Commissioners of Customs and Excise v Lewis
| Jurisdiction | England & Wales |
| Judgment Date | 08 June 1994 |
| Date | 08 June 1994 |
| Court | Queen's Bench Division |
Queen's Bench Division (Crown Office List).
Brooke J.
Melanie Hall (instructed by the Solicitor for Customs and Excise) for the Crown.
Stephen Silman (instructed by Lewis Holman & Lawrence) for the taxpayer.
The following cases were referred to in the judgment:
C & E Commrs v McLean Homes Midland Ltd VAT[1993] BVC 99
C & E Commrs v London Diocesan Fund and related appealsVAT[1993] BVC 123
Jamieson (EDN/92/282) No. 10,939
Hilderbrandt v Stephen [1964] NSWR 740
Kirkby v Hughes (HMIT) TAX[1993] BTC 52
Lucking Bros (LON/93/807) No. 11,595
Value added tax - Zero-rating - Construction of dwelling - dwelling house constructed on site of derelict barn using existing features - Whether building works on existing building - Whether building works excluded from zero-rating - schedule 5 group 8Value Added Tax Act 1983, Sch. 5, Grp. 8, item 2. Note (1A) (replaced by new Note (9) by Finance Act 1989 schedule 3Finance Act 1989, s. 18 and Sch. 3).
This was an appeal by Customs against a decision of the VAT tribunal ([1992] BVC 752) that building works on the construction of a dwelling house, which incorporated the ruined walls of a derelict barn, did not constitute the "conversion, reconstruction, alteration or enlargement of an existing building" within the schedule 5 group 8Value Added Tax Act 1983, Sch. 5, Grp. 8, item 2, Note (1A).
The taxpayer owned land on the Sussex Downs on which stood a derelict eighteenth century barn. The roof had fallen in leaving four walls surrounding a bed of nettles.
Planning permission was granted expressly in terms of conversion and reconstruction of the barn into a dwelling, with conditions that the appearance of the building from the road should be preserved. The house was built in accordance with the planning permission using as much of the old barn as possible at a greater cost than if the site had been cleared and the building constructed from the ground up. A new wing was built, a complex underpinning operation carried out and a new roof built. At the end of the work, although approximately 80 per cent of the walls consisted of new material, the finished building looked like a Sussex barn circa 1820.
The question was whether the work was zero-rated by virtue of the schedule 5 group 8Value Added Tax Act 1983, Sch. 5, Grp. 8, item 2, or whether it was excluded from zero-rating by schedule 5 group 8Note (1A) as the "conversion, reconstruction, alteration or enlargement of any existing building".
Customs contended that the tribunal had wrongly concentrated on whether the building continued to exist as a barn instead of considering whether it continued to exist as a "building", and relied on the terms of the planning permission.
Held, dismissing Customs' appeal:
The word "building" was a word in ordinary use and it was a matter for the tribunal of fact to determine in the statutory context whether the structure in question could be described as an existing building. The tribunal's finding that there was no existing building was not, in the circumstances, impugnable by the court.
Customs appealed against a decision of the VAT tribunal (chairman His Honour Judge Oliver QC) released on 26 September 1992. The grounds of the appeal were that the tribunal should have held that the construction of a dwelling house incorporating a derelict barn amounted to the conversion, reconstruction, alteration or enlargement of an existing building within the schedule 5 group 8Value Added Tax Act 1983, Sch. 5, Grp. 8, item 2, Note (1A).
Brooke J: This is an appeal by the Commissioners of Customs and Excise from a decision of a VAT tribunal sitting in London at the London Tribunal Centre, which was released on 26 February 1992 on an appeal under section 40s. 40 of the Value Added Tax Act 1983. The tribunal allowed an appeal by the respondent, Mr John Christopher Lewis, against an assessment for value added tax dated 11 July 1990 which was amended on 31 October 1990. I understand that the original intention was to list this appeal with a series of appeals which were heard by McCullough J in March 1993 under the general titleC & E Commrs v London Diocesan Fund VAT[1993] BVC 123, but for various reasons it was not convenient or practical for the appeal to be heard then.
The appeal is concerned with a very short point arising under schedule 5 group 8item 2 of Grp. 8 of Sch. 5 to the Value Added Tax Act 1983 (as amended), that item being zero-rated for VAT:
The supply in the course of the construction or demolition of any building or any civil engineering work, of any services…
schedule 5 group 8Note (1A) to Grp. 8 however provided:
Any reference in schedule 5 group 8item 2 or the following Notes to the construction of any building …does not include a reference to -
(a) the conversion, reconstruction, alteration or enlargement of any existing building…
I should add that schedule 5 group 8Grp. 8, Sch. 5was amended by the SI 1987/781Value Added Tax (Construction of Buildings) Order 1987 (SI 1987/781) and again by the Finance Act 1989Finance Act 1989, but neither of those amendments is material to this appeal.
I have referred to it as a very short point. Putting it very inelegantly, the principal issue on this appeal is when is a building not a building, or perhaps more correctly, when does an existing building cease to exist as a building? A secondary issue, in the event that a pre-existing structure is appositely described as an existing building, is this: are the works in question properly described as the conversion, reconstruction, alteration or enlargement of an existing building?
I am quite satisfied that these are very much issues of fact and degree for the tribunal of fact to decide. In the circumstances, provided that no error of law can be detected in the tribunal's approach to the facts, the approach of this court must be of a character I described in my recent judgment in C & E Commrs v McLean Homes Midland LtdVAT[1993] BVC 99 at pp. 104-106. This court can only interfere if a reasonable tribunal, which was reasonably directing itself on the law and the facts, could not reasonably have come to the conclusion which it did; in other words, if the tribunal directs itself correctly on the law, there are only very limited grounds on which this court can...
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