Taylor Wimpey PLC v The Commissioners for HM Revenue and Customs
| Jurisdiction | UK Non-devolved |
| Judge | Sir Nicholas Warren,Judge Berner |
| Neutral Citation | [2018] UKUT 0055 (TCC),[2018] UKUT 0055 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Date | 26 February 2018 |
| Subject Matter | Tax,26 February 2018 |
| Published date | 26 February 2018 |
[2018] UKUT 0055 (TCC)
Appeal numbers: UT/2015/0094
UT/2015/0095
VAT – Builder’s Block restricting deduction of input tax for certain items on
a supply of a new dwelling – whether Claim Items were incorporated in any
part of the building – whether certain Claim Items were ordinarily installed
by builders as fixtures – whether input tax on any Claim Items which were
the subject of a separate standard-rated supply, where time limits precluded
an assessment of output tax on that supply, must be offset by that output tax
– VATA, s 81(3), (3A)
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
TAYLOR WIMPEY PLC Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Respondents
TRIBUNAL:
SIR NICHOLAS WARREN
JUDGE ROGER BERNER
Sitting in public at The Royal Courts of Justice, Rolls Building, Fetter Lane,
London EC4 on 17 – 19 January 2018
Jonathan Peacock QC and James Rivett, instructed by PricewaterhouseCoopers
LLP, for the Appellant
Andrew Macnab and Ewan West, instructed by the General Counsel and
Solicitor to HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2018
DECISION
1. A number of outstanding issues in these appeals remained open following our
decision (“the first UT decision”) released on 7 February 2017 (published under the 5 neutral citation [2017] UKUT 0034 (TCC)). By the first UT decision, we decided a
number of issues in principle and left it open to the parties to revert to the tribunal for
further determinations to the extent they remained unable to agree.
2. As we described in the first UT decision, the appeals concern claims by Taylor
Wimpey Plc (“Taylor Wimpey”), as representative member of its VAT group, for 10 recovery of input tax incurred by group members during the period between 1 April
1973 and 30 April 1997 (“the Claim Period”). The claims relate to the installation in
new-built homes of (i) built-in ovens, (ii) surface hobs, (iii) extractor hoods, (iv)
washing machines, (v) microwave ovens, (vi) dishwashers, (vii) washer driers, (viii)
tumble driers, (ix) refrigerators, (x) freezers, (xi) fridge freezers and (xii) carpets and 15 carpeting materials (“the Claim Items”). As we also explained, the claims are
Fleming claims, made on 30 March 2009, within the extended transitional limitation
period for historic claims provided for by s 121 of the Finance Act 2008, following
the decision of the House of Lords in Fleming (trading as Bodycraft) v Revenue and
Customs Commissioners; Condé Nast Publications Ltd v Revenue and Customs 20 Commissioners [2008] STC 324.
3. The FTT released two decisions. We shall describe those respectively as
“FTT1” and “FTT2”. We refer to the first UT decision, at [10] – [25], for a
description of issues considered by the FTT, and the FTT’s findings and conclusions
in each of those decisions. 25
4. In the evidence before the FTT, and in FTT1 itself (at [5]), the Claim Items
were sub-divided into three categories. The built-in ovens, surface hobs and extractor
fans were grouped together as “Low Specification Appliances”; the other items were
described as “High Specification Appliances” apart from the carpets and carpeting
materials, which was the third category. 30
5. The basis for Taylor Wimpey’s claims was that, whether as a matter of EU law
or domestic law, the restrictions in the domestic legislation on the deductibility of
input tax on expenditure on certain goods incorporated in a new dwelling supplied by
way of a zero-rated supply, described as “the Builder’s Block”, did not apply to the
Claim Items in the Claim Period. 35
The Builder’s Block
6. We described the Builder’s Block in the first UT decision, at [5] – [7], in the
following way:
“[5] The block, which was first introduced by the Input Tax (Exceptions) (No 1)
Order 1972, with effect from 1 April 1973, applies only to goods which are 40 incorporated into any part of the building or its site. It excludes (and so allows
3
recovery of input tax in these respects) certain items, namely materials,
builders’ hardware, sanitary ware and other articles of a kind ordinarily installed
by builders as fixtures (or, since 1 March 1995, ordinarily incorporated by
builders in the building or site). But as a result of legislative changes, there
have been introduced successive exceptions to those exclusions, thus blocking 5 input tax recovery on certain specific classes of goods incorporated in the
building, even where they are ordinarily installed as fixtures, or ordinarily
incorporated in the building or site.
[6] Thus, from 1 June 1984, by virtue of Article 2 of the Value Added Tax
(Special Provisions) (Amendment) (No 2) Order 1984 (“the 1984 Order”), input 10 tax was specifically blocked in relation to (a) finished or prefabricated furniture,
other than furniture designed to be fitted in kitchens, (b) materials for the
construction of fitted furniture, other than kitchen furniture, and (c) domestic
electrical or gas appliances, other than those designed to provide space heating
or water heating or both. From 21 May 1987, by the Value Added Tax 15 (Construction of Buildings) Order 1987 and its replacement, the identical Value
Added Tax (Construction of Buildings) (No 2) Order (taken together “the 1987
Order”), a further specific block was introduced, this time for carpets or
carpeting materials.
[7] The legislation changed again with effect from 1 March 1995. The 20 Builder’s Block continued to apply to goods incorporated in any part of a
building as described in the zero-rating schedule (Schedule 8 to the Value
Added Tax Act 1994 (“VATA”)), including a dwelling or its site, but not to
building materials. The expression “building materials” was itself to be found
in Schedule 8, and meant goods of a description ordinarily incorporated in a 25 building (which included installation as fittings), other than goods of the
specific descriptions already excluded (and thus blocked), with the exception of
electrical and gas appliances designed to heat space or water (as before) and
new exceptions (thereby affording input tax recovery) for such appliances to
provide ventilation, air cooling, air purification or dust extraction and door entry 30 systems, waste disposal units and machines for compacting waste, if intended
for use in a building designed as a number of dwellings, burglar alarms, fire
alarms, fire safety equipment and other appliances designed solely for the
purpose of enabling aid to be summoned in an emergency.”
7. As we did in the first UT decision, we have attached for convenience a schedule 35 which sets out the text of the legislation on the Builder’s Block as it applied from time
to time in the Claim Period.
The first UT decision
8. Our decisions on the issues of principle are set out in full in the first UT
decision, with which this decision should be read. By way of introduction only, as 40 some of the issues require more detailed analysis, we can summarise the conclusions
we arrived at in the following way:
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