes of the concession when it was substantially finished rather than when the drainage had been inspected and the certificate issued by the council.
[The tribunal set out the facts summarised above and continued as follows.]
2. The issues for determination in the appeal were:
(2) whether the tribunal had jurisdiction to decide whether the appellant came within the terms of an extra-statutory concession published on 21 July 1994;
(3) whether the appellant did come within the terms of that extra-statutory concession and, in particular, whether his claim had been submitted no later than three months after the completion of the building; and, if so
(4) whether Customs should have applied the extra-statutory concession in favour of the appellant.
3. Group 8 of Sch. 5 to the Value Added Tax Act 1983 (the 1983 Act) zero-rated certain supplies made in the course of construction of certain buildings but Note (9) provided that that did not include the conversion of a building. Accordingly, supplies made in the conversion of a building were standard-rated.
4. Section 21 of the Value Added Tax Act 1983 provided that where tax was charged on the supply of goods to a person constructing a building, otherwise than in the course of business, and the supply would have been zero-rated under Grp. 8 of Sch. 5 [to the Value Added Tax Act 1983], then Customs would refund the...
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