PAT Munro - (Alness) Limited v The Commissioners of Customs and Excise, A 00002
| Jurisdiction | UK Non-devolved |
| Judge | T Gordon COUTTS QC |
| Judgment Date | 30 July 2004 |
| Respondent | The Commissioners of Customs and Excise |
| Appellant | PAT Munro - (Alness) Limited |
| Reference | A 00002 |
| Court | First-tier Tribunal (Tax Chamber) |
Aggregate levy – whether levy applicable to material excavated and processed as a result of a contractor constructing an all-weather football pitch – whether commercial exploitation – whether the aggregate removed from the ground is exempt or taxable – Finance Act 2001 Sections 16, 17 and 19.
PAT MUNRO – (ALNESS) LIMITED Appellant
- and -
Tribunal: (Chairman): T Gordon Coutts, QC
Sitting in Inverness Sheriff Court on Wednesday 21 July 2004.
for the Appellant Mr Brian Munro
for the Respondents Mr Richard Shaw
© CROWN COPYRIGHT 2004.
DECISION
Introductory
The Appellant appealed against being charged with aggregate levy in the circumstances undernoted. The facts were not in dispute and the point made by the Appellant was to question whether they were or should be liable for the levy in the circumstances, given the purpose of the levy and the declared objectives for its introduction.
The Facts
The Appellant, a substantial contracting firm in the North of Scotland, not only operate as contractors in construction work but also are registered as processors of and providers of aggregate. It owns quarry facilities. Accordingly it can be and was in the present instance both the contractor to the Highland Regional Council, and the firm responsible for the recycling of material excavated in the course of the contract and its re-use.
The Appellant was engaged to provide an all-weather football pitch. This was situated on what had been sloping ground. That ground required to be excavated and a retaining wall constructed. The excavation required to level the site was of several thousand tonnes of material. That material was a mixture of sand, gravel and stone. It did not contain soil other than sub-soil. The material was excavated, transported to the Appellant’s recycling facility processed and thereafter sold.
The Respondent took the view that the operation above described did not fall within any of the exemptions provided by statute and that accordingly the levy was due.
The Appellant contested this view both on the merits and on a view of the underlying purpose of the act which it was maintained would be defeated should this assessment stand.
The legislation in the Finance Act 2001 read as enacted:
' 16 Charge to aggregates levy
(1) A levy, to be known as aggregates levy, shall be charged in accordance with this Part on aggregate subjected to commercial exploitation.
(2) The charge to the levy shall arise whenever a quantity of taxable aggregate is subjected, on or after the commencement date, to commercial exploitation in the United Kingdom.
(3) The person charged with the levy arising on any occasion on a quantity of aggregate subjected l to commercial exploitation shall be the person responsible for its being so subjected on that occasion.
17 Meanings of "aggregate" and "taxable aggregate"
(1) In this Part "aggregate" means (subject to section 18 below) any rock, gravel or sand, together with whatever substances are for the time being incorporated in the rock, gravel or sand or naturally occur mixed with it.
(2) For the purposes of this Part any quantity of aggregate is, in relation to any occasion on which it is subjected to commercial exploitation, a quantity of taxable aggregate except to the extent that –
-
it is exempt under this section;
-
it has previously been used for construction purposes (whether before or after the commencement date);
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it is, or derives from, any aggregate that has already been subjected to a charge to aggregates levy;
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it is aggregate that on the commencement date is on a site other than-
(i) its originating site; or
(ii) a site that is required to be registered under the name of a person who is the operator, or one of the operators, of that originating site.]'
(3) For the purposes of this Part aggregate is exempt under this section if
(a) ...
(b) it consists wholly of aggregate won by being removed from the ground on the site of any building or proposed building in the course of excavations lawfully carried out-
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in connection with the modification or erection of the building; and
(ii) exclusively for the purpose of laying foundations or of laying any pipe or cable.
Section 18 specifies exempt processes and it was agreed that none of these applied.
19 Commercial exploitation
(1) For the purposes of this Part a quantity of aggregate is subjected to exploitation if, and only if –
(a) it is removed from a site falling within subsection (2) below;
(b) it becomes subject to an agreement to supply it to any person;
(c) it is used for construction purposes; or
(d) it is mixed, otherwise than in permitted circumstances, with any material or substance other than water.
(2) The sites which, in relation to any quantity of aggregate, fall within this subsection are
(a) the originating site of the aggregate;
…
(c) any site not falling within paragraph (a) or (b) above to which the quantity of aggregate had been removed for the purpose of having an exempt process applied to it on that site but at which no such process has been applied to it.
(3) For the purposes of this Part the exploitation to which a quantity of aggregate is subjected shall be taken to be commercial exploitation if, and only if
(a) it is subjected to exploitation in the course or furtherance of a business carried on by the person, or one of the persons, responsible for subjecting it to exploitation;
(b) the exploitation to which it is subjected does not, consist in its removal from one registered site to another in a case where both sites are registered under the name of the same person;
(c) the exploitation to which it is subjected does not consist in or require its removal to a registered site for the purpose of having an exempt process applied to it on that site.
Appellant’s Arguments
The Appellant attacked the stance of the Commissioners. Mr Munro outlined his objection to what he saw as a rigid approach when seeking a Departmental Review as quoted below. The same contentions were put to the Tribunal.
“The HMCE stance on this subject is that the legislation states that aggregates arising from the construction of Public Highways, buildings and utilities are exempt from the levy, and therefore, any aggregates extracted from construction projects not conforming to these 3 types must incur the levy. I feel that this is a very blinkered view on the wording of a new piece of legislation and that the logic is unfair and un-workable. As the levy was introduced with the premise of encouraging the re-use of secondary materials, including those excavated from construction projects, I find it hard to believe that the government did not want to encourage the re-use of any aggregates arising from the construction of footpaths, car parks, recreational areas, playgrounds etc. However, on the HMCE reading of the legislation, such material would not benefit from the levy exemption.
In this case, our civil engineering section carried out a contract to construct an All weather Football Pitch at a Local High School. This necessitated the removal of a significant quantity of existing material, which was taken to our quarry at...
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