Port Erin Hotels Ltd v The Treasury
| Jurisdiction | UK Non-devolved |
| Judgment Date | 11 July 1990 |
| Date | 11 July 1990 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following case was referred to in the decision:
Neville Russell VAT(1987) 3 BVC 611; (1987) VATTR 194
Assessment - Input tax - Whether the appellant was liable for tax on materials acquired for improvements made to two hotels operated by the appellant - Whether the assessment was correctly calculated - Whether the improvements made by the appellant to the property it occupied were for a consideration - Whether there was a taxable supply.
The issue was whether improvements made by the appellant to the property it occupied were for a consideration.
The managing director, Mr Wilson ("W") was the representative and sole witness for the appellant. He was chairman of J H Cubbon Ltd ("C") which owned 99.9 per cent of shares in the appellant. C had been a long-established contracting company, which ceased such trading and became a property and investment company, thereupon ceasing to be registered for VAT.
In late 1983 it was decided to improve the quality of accommodation offered by the Port Erin Princess Hotel and the Port Erin Countess Hotel. Because of the past experience of the parent company in contracting, the work was to be done by own labour instead of undertaking the normal formalities for grant assistance. The grant would be paid on the basis of the cost of the completed work. Most of the work on the Princess Hotel was completed by June 1984; in the case of the Countess most of the work was done after the end of the 1984 tourist season. It was considered by the directors of C that the work was zero-rated for VAT and so it did not matter that the grant applicant was not registered for VAT. Accordingly the grant was applied for in the name of C and was received in December 1986.
In the spring of 1984 W became aware of the intended change in the VAT law from 1 June 1984, which would result in building work being subject to VAT at the standard rate. W's group auditors advised that, as C had previously waived the collection of rent from the appellant and expected the appellant to have responsibility for all maintenance, these arrangements should be formally recorded. A lease agreement between C as landlord and the appellant as tenant dated 31 March 1984 was prepared and signed. This agreement granted occupation of the premises to the tenant for a period of two years free of rent. The stated consideration was that the tenant should carry out all the interior and exterior maintenance of...
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Ridgeons Bulk Ltd (No. 2)
...3 BVC 428 Neville Russell (a firm) VAT(1987) VATTR 194; (1987) 3 BVC 611 Port Erin Hotels Ltd v The Treasury VAT(MAN/89/722) No. 5045; (1990) 5 BVC 772 Supply - Whether taxable supply made - Whether consideration for what was done - Whether three years' rent-free occupation consideration fo......