Commissioners of Customs and Excise v Link Housing Association Ltd
| Jurisdiction | Scotland |
| Judgment Date | 10 July 1992 |
| Date | 10 July 1992 |
| Court | Court of Session |
Court of Session (Inner House).
Lord President Hope, Lord Mayfield and Lord Grieve.
CJ Harris (instructed by Shepherd & Wedderburn WS) for the Crown.
Colin Tyre (instructed by W & J Burness WS) for the taxpayers.
The following cases were referred to in the judgment:
Briararch v C & E Commrs VAT(LON/90/609) No. 5703; [1991] BVC 605
Curtis Henderson Ltd v C & E Commrs VAT(LON/90/1432) No. 5815; [1991] BVC 646
EC Commission v United Kingdom VAT(Case 416/85)(1988) 3 BVC 378
R v IR Commrs (Pemsel's Case) ELR(1889) 22 QBD 296
Vickers Sons & Maxim Ltd v Evans ELR[1910] AC 444
Value added tax - Zero-rating - Construction of dwellings - Housing association built houses - Houses let to tenants for less than 21 years - Tenants purchased houses under "right to buy" legislation several years later - Whether zero-rated as "a person constructing a building" - Whether housing association entitled to deduct input tax - Value Added Tax Act 1983 schedule 5 group 8Value Added Tax Act 1983, Sch. 5, Grp. 8, item 1.
This was an appeal by the Customs and Excise Commissioners against a decision of the VAT tribunal ([1991] BVC 559) that a housing association made a zero-rated supply on the sale of houses purchased by the tenants under the "right to buy" legislation.
The taxpayers were was a housing association within the meaning of the Housing Associations Act 1985. It had constructed a number of dwellings over a period of years letting them after completion to tenants on short leases for less than 21 years. The tenants, having acquired a right to buy their dwellings after two years' occupation under the Housing (Scotland) Act 1987, entered into contracts to purchase the houses.
The question was whether the taxpayer made a zero-rated supply withinValue Added Tax Act 1983 schedule 5 group 8Grp. 8, item 1 of Sch. 5 to the Value Added Tax Act 1983, having granted major interests in the buildings to the purchasers within the meaning ofValue Added Tax Act 1983 section 48 subsec-or-para (1)sec. 48(1), enabling them to recover input tax. The answer depended on whether the taxpayers were "a person constructing a building".
The VAT tribunal rejected the argument for the commissioners that zero-rating under item 1 was only available if the first supply after construction was a major interest in the building, limiting item 1 to the first grant of a major interest in a recently constructed building which had previously been unoccupied.
The VAT tribunal read the phrase, "a person constructing a building" as meaning "a person who has constructed a building" which it regarded as grammatically acceptable and as producing a reasonable result, namely that the builder could reclaim input tax on a building constructed by him at any time until he sold it.
On appeal to the Court of Session the commissioners introduced a further argument that the phrase "a person constructing a building" not only implied a current state of affairs but clearly, without any ambiguity, restricted its scope to the stage while the building was still under construction. Thus, the supply of a major interest in the building at any time after it had been completed would come too late to attract zero-rating and it would fall in every such case to be treated as an exempt supply. The use of the present participle showed that the relief was not intended to extend beyond the stage of construction.
The taxpayers contended that the phrase "a person constructing a building" contained an ambiguity. It might mean "a person who is still in the course of constructing a building" or it might mean simply "the constructor of a building" so that a person would be covered by the expression whether the building was still under construction or not so long as he was the constructor of it. The appropriate way to resolve the ambiguity was to examine the Act as a whole and the purpose of the legislation which showed that item 1 was not restricted to the period while the building was under construction.
Held, dismissing the Customs' appeal:
Item 1 was ambiguous and it was therefore permissible to look at other provisions in the 1983 Act to ascertain its meaning. There were various examples of the use of the present participle as a convenient shorthand for a longer phrase to describe the person to whom a provision was to apply. The phrase was purely descriptive and designed only to ensure that it was the person who had constructed the building who was entitled to zero-rating. Parliament could not have intended that zero-rating was to be available on the grant of a major interest in...
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Bletchingley Church House Charity
...accepted to be the first grant of a major interest by the person constructing (see para. 80, C & E Commrs v Link Housing Association Ltd[1992] BVC 113 referred). BCHC argued that Note (6) could apply to its use of the building, it did not solely refer to use of the buildings by the lessee o......
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University of Bath
...The following cases were referred to in the decision: Barnett v Hickmott ELR[1895] 1 QB 691 C & E Commrs v Link Housing Association LtdVAT[1992] BVC 113 Re Hecquard, ex parte Hecquard ELR(1889) 24 QBD 71 St Catherine's College v Dorling UNK[1979] 3 All ER 250 Stribling v Halse ELR(1885) 16 ......