Morfee
| Jurisdiction | UK Non-devolved |
| Judgment Date | 19 December 1995 |
| Date | 19 December 1995 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Batey (HMIT) v Wakefield TAX(1981) 55 TC 550
Hardy VAT(MAN/94/591) No 12,776; [1996] BVC 2057
Lee VAT(LON/92/980) No. 10,662; [1994] BVC 1336
EC Commission v UK VAT(Case 416/85) [1988] ECR 3127; (1988) 3 BVC 378
Lewis (HMIT) v Lady Rook TAX[1992] BTC 102
MKM Builders VAT(LON/92/2421) No 10,511; [1993] BVC 1029
Orme VAT(LON/92/1885) No. 9975; [1993] BVC 1533
Pepper (HMIT) v Hart TAX[1992] BTC 591
Whiteley (LON/92/2979) No 11,292;VAT [1995] BVC 551
Zero-rating - Protected building - Alterations to barn in curtilage of listed building - Two rooms added at first floor level - Cottage and barn subject of domestic use before and after alterations - Whether buildings formed one entity and covered by listing - Whether zero-rating applied - Value Added Tax Act 1983, s. 16 and Sch. 5, Grp. 8A, Note (1) (Value Added Tax ActValue Added Tax Act 1994 schedule 8 group 61994, s. 30 and Sch. 8, Grp. 6, item 2 and Note (1)).
The issue was whether work carried out in the course of alterations made to a barn used for domestic purposes and situated in the grounds of a listed building constituted the supply in the course of an approved alteration of a protected building and therefore zero-rated.
The appellant lived with his family at Bridge Cottage, a listed building situated near Langport in Somerset. Previously the barn, which was close to the cottage, had been used as a workshop, for storage, as an occasional garage and as a freezer room.
On 11 February 1993, the appellant applied for and was granted listed building consent for the "carrying out of alterations, repairs and improvements to (the) barn". The work consisted of the addition of two rooms at first floor level and resulted in an additional floor and ceiling and two rooms above. Water and drainage were installed with hot water and a storage heater. The result was modern living accommodation with light, heat, plaster walls and roof insulation. The appellant continued to use the ground floor space for storage and as a workshop.
By letter dated 17 March 1994, Customs ruled that the building works carried out on the barn were standard-rated for VAT purposes.
Before the tribunal, the appellant contended that the work amounted to supplies made in the course of an approved alteration of a protected building and thus should be zero-rated. They maintained that the barn was part of the domestic accommodation both before and after the conversion and that together with the cottage constituted "a building". This was reinforced by s. 1(5)(b) of the Planning (Listed Buildings and Conservation Areas) Act 1990 which stated that, "any object or structure within the curtilage of the building which, although not fixed to the building, forms part of the land and has done so since before 1st July 1948, shall be treated as part of the building".
The commissioners contended that the barn was not "a building which is designed to remain as or become a dwelling or number of dwellings or is intended for use solely for a relevant residential purpose … after the reconstruction or alteration …" and so did not satisfy the definition in Note (1) to Grp. 8A of Sch. 5 to the Value Added Tax Act 1983 and that the zero-rating contemplated one building and not more than one. Consequently, the building works were standard-rated.
Held, allowing the taxpayer's appeal:
1. The appellant's claim to zero-rating in relation to the barn was not excluded by the fact that Grp. 8A and Note (1) of Sch. 5 to the Value Added Tax Act 1983 referred generally to "a building" and "a dwelling" in the singular.
2. The cottage and the barn were both the subject of domestic use before and after the work and so were "designed to remain as … a dwelling" and together they constituted a "protected building". The alterations, which were accepted as being "allowed alterations", were entitled to zero-rating.
[The tribunal set out the facts summarised above and continued as follows.]
The sole issue between the parties is whether the work carried out for the appellant is standard-rated for VAT or zero-rated.
It is the appellant's view that the works the subject of the disputed ruling are, as to a substantial part, the supply in the course of an approved alteration of a protected building, of services within the meaning of item 2, Grp. 8A of Sch. 5 to the Value Added Tax Act 1983 (then applicable) and are accordingly zero-rated.
The commissioners, however, contend that none of the work done amounts to a supply of services in the course of an approved alteration of a protected building because a protected building, as defined by Note (1) to Grp. 8A of Sch. 5 [to the Value Added Tax Act1983] is being "a building which is designed to remain as or become a dwelling or a number of dwellings or is intended for use solely for a relevant residential purpose … after the reconstruction or alteration". The commissioners contend that the barn is not such a building. They further say that what the provision for zero-rating contemplates is one building, not more than one.
There has been considerable correspondence between the parties. It is unnecessary to reproduce this in its entirety. The commissioners have expressed the view that the barn is not classed as a protected dwelling or qualifying dwelling, that it is "not a dwelling in its own right" and that the barn is not a building that is or has become a dwelling and that indeed it could not become a separate dwelling because planning restrictions forbade new apertures.
The appellant in correspondence maintained that the barn was part of his domestic accommodation both before and after the conversion. A dwelling was not restricted to one building. Most dwellings which were not flats consisted of more than one building. The barn was not specifically mentioned when Bridge Cottage was included in the Secretary of State's list of protected buildings, but it was inconceivable that the Secretary of State had not intended to include it in the listing.
The parties referred the tribunal to a number of authorities which will be considered hereafter. The appellant further relied on the intention of the legislature not to restrict unduly access to zero-rating, and relies in support of this contention on a number of extracts from Hansard.
The appellant can only succeed in his contention by showing that the work to the barn was covered by zero-rating provision of s. 16 of theValue Added Tax Act 1983 that is to say that the supplies are "of a description for the time being specified in Sch. 5 to this Act or the supply is of a description for the time being so specified".
Group 8A of Sch. 5 [to the Value Added Tax Act 1983] refers to protected buildings in the following terms:
Item No.
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1. The grant by a person substantially reconstructing a protected building, of a major interest in, or in any part of, the building or its site.
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2. The supply, in the course of an approved alteration of a protected building, of any services other than the services of an architect, surveyor or any person acting as consultant or in a supervisory capacity.
Notes:
(1) "Protected building" means a building which is designed to remain as or become a dwelling or number of dwellings or is intended for use solely for a relevant residential purpose or a relevant charitable purpose after the reconstruction...
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