Ridgeons Bulk Ltd (No. 2)
| Jurisdiction | UK Non-devolved |
| Judgment Date | 03 June 1992 |
| Date | 03 June 1992 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Apple & Pear Development Council v C & E Commrs VAT(Case 102/86) (1988) 3 BVC 274
Battersea Leisure Ltd; C & E Commrs v VAT[1992] BVC 23
Gleneagles Hotel plc VAT(1986) VATTR 196; (1986) 2 BVC 208,108
Naturally Yours Cosmetics Ltd v C & E Commrs VAT(1988) 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 for the supply of services -Value Added Tax Act 1983 section 2 section 3Value Added Tax Act 1983, sec. 2 and 3.
The issue was whether the appellant made a taxable supply when it carried out certain repairs and modifications to property which it occupied and in return received from the landlord a rent-free period of three years' occupation.
The appellant company was formed in 1987 to operate a sawmill that had been acquired by Ridgeons (Saffron Walden) Ltd, an associated company. Some of the necessary works were carried out at the appellant's expense and the tax thereon was claimed as input tax. The commissioners at first disallowed the claim. Later they allowed it but raised a corresponding assessment for output tax.
The facts behind this were that before 27 January 1988 an agreement was reached between the two companies that Ridgeons (Saffron Walden) Ltd would let the sawmill to the appellant for 25 years from 1 March 1988. The first three years were to be rent-free and thereafter the annual rent was to be £140,000 with periodic review. The appellant was to carry out certain specified repairs and modifications which were estimated to cost approximately £375,518. A letter was sent by the financial director of Ridgeons (Saffron Walden) Ltd to the solicitors on 27 January containing the following passage: "The annual rent will be £140,000. However, it has been agreed that Ridgeons Bulk Ltd will undertake to carry out repairs and modifications value £375,518 and in view of this a rent-free period of three years has been agreed."
In due course a lease was drawn up expressing the terms of the agreement previously entered into by the parties. Thereafter the appellant entered into occupation of the sawmills in accordance with the lease and the building works that it had undertaken to carry out were completed and paid for.
Held, dismissing the company's appeal:
1. Since pursuant to the Value Added Tax Act 1983 section 3 subsec-or-para (2)Value Added Tax Act 1983, sec. 3(2)(b) anything which is not a supply of goods but is done for a consideration is a supply of services and because when the building works were carried out "something was done" which was not a supply of goods, the question to be answered to ascertain whether there had been a taxable supply was: was what was done "done for a consideration?"
2. To determine that, the tribunal then had to ask, following authority: did the appellant receive, or was it entitled to...
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