University of Bath
| Jurisdiction | UK Non-devolved |
| Judgment Date | 07 May 1996 |
| Date | 07 May 1996 |
| Court | Value Added Tax Tribunal |
VAT Tribunal
The following cases were referred to in the decision:
Barnett v Hickmott ELR[1895] 1 QB 691
C & E Commrs v Link Housing Association LtdVAT[1992] BVC 113
Re Hecquard, ex parte Hecquard ELR(1889) 24 QBD 71
St Catherine's College v Dorling UNK[1979] 3 All ER 250
Stribling v Halse ELR(1885) 16 QBD 246
Zero-rating - Input tax - Refurbished buildings on campus used to house students - Leases of buildings granted to company - Separate types of building layout considered - Certain types of accommodation let to third parties during vacations - Whether individual units of accommodation "designed as a dwelling or number of dwellings" - Interaction of "dwelling" and "use for a relevant residential purpose" in Grp. 5 - Whether, where construction and subsequent lease and conversion executed by same party, intended use to be determined at time of construction or of grant of lease - Value Added Tax Act 1994 section 30 subsec-or-para (1) section 30 subsec-or-para (2) schedule 8 group 5 schedule 8 group 5 schedule 8 group 5 schedule 8 group 5 schedule 8 group 5 schedule 8 group 5Value Added Tax Act 1994, ss. 30(1) and (2), Sch. 8, Grp. 5, item 1(a) and (b) and Notes (2), (3), (6) and (7).
The issue was whether the appellant, which had originally constructed buildings designed as student accommodation and subsequently refurbished and leased them, was entitled to zero-rate the grants and thus claim the input tax on the construction costs on the basis that the student accommodation was "designed as a dwelling or a number of dwellings" or "intended for use solely for a relevant residential purpose".
Between 1965 and 1975 the University constructed seven buildings on its campus as accommodation for students. These buildings were named "Cotswold", "Derhill", "Quantock", "Conygre", "Wolfson", "Mendip" and "Quarry".
In July 1994 work commenced on the refurbishment of these buildings, the work being carried out in three phases. Phase one involved the first four of those named, with the work beginning in July 1994 and being completed in September 1994. Phase two concerned "Wolfson", the work beginning in October 1994 and being completed in January 1995 and phase three, that of "Mendip" and "Quarry", started in February 1995 and was completed in May 1995.
The phase one properties had five storeys after the refurbishment instead of four and each block was, as it had been previously, divided vertically so that each of its five sections was separated from the others with its own staircase and front door. The student rooms were equipped as a bedroom and study with a bed, desk, chairs and storage space. The rooms also contained a shower, wc and washbasin. In each section there was a shared kitchen equipped with individual food cupboards, fridge-freezers, a cooker and a microwave plus a table and chairs sufficient for the number of students served by the kitchen to have meals. A student had a key which uniquely opened his or her own room, the key opening the front door to that section and the door to the kitchen belonging to that section.
Phase two and three properties were differently laid out but also had an additional fifth floor after the refurbishment. Twenty-five individual student rooms led off a corridor running the entire length of the building at each level, the rooms being equipped in the same way as those in the phase one properties with shared kitchens serving groups of rooms. A student had a key opening the front door, the corridor door, the shared kitchen and his or her room. Prior to the refurbishment the students had shared bathrooms.
During term time all buildings were occupied by students, some students entering into termly lettings for 30 weeks and some for sessional lettings, i.e. for the whole academic year of 39 weeks. The student on a termly letting had to remove his or her belongings for the Christmas or Easter vacations but could, on application, stay during the long vacation for casual letting. Prior to the refurbishments only phase one buildings were available for third-party lettings for conferences and educational courses but after the refurbishment all seven buildings were available for third-party lettings during the vacations.
On 30 September 1994 the University entered into an agreement for lease with an associated company in respect of all seven buildings and executed formal leases of the buildings on 31 July 1995. Each was for a period in excess of 21 years, although that in respect of "Wolfson" was for the first 13 years for term times only.
On 4 September 1995 Customs issued a ruling that since the grants of the leases were exempt supplies the amount of input tax which the University could claim in respect of the refurbishment was to be restricted.
The appellant contended that the grants were zero-rated, arguing that in respect of the phase one properties, either looking at the buildings as originally constructed or refurbished, they had been or were "designed as a dwelling or number of dwellings" in the relevant sense. Each vertical section of the phase one buildings was a dwelling. The fact that "residential accommodation for students or school pupils" was brought into zero-rating as "a relevant residential purpose" byValue Added Tax Act 1994 schedule 8 group 5Note (3)(d)of Sch. 8, Grp. 5 to the Value Added Tax Act 1994 did not prevent the appellant from relying on item 1(a) of Sch. 8, Grp. 5 to the Value Added Tax Act 1994, i.e. a building "designed as a dwelling or number of dwellings" since "residential accommodation"...
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