McElroy
| Jurisdiction | UK Non-devolved |
| Judgment Date | 29 November 1977 |
| Date | 29 November 1977 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
Input tax - Tax on materials used in construction of dwelling - Purchase of partially built house - Completion of structural work by sub-contractor and other necessary work by purchaser - Whether "a person constructing a dwelling" - Whether entitled to refund of tax paid - section 15AFinance Act 1972, sec. 15A, as amended by section 3 subsec-or-para (1)Finance Act 1975, sec. 3(1) (now section 21VATA 1983, sec. 21).
The appellant, a chartered surveyor, purchased a partially constructed house, the builder of which had become bankrupt. The appellant agreed to buy the house on condition that the remaining structural work was completed by a sub-contractor. He completed the remaining works himself, including all the internal joinery work, the fitting out of the kitchen, the installation of all sanitary-ware and plumbing and the installation of a central heating system. A preliminary inquiry to the local Value Added Tax Office confirmed that he should lodge a claim for rebate of tax under the Do-It-Yourself builders' scheme described in Notice No. 719 when the work was finished. The claim eventually submitted was rejected on the grounds that the work the appellant did was "finishing off" and not major construction. The appellant maintained that he had in part constructed the dwelling so the tax should be refunded.
Held, allowing the taxpayer's appeal:
1. "Constructing a dwelling" included the installation of services such as electrical, plumbing and central heating systems, joinery and floor and wall finishes and decorations. Until that work was done the construction of the dwelling was not complete.
2. The appellant was "a person constructing a dwelling". The work he carried out could not be regarded as insignificant.
3. The work carried out by the appellant was part of the process of "constructing". It was not necessary to show that he constructed a complete new dwelling or most of a complete new dwelling including structural work.
4. Through his sub-contractor the appellant undertook structural work of some significance.
5. There was no change of purpose or function of the original structure so the appellant did not convert or alter an existing building into an habitable dwelling.
[The Tribunal set out the facts summarised above and continued as follows.]
… [T]he Commissioners contended that the process of constructing a dwelling had ended, before Mr. McElroy entered the scene, on or before the completion of the works...
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Wedgbury and Another
...guidance on when a building can be regarded as having been completed can be obtained from the decisions of the VAT Tribunal in McElroy (1977) 1 BVC 1066 (“McElroy”) and the VAT and Duties Tribunal in Purdue (EDN/94/511) [1996] BVC 4,138 (“Purdue”). In McElroy, the Tribunal held that the con......
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Whiteley
...were referred to in the decision: Batey v Wakefield TAX(1981) 55 TC 550 Bruce ENRVAT(BEL/90/3) No. 6326; [1991] BVC 798 McElroy VAT(1977) 1 BVC 1066 Samco Construction Ltd VAT(LON/88/1478) No. 4135; (1989) 4 BVC 1406 Symonds VAT(LON/90/1836) No. 9050; [1993] BVC 1354 Supply - Zero-rating - ......