Look Ahead Housing Association
| Jurisdiction | UK Non-devolved |
| Judgment Date | 31 August 2000 |
| Date | 31 August 2000 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
C & E Commrs v Civil Service Motoring AssociationVAT[1998] BVC 21
Davison v Birmingham Industrial Co-operative Society (1920) 90 LJKB 206
EC Commission v UK VAT(Case 416/85) (1988) 3 BVC 378
Sparekassernes Datacenter (SDC) v Skatteministeriet VAT(Case C-2/95) [1997] BVC 509
St Catherine's College v Dorling UNK[1979] 3 All ER 250
Temple House Developments Ltd VATNo. 15,583; [1998] BVC 2302
Tilley VATNo. 15,097; [1997] BVC 2535
University of Bath VATNo. 14,235; [1996] BVC 2909
White VATNo. 15,388; [1998] BVC 2167
Zero-rating - Housing association - Conversion of bed-sit accommodation into flats - Whether property was non-residential before conversion - Meaning of dwelling - Value Added Tax Act 1994 schedule 8 group 5Value Added Tax Act 1994, Sch. 8, Grp. 5, item 3(a) and Notes (2), (7) and (9).
The issue was whether work carried out on behalf of a housing association involving the conversion of two town houses into self-contained flats was zero-rated as the supply to a relevant housing association in the course of conversion of a non-residential building, or part of a building, into a building, or part of a building, designed as a dwelling or number of dwellings, in accordance with Value Added Tax Act 1994 schedule 8 group 5item 3(a) of Grp. 5 of Sch. 8 to the Value Added Tax Act 1994.
The property, situated at 33 and 35 Linden Gardens, London W2, had originally been converted into 26 bed-sits following the granting of planning permission in 1946. Two of the bed-sits were later converted into self-contained flats. There was no argument that the renovation of these flats by the appellant was subject standard-rated. The conversion of the bed-sits commenced in December 1997 for an initial contract price of almost £1.2m, excluding VAT, and the work was completed in April 1999. The flats were subsequently fully occupied by clients of the appellant. There was common agreement that the appellant was a relevant housing association within the meaning of item 3(a), and also that after completion of the conversion there was a number of dwellings in the form of self-contained flats.
The appellant contended that before commencement of the work, the property was non-residential. The building, as it existed before conversion, was not designed for use as a dwelling or a number of dwellings, in accordance with the conditions laid down in Note (2) to Grp. 5, because the bed-sits did not provide self-contained living accommodation: they had shared facilities and there was also direct internal access.
The commissioners contended that since zero-rating is an exception to the general rule that all economic transactions by a taxable person shall be liable to VAT, the provisions conferring zero-rating should be construed narrowly. They submitted that zero-rating is allowed only as a derogation from the sixth VAT directive to the extent that it is for clearly defined social reasons, in this case, the building of new houses. In the commissioners' opinion the bed-sits were already dwellings and since no new dwellings were created, zero-rating was not applicable.
Held, allowing the association's appeal:
1. To be a dwelling in the ordinary sense of the word, each of the bed-sits would have to contain all the major activities of life, particularly sleeping, cooking and feeding plus toilet facilities. The bed-sits were not self-contained: they had shared facilities and were not dwellings.
2. The part of the building occupied by the bed-sits was not in itself a single dwelling. The bed-sits were more than lodgings in a shared household and were for each tenant his or her own territory with the right to exclude other people. A building occupied in this way does not have the characteristics of a dwelling.
3. Conversion of the bed-sits was carried out in accordance with item 3(a) and qualified for zero-rating.
[The tribunal set out the facts summarised above and continued as follows.]
5. The commissioners accept that the appellant is a "relevant housing association". It is also not in dispute that after the completion of the conversion works there are a number of dwellings, self-contained flats, which satisfy Note (2) [of the Value Added Tax Act 1994 schedule 8 group 5Value Added Tax Act1994, Sch. 8, Grp. 5].
6. Mr Broderick for the appellant submitted that the building, as it was following the earlier conversion into bed-sits in 1946, was not designed for use as a dwelling or a number of dwellings because two of the conditions in Note (2) were not satisfied. The bed-sits did not provide self-contained living accommodation as they had shared facilities. There was also direct internal access. In his submission the expression "adapted" in the phrase "adapted as a dwelling house" means physically adapted or altered. He cited in...
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Opal Carleton Ltd
...No. 16,396; [2000] BVC 2195•Moore v Secretary of State for the Environment (1999) 77 P&CR 114•Look Ahead Housing Association No. 16,816; [2001] BVC 2107•Uratemp Limited v Collins [2002] ALL.E.R .46•Amicus Group Ltd No. 17,693; [2003] BVC 4005•Oldrings Development Kingsclere Ltd No. 17,769; ......
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Amicus Group Ltd
...conversion as the buildings before conversion were non-residential, following the decision in Look Ahead Housing Association No. 16,816; [2001] BVC 2107 in which it had been found that bed-sits were not dwellings, so that the conversion into flats was zero-rated - The commissioners submitte......