Wimpey Group Services Ltd v Commissioners of Customs and Excise
| Jurisdiction | England & Wales |
| Judgment Date | 04 July 1988 |
| Date | 04 July 1988 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal.
Mr. Guy Sankey (instructed by the Solicitor for Customs and Excise) for the Crown.
Mr. David Milne Q.C. and Mr. Giles Goodfellow (instructed by R.W. Grey, chief solicitor Wimpey Group Services Ltd.) for Wimpey.
Before: Lord Donaldson M.R., Woolf L.J. and Sir Denys Buckley.
The following cases were referred to in the judgment of Lord Donaldson M.R.:
Joel v. Swaddle WLR[1957] 1 W.L.R. 1094
Percy E. Cadle & Co. Ltd. v. Jacmarch Properties Ltd.ELR[1957] 1 Q.B. 323
Value added tax - Zero-rating - Construction of building - New factory built on site of old factory which was partly demolished - Whether construction of new building or reconstruction of old building - Value Added Tax Act 1983 schedule 5 group 8Value Added Tax Act 1983, Sch. 5, Grp. 8, item 2, Note (1A).
This was an appeal from the decision of Mann J. ((1987) 3 BVC 157) allowing an appeal by Wimpey Group Services Ltd. ("Wimpey") against a decision of the VAT Tribunal that certain construction work was standard-rated for VAT.
In the early 1980s a large complex of buildings known as Mothers Pride Bakery was redeveloped to increase production and efficiency. The work involved the demolition of part of the existing bakery and the erection of a single storey extension adjoining the remaining buildings with roof-top parking.
Wimpey, who carried out the work, appealed to a VAT Tribunal claiming that all the work should be zero-rated, including that done after the introduction of Value Added Tax Act 1983 schedule 5 group 8Sch. 5, Grp. 8, Note (1A) to the Value Added Tax Act1983 with effect from 1 June 1984 which withdrew zero-rating from the "conversion, reconstruction, alteration or enlargement of any building". Wimpey claimed that the work constituted the construction of a new building and not the reconstruction of a pre-existing building.
The Tribunal's findings of fact were that the redevelopment involved the construction of a new building completely different in construction from the old, that none of the old materials were used and the new building was structurally independent of the old buildings which remained. However, they dismissed the appeal because they said that the ordinary man in the street, if asked what had been done, would conclude that they had reconstructed the existing bakery.
Mann J. held that the only affinity of the new building with the old was its function as part of a large bakery. The Tribunal had erred in that they did not focus on that which was demolished and that which appeared in its place. Rather, they focused on the functional concept of the bakery.
Held, dismissing an appeal by the Commissioners:
1. The Tribunal, having found that a new building had been created, allowed their attention to be diverted from that fact by considering the man in the street's idea of the building as a bakery.
2. On the findings of fact made by the Tribunal, the decision of the judge was correct.
Per Woolf L.J.: The fact that there was no total demolition of what was there before and that the new buildings were attached to the remaining buildings would have been important in considering alteration and enlargement but not in considering reconstruction. If enlargement or alteration had been considered in addition to reconstruction the result might not have been the same.
The Commissioners of Customs and Excise appealed against the judgment ofMann J. on the following grounds:
The judge erred in law:
(2) In failing to hold that work carried out at the site of the bakery in Greenford, Middlesex, owned by British Bakery Southern Ltd., was chargeable to VAT at the standard rate.
(3) In holding that the Tribunal were in error in their conclusion that the work amounted to reconstruction of an existing building.
(4) In holding that a new building was erected on the site.
(5) In holding that the phased erection of "the new building" was incapable of constituting the reconstruction of the pre-existing buildings which were demolished.
Lord Donaldson M.R.: This is an appeal from a judgment ofMann J. given on 19 November 1987 ((1987) 3 BVC 157) whereby he allowed an appeal by Wimpey Group Services Ltd. against a decision of a VAT Tribunal that certain work was subject to a standard rate of VAT.
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