The Commissioners for Her Majesty's Revenue and Customs v Astral Construction Limited
| Jurisdiction | UK Non-devolved |
| Judge | Judge Greg Sinfield , |
| Judgment Date | 20 January 2015 |
| Neutral Citation | [2015] UKUT 0021 (TCC) |
| Respondent | ASTRAL CONSTRUCTION LIMITED |
| Appellant | HER MAJESTY’S REVENUE AND CUSTOMS |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Appeal Number | FTC/122/2013 |
[2015] UKUT 0021 (TCC)
Appeal number: FTC/122/2013
VALUE ADDED TAX - zero rating - construction of nursing home on site of and
incorporating redundant church building - whether construction of building for
purposes of Item 2 Group 5 Schedule 8 VAT Act 1994 - yes - whether enlargement
of or extension to existing building - no - whether special residential conversion of
building – yes - appeal dismissed
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
BETWEEN: THE COMMISSIONERS FOR
HER MAJESTY’S REVENUE AND CUSTOMS Appellants
- and –
ASTRAL CONSTRUCTION LIMITED Respondent
Tribunal:
Judge Greg Sinfield
Judge Judith Powell
Sitting in public at 45 Bedford Square, London WC1 on 20 October 2014
Eleni Mitrophanous, counsel, instructed by the General Counsel and Solicitor to
HM Revenue and Customs for the Appellants
Timothy Brown, counsel, instructed by Essential VAT Services, for the
Respondent
© CROWN COPYRIGHT 2015
2
DECISION
Introduction
1. The Respondent (“Astral”) supplied construction services relating to the
development of a nursing home on the site of and incorporating a redundant church.
Astral treated the supplies as zero-rated supplies in the course of construction of a 5 building designed for use for a relevant residential purpose. The Appellants
(“HMRC”) decided that the construction works were not the construction of a
building but were an enlargement of or extension to an existing building and,
accordingly, not zero-rated. HMRC considered that the works were the conversion of
the church to a relevant residential purpose chargeable to VAT at the reduced rate of 10 5% and assessed Astral accordingly. Astral appealed to the First-tier Tribunal (Tax
Chamber) (“the FTT”).
2. The appeal turned on whether the construction works were a conversion of
and/or an enlargement of or extension to an existing building, namely the church, and
thus excluded from being the construction of a building by Note (16)(a) and/or (b) to 15 Group 5 of Schedule 8 to the Value Added Tax Act 1994 (“VATA”). In a decision
released on 2 July 2013, [2013] UKFTT 374 (TC), (“the Decision”), the FTT (Judge
Lady Judith Mitting and Mr Derek Robertson) decided that the works were not a
conversion of or enlargement of or an extension to the church and allowed Astral’s
appeal. 20
3. HMRC appealed against the decision of the FTT on the ground that the supplies
by Astral were an enlargement of or an extension to an existing building, namely the
church. HMRC made no appeal in relation to the FTT’s decision that the works were
not a conversion of the church.
4. Although it had not been part of the decision subject to appeal or argued before 25 the FTT, HMRC amended their grounds of appeal to contend additionally that, if they
succeeded in their appeal, the supplies of construction services by Astral were not
chargeable to VAT at the reduced rate but at the standard rate because, after the
conversion (which HMRC did not accept), the church did not form the entirety of the
nursing home. Notwithstanding the fact that neither party appealed against the FTT’s 30 conclusion that the works were not a conversion, we considered that, in view of
HMRC’s further ground of appeal, we should consider whether the works were a
conversion.
5. Shortly before the hearing of this appeal, HMRC applied to make a further
amendment to their grounds of appeal to submit that the construction of a building in 35 Item 2 of Group 5 of Schedule 8 to the VATA means the erection of a building as a
whole. HMRC contend that, even if the works are not an enlargement of or an
extension to the church, the supplies would not be zero-rated because they were not in
the course of the construction of a completely new building as the new structure
incorporated the church. 40
6. An appeal to the Upper Tribunal from a decision of the FTT can only be made
on a point of law (section 11 Tribunals, Courts and Enforcement Act 2007). The
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