The Commissioners for Her Majesty's Revenue and Customs v Roy Shields
| Jurisdiction | UK Non-devolved |
| Judge | Judge Greg Sinfield , |
| Judgment Date | 24 October 2014 |
| Neutral Citation | [2014] UKUT 0453 (TCC) |
| Respondent | ROY SHIELDS |
| Appellant | HER MAJESTY’S REVENUE AND CUSTOMS |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/128/2013 |
[2014] UKUT 0453 (TCC)
Appeal number: FTC/128/2013
VALUE ADDED TAX – input tax - DIY Builders Scheme – construction of
dwelling as equestrian facilities managers residence - whether designed as a
dwelling for purposes of Group 8 of Schedule 5 VAT Act 1994 - whether description
in planning application as equestrian facilities managers residence prohibited
separate use of dwelling - no - whether planning permission condition that
occupation of dwelling be limited to person solely employed by the equestrian
business and any resident dependants prohibited separate use of dwelling - yes -
appeal allowed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
BETWEEN: THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS Appellants
- and –
ROY SHIELDS Respondent
Tribunal:
Judge Greg Sinfield
His Honour Judge Alistair Devlin
Sitting in public in the Tribunal Hearing Centre, Bedford House, Bedford Street,
Belfast on 9 September 2014
Christiaan Zwart, counsel, instructed by the General Counsel and Solicitor to
HM Revenue and Customs for the Appellants
David Donaldson of Donaldson Planning for the Respondent
© CROWN COPYRIGHT 2014
2
DECISION
Introduction
1. The Appellants (“HMRC”) appeal against the decision of the First-tier Tribunal
(Tax Chamber) (“the FTT”) released on 7 August 2013 with neutral citation [2013]
UKFTT 424 (TC) (“the Decision”). In the Decision, the FTT (Judge Ian Huddleston 5 and Ms Celine Corrigan) allowed an appeal by the Respondent (“Mr Shields”) against
HMRC’s refusal of Mr Shields’s claim under section 35 of the Value Added Tax Act
1994 (“VATA94”), popularly known as the DIY Builders Scheme, for repayment of
VAT of £6,189.56 incurred on the construction of a dwelling to be occupied by Mr
Shields and his family on the site of his equestrian business. 10
2. It appears from the Decision that two issues had been the subject of argument at
the hearing of the appeal. The first issue was whether Mr Shields carried out the
construction of the dwelling otherwise than in the course or furtherance of any
business which would preclude recovery of input tax under section 35 VATA94. The
FTT found that the dwelling was not built in the course or furtherance of any 15 business.
3. The second issue concerned a condition of the planning permission for the
construction of the dwelling that limited the occupation of the dwelling to a person
solely employed by the equestrian business and any dependants. If that condition
prohibited the separate use of the dwelling then the building was not “designed as a 20 dwelling”, as defined by Note 2(c) to Group 5 of Schedule 8 VATA94. If the
building was not designed as a dwelling for VAT purposes then it could not qualify
for a refund under the DIY Builders Scheme. The FTT held that the relevant
condition in the planning permission was an occupancy condition and did not amount
to a prohibition of the separate use of the dwelling. As the FTT had found in favour 25 of Mr Shields on both points, they allowed the appeal. HMRC applied for and the
FTT (Judge Jonathan Cannan) granted permission to appeal in relation to both issues.
4. At the hearing before us, HMRC did not pursue the appeal in relation to the first
issue but maintained that the FTT had erred in failing to conclude that the planning
permission for the construction of the dwelling imposed a prohibition on the separate 30 use of the dwelling. For the reasons given below, we have decided that the condition
in the planning permission restricting occupation of the dwelling to a person solely
employed by the equestrian business and any resident dependants was a prohibition of
the separate use of the dwelling. Accordingly, HMRC’s appeal against the Decision
is allowed. 35
Legislation
5. Section 35 of the VATA provides for the refund of VAT to persons constructing
certain buildings. So far as relevant to this appeal, section 35 is as follows:
“(1) Where -
(a) a person carries out works to which this section applies, 40
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