Temple House Developments Ltd
| Jurisdiction | UK Non-devolved |
| Judgment Date | 26 June 1998 |
| Date | 26 June 1998 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following case was referred to in the decision:
Tilley VAT(LON/96/1199) No. 15,097; [1997] BVC 2535
Zero-rating - Construction - Conversion of non-residential building - Public house with living accommodation - Whether previous residential part of building precluded zero-rating -Value Added Tax Act 1994 schedule 8 group 5Value Added Tax Act 1994, Sch. 8, Grp. 5, item 1(b) and Notes (2), (7) and (9).
The issue was whether the sale of a public house which had been converted into two semi-detached dwellings was zero-rated.
On 16 June 1994, the appellant purchased a public house in Berkshire, in relation to which planning permission had been granted for its conversion into dwellings.
Plans, which were prepared at the time of the purchase, showed the ground floor as consisting of bars, drawing room and kitchen and the first floor comprising a bedroom, bathroom, store and office. A further plan showed the conversion to two two-storey self-contained dwellings, each with separate staircases. Unit one was formed from a lounge bar, cellar and store on the ground floor and the rooms marked as bedroom, bathroom and bottle store on the first floor. Unit two was formed from the public bar and drawing room on the ground floor and the rooms marked as office and store above. The existing kitchen and two WCs were demolished. According to one of the plans, both units included parts of the building marked as having residential use and parts not so marked. Evidence was given that the property was very run down when it was acquired by the appellant with all the living areas strewn with rubbish and storage, having been used as a dumping ground for years. The building appeared to have been empty for some time. The appellant converted the public house into two dwellings and sold the two dwellings in late 1996. In June 1997, the commissioners issued an assessment for input tax claimed on the conversion costs on the basis that these were attributable to exempt supplies.
The appellant contended that it had converted a non-residential building into a building designed as a number of dwellings. To the extent that the building had previously contained a residential part, the result of the conversion was to create an additional dwelling so that the requirements of Value Added Tax Act 1994 schedule 8 group 5Grp. 5 had been satisfied.
The commissioners contended that the conversion lacked the necessary identity between any previous non-residential part of the building into a dwelling. Alternatively, the conversion of the non-residential parts did not of themselves result in the creation of an additional dwelling as required by Value Added Tax Act 1994 schedule 8 group 5Value Added Tax Act 1994, Sch. 8, Grp. 5, Note (9).
Held, allowing the company's appeal:
1. It was necessary first to consider how much of the building had been non-residential before the conversion....
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...VAT(Case C-2/95) [1997] BVC 509 St Catherine's College v Dorling UNK[1979] 3 All ER 250 Temple House Developments Ltd VATNo. 15,583; [1998] BVC 2302 Tilley VATNo. 15,097; [1997] BVC 2535 University of Bath VATNo. 14,235; [1996] BVC 2909 White VATNo. 15,388; [1998] BVC 2167 Zero-rating - Hou......