Colaingrove Ltd v Commissioners of Customs and Excise

JurisdictionEngland & Wales
JudgeLady Justice Arden,Lord Justice Neuberger,Lord Justice Thorpe
Judgment Date19 February 2004
Neutral Citation[2004] EWCA Civ 146
Docket NumberCase No: C3/2003/1083
CourtCourt of Appeal (Civil Division)
Date19 February 2004

[2004] EWCA Civ 146

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF

JUSTICE, CHANCERY DIVISION

(The Hon Mr Justice Jacob)

Royal Courts of Justice

Strand,

London, WC2A 2LL

Before:

Lord Justice Thorpe

Lady Justice Arden and

Lord Justice Neuberger

Case No: C3/2003/1083

Between:
Colaingrove Ltd
Appellant
and
The Commissioners of Customs & Excise
Respondents

Mr Roderick Cordara QC and Mr David Scorey (instructed by Eversheds) for the Appellant

Mr Rupert Anderson QC (instructed by Customs & Excise Solicitors) for the Respondents

Lady Justice Arden
1

This is an appeal from the dismissal by Jacob J of the appellant's appeal from the decision of the VAT Tribunal (Chairman, Mr Theodore Wallace) dated 20 July 1999. The Tribunal dismissed the appellant's appeal from the decision of the Commissioners that the letting of caravan sites for seasonal pitches incurred value added tax ("VAT") pursuant to schedule 9, part II, group 1 to the Value Added Tax Act 1994 (" VATA") . This appeal, therefore, raises the question of the scope of the exemption in article 13B(b) of the EC Sixth VAT Directive (77/388/EEC) ("the Sixth Directive"), which group 1 of part II to schedule 9 to VATA (set out in material part below) was designed to implement.

2

Article 13B provides as follows:-

"B. Other exemptions

Without prejudice to other Community provisions, Member States shall exempt the following under conditions which they shall lay down for the purpose of ensuring the correct and straightforward application of the exemptions and of preventing any possible evasion, avoidance or abuse;

(a) insurance and reinsurance transactions, including related services performed by insurance brokers and insurance agents;

(b) the leasing or letting of immovable property excluding:

1. the provisions of accommodation, as defined in the laws of the Member States, in the hotel sector or in sectors with a similar function, including the provision of accommodation in holiday camps or on sites developed for use as camping sites;

2. the letting of premises and sites for parking vehicles;

3

lettings of permanently installed equipment and machinery;

4

hire of safes.

Member States may apply further exclusions to the scope of this exemption;

(c) supplies of goods used wholly for an activity exempted under this Article or under Article 28(3) (b) when these goods have not given rise to the right to deduction, or of goods on the acquisition or production of which, by virtue of Article 17(6), value added tax did not become deductible;

(d) the following transactions:

1. the granting and the negotiation of credit and the management of credit by the person granting it;

2. the negotiation of or any dealings in credit guarantees or any other security for money and the management of credit guarantees by the person who is granting the credit;

3. transactions, including negotiation, concerning deposit and current accounts, payments, transfers, debts, cheques and other negotiable instruments, but excluding debt collection and factoring;

4. transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items; 'collectors' items' shall be taken to mean gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest;

5. transactions, including negotiation, excluding management and safe-keeping, in shares, interests in companies or associations, debentures and other securities, excluding:

documents establishing title to goods,

the rights or securities referred to in Article 5(3);

6. management of special investment funds as defined by Member States;

(e) the supply at face value of postage stamps valid for use for postal services within the territory of the country, fiscal stamps, and other similar stamps;

(f) betting, lotteries and other forms of gambling, subject to conditions and limitations laid down by each Member State;

(g) the supply of buildings or parts thereof, and of the land on which they stand, other than as described in Article 4(3) (a);

(h) the supply of land which has not been built on other than building land as described in Article 4(3) (b) ."

3

The question on this appeal is whether article 13B(b) permits a member state to charge VAT on the supply of licences for the parking of static caravans. The Commissioners contend that article 13B(b) not only exempts the leasing or letting of immovable property and sets out a number of specific exclusions from this exemption. It also gives the member states an option to apply further exclusions to the scope of the exemption. I will refer to this provision as the "tailpiece member state option".

4

The appellant contends that it is not clear as a matter of Community law whether the tailpiece member state option confers a power to create a charging provision of the nature to be found in schedule 9. It seeks an order that this question be referred to the European Court of Justice ("the European Court") . In short, it contends that the licensing of static caravans on seasonal pitches should be exempt from VAT if they are used for residential purposes because the policy behind the exemption in article 13B(b) is that the supply of land to final consumers on a long-term basis, particularly residential consumers, should be exempt.

5

Under the transactions in question in this case, clients of the appellant are typically purchasers of an eight year licence to occupy a particular site. This site is a slab of concrete on a camping site with access to gas, water and electricity. The camping site provides other facilities but clients who desire to use these facilities must purchase a separate pass and we are not concerned with the provision of those services. As to the terms of the licences in question, paragraph 3 of the judge's judgment contains a convenient summary:-

"3. There are restrictions as to what the owners can do on the sites. In particular they may not live in their caravans as a permanent address and may not stay overnight the 3 months December to February. During those 3 months they can have access to their caravans but not stay. The caravan sites have the sort of amenities one would expect for a holiday site such as swimming pools, entertainment facilities and so on. In essence, therefore, what the appellants provide their customers with is a place to keep their caravans for holiday use and not permanent residential use. The customers are free (during the permitted times only) to let their caravans for use by others. Some do this. Others choose to live in their caravans over the summer."

6

Group 1 of schedule 9, part II to VATA provides as follows:-

"GROUP 1 – LAND

1. The grant of any interest in or right over land or of any licence to occupy land, or, in relation to land in Scotland, any personal right to call for or be granted any such interest or right, other than:

(a) the grant of the fee simple in:

(i) a building which has not been completed and which is neither designed as a dwelling or number of dwellings nor intended for use solely for a relevant residential purpose or a relevant charitable purpose;

(ii) a new building which is neither designed as a dwelling or number of dwellings nor intended for use solely for a relevant residential purpose or a relevant charitable purpose after the grant;

(iii) a civil engineering work which has not been completed;

(iv) a new civil engineering work;

(b) a supply made pursuant to a developmental tenancy, developmental lease or developmental licence;

(c) the grant of any interest, right or licence consisting of a right to take game or fish unless at the time of the grant the grantor grants to the grantee the fee simple of the land over which the right to take game or fish is exercisable;

(d) the provision in an hotel, inn, boarding house or similar establishment of sleeping accommodation or of accommodation in rooms which are provided in conjunction with sleeping accommodation or for the purpose of a supply of catering;

(e) the grant of any interest in, right over or licence to occupy holiday accommodation;

(f) the provision of seasonal pitches for caravans, and the grant of facilities at caravan parks to persons for whom such pitches are provided;

(g) the provision of pitches for tents or of camping facilities;

(h) the grant of facilities for parking a vehicle;

(j) the grant of any right to fell and remove standing timber;

(k) the grant of facilities for housing, or storage of, an aircraft or for mooring, or storage of, a ship, boat or other vessel;

(l) the grant of any right to occupy a box, seat or other accommodation at a sports ground, theatre, concert hall or other place of entertainment

(m) the grant of facilities for playing any sport or participating in any physical recreation; and

(n) the grant of any right, including:

(i) an equitable right,

(ii) a right under an option or right of pre-emption, or

(iii) in relation to land in Scotland, a personal right,

to call for or be granted an interest or right which would fall within any of paragraphs (a) or (c) to (m) above."

NOTES

"(13) 'Holiday accommodation' includes any accommodation in a building, hut (including a beach hut or chalet), caravan, houseboat or tent which is advertised or held out as holiday accommodation or as suitable for holiday or leisure use, but excludes any accommodation within paragraph (d) .

(14) A seasonal pitch is a pitch:

(a) which is provided for a period of less than a year, or

(b) which is provided for a year or a period longer than a year but which the person to whom it is provided is prevented by the terms of any covenant, statutory planning...

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