Commissioners of Customs and Excise v Morrish
| Jurisdiction | England & Wales |
| Judgment Date | 01 July 1998 |
| Date | 01 July 1998 |
| Court | Queen's Bench Division |
Queen's Bench Division (Crown Office List).
Moses J.
Melanie Hall (instructed by the Solicitor for Customs and Excise) for the Crown.
The taxpayer did not appear.
The following cases were referred to in the judgment:
ACT Construction Ltd v C & E Commrs VAT(1981) 1 BVC 451
C & E Commrs v Lewis VAT[1994] BVC 201
C & E Commrs v Windflower Housing Association VAT[1995] BVC 329
Parish Council of St Luke v C & E Commrs VAT(1982) 1 BVC 521
Value added tax - Zero-rating - Alteration of listed building - Building destroyed by fire and rebuilt and extended with new materials - Whether "alterations" - Value Added Tax Act 1983, Sch. 5, Grp. 8A, item 2 (Value Added Tax Act 1994 schedule 8 group 6Value Added Tax Act 1994, Sch. 8, Grp. 6, item 2).
This was an appeal by Customs against a decision of the VAT and duties tribunal ((LON/96/1144) No. 14,817; [1997] BVC 2328) that repairs to a listed building after damage by fire were zero-rated under the Value Added Tax Act 1983, Sch. 5, Grp. 8A, item 2.
The taxpayer was a builder who carried out works on a listed building in Cornwall known as Fradd's Meadow, which had been severely damaged by fire in 1993. Approval of the extensive building work was given including "reinstatement works damaged by fire including new roof" and "rear extension and alteration subsequent to fire damage".
The issue was whether reconstruction, reinstatement or rebuilding of a house gutted by fire could be described as "alteration" within item 2 of Grp. 8A of Sch. 5 to the 1983 Act.
The taxpayer calculated his relevant VAT return on the basis that the works on the existing building were zero-rated and only the cost of the extension was standard-rated.
The taxpayer appealed to the VAT tribunal arguing that the works were so extensive and that so many significant alterations were made to the existing building that the whole work should be zero-rated under item 2 of Grp. 8A.
Customs contended that the test to determine whether approved work on a listed building was an alteration was to compare the building before and after the fire. Much of the work in this case had re-instated the building to its former condition and could not be described as alteration.
The tribunal chairman substantially allowed the appeal. He said that the expression "approved alteration" in Grp. 8A of Sch. 5 to the 1983 Act was to be construed by reference to the Planning (Listed Buildings and Conservation Areas) Act 1990 and by reference to those alterations for which approval was required under that Act.
Held, allowing Customs' appeal:
1. There was no warrant in the 1983 Act for using the provisions of the planning legislation to determine whether the work in question was alteration. The tribunal's findings supported the conclusion that the work consisted in reconstruction and not alteration. Its error was in considering the dichotomy between alteration and repair while not considering the question of alteration itself.
2. The case should be remitted to a different tribunal to make findings in accordance with the judgment.
Per Curiam: The taxpayer would be entitled to contend that after the fire there was no building there at all and a claim for zero-rating might succeed on the basis of construction of a dwelling under Sch. 5, Grp. 8, item 2.
Moses J: This is an appeal from the decision of Mr Palmer, chairman of the VAT tribunal, dated 1 April 1997. The issue is whether the reconstruction, reinstatement or rebuilding of a house severely gutted by fire can be described as alteration.
The chairman recorded that the house, Fradd's Meadow, is a grade 2 listed building which dates back to the mid-18th Century. He found as a fact that the condition of the building was set out in a report of April 1993:
The whole of the house has been severely gutted by fire. The damage includes the total destruction of the roof, first floors, and internal timber partitions. Windows have been generally destroyed and a number of the original timber lintels have also been severely damaged. The enclosing stone walls have to be rebuilt in part as a result of the damage to the lintels and of the loss of structural strength caused by the heat of the fire in the north-east corner …
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C Neary Ltd
...bracketed by the words “construction” and “demolition”. Instead, it stands on its own. Nevertheless, Moses J in C & E Commrs v Morrish VAT[1998] BVC 378 at p. 381 thought that the word “alteration” should probably be construed in the same way in this context and it is common ground between ......
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Morfee
...protected building (original emphasis). The Tribunal cited, and followed, dicta of Moses J (as he then was) in C & E Commrs v Morrish VAT[1998] BVC 378, as follows:… Parish Council of St Luke v C & E Commrs VAT(1982) 1 BVC 521 … is authority for the following propositions. (1) The question ......
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