[2009] UKFTT 322 (TC)

                                                                                                TC00265

Appeal number LON/2009/0684

Zero-rating – supply to handicapped person – Appellant designed and assembled decking to provide access – whether supply of component materials is zero-rated – Group 12, Sch 8, Value Added Tax Act 1994

FIRST-TIER TRIBUNAL

TAX

                                               ANDRAS BOKOR                              Appellant

                                                                      - and -

                                 THE COMMISSIONERS FOR HER MAJESTY’S

                                             REVENUE AND CUSTOMS (VAT)          Respondents

                                                TRIBUNAL: JUDGE ROGER BERNER

Sitting in chambers in London on 19 September 2009

Decision without a hearing pursuant to Rule 29 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009

© CROWN COPYRIGHT 2009

DECISION

1.     With the consent of the parties, and the Tribunal having decided that it is able to decide this matter without a hearing, I gave directions on 30 September 2009 for service of documents, the production of a bundle of documents and for any further submissions to be filed with the Tribunal, and I directed that the matter would be determined by me today.

2.     I have received and read the bundle of documents filed by HMRC, along with the Tribunal file.  For the reasons I give below, I dismiss this appeal.

Introduction

3.     Andras Bokor (“Mr Bokor”) appeals against a decision of HMRC of 30 October 2008 upholding their earlier decision of 5 August 2008 to refuse Mr Bokor’s claim for a refund of £56.82 in respect of VAT under s 30 of the Value Added Tax Act 1994 (“VATA”).

4.     Section 30 provides that where a taxable person supplies goods or services and the supply is zero-rated, no VAT is to be charged on the supply.  The essence of Mr Bokor’s claim is that the supplies to him of certain materials for the purpose of installing decking suitable to enable his severely-disabled wife to move by wheelchair within the family home is a zero-rated supply, and that he should be refunded the VAT that was over-paid on those supplies.

The facts

5.     Mr Bokor’s wife is severely disabled and receives high grade disability allowance.  She has been assessed by the NHS and her local authority to require a wheelchair.

6.     The floor of the balcony outside the Appellant’s living room is some 20 centimetres below that of the living room.  To enable his wife to be wheeled between the living room and the balcony, Mr Bokor decided to design decking which he could install on the balcony floor.  In accordance with his design he ordered from a timber merchant timber decking cut to precisely specified lengths and planed to precise thickness, together with the exact number of nuts, bolts and washers, which were all used in the designed project itself.  There was no waste or spares whatsoever which could be used for other purposes.  He also bought two plastic pallets (normally used for stacking goods in stores) on which the timber decking was designed to rest and, together with it, provided the required height in total.  Finally he bought a cover plate, normally used to cover holes during pavement repairs, to bridge the short gap between the decking and the living room floor.  Mr Bokor says, and this is not challenged, that he has no other use for the two pallets and the cover plate.  In other words, they are bespoke to his design.

7.     Mr Bokor also says, and again there is no challenge to this, that the suppliers of the materials understood the complete project and knew that the materials were for the decking to be used by a disabled person.

8.     Mr Bokor is not registered for VAT, but the suppliers from whom he purchased the various materials were so registered and the price he paid included VAT, which he now seeks to reclaim.

The law

9.     Much of the correspondence that has passed between the parties has focussed on the terms of VAT Notice 701/7/02: Reliefs for disabled people.  Whilst some VAT notices have the force of law, this is not one of them.  I must therefore consider the applicable law, and I do not have regard to statements in the VAT Notice.

10.  I have described s 30 VATA above.  The relevant zero-rating provision is contained in Group 12, Schedule 8, VATA, the material parts of which are as follows:

“…

2 The supply to a handicapped person for domestic or his personal use, or to a charity for making available to handicapped persons by sale or otherwise, for domestic or their personal use, of—

(a)     medical or surgical appliances designed solely for the relief of a severe abnormality or severe injury;

(b)     electrically or mechanically adjustable beds designed for invalids;

(c)     commode chairs, commode stools, devices incorporating a bidet jet and warm air drier and frames or other devices for sitting over or rising from a sanitary appliance;

(d)     chair lifts or stair lifts designed for use in connection with invalid wheelchairs;

(e)     hoists and lifters designed for use by invalids;

(f)     motor vehicles designed or substantially and permanently adapted for the carriage of a person in a wheelchair or on a stretcher and of no more than [11]⁸ other persons;

(g)     equipment and appliances not included in paragraphs (a) to (f) above designed solely for use by a handicapped person;

(h)     parts and accessories designed solely for use in or with goods described in paragraphs (a) to (g) above;

(i)     boats designed or substantially and permanently adapted for use by handicapped persons.

…

3 The supply to a handicapped person of services of adapting goods to suit his condition.

…

6 The supply of goods in connection with a supply described in item 3 ...

8 The supply to a handicapped person of a service of constructing ramps or widening doorways or passages for the purpose of facilitating his entry to or movement within his private residence.

…

13 The supply of goods in connection with a supply described in items 8, 9, 10 or 11.”

Discussion

11.  Mr Bokor argues that Group 12, in particular paragraphs (g) and (h) of Item 2 applies perfectly to the decking which he designed and assembled.  He argues that there is no requirement for a supplier to provide the complete equipment, nor to provide an installation service, but merely that the parts and accessories had to be designed solely for use by a handicapped person.  Exclusion on the grounds that parts, or the whole of the equipment could be used for other purposes is not mentioned, he says.

12.  HMRC argue as follows:

(1)  The materials supplied to Mr Bokor were everyday building and similar materials and were not goods of a type falling within a description in Item 2 of Group 12.

(2)  Mr Bokor, who is not a taxable person, himself carried out the necessary work to adapt the materials to suit his wife’s condition and he was not otherwise supplied with any services such as would satisfy the description in Items 3, 8 or any other Item of Group 12.

(3)  Since Mr Bokor was not supplied with any services such as would satisfy the description in Items 3, 8 or any other Item of Group 12, the supply to him of the materials did not satisfy the description in Item 6, 13 or any other Item of Group 12 of goods supplied in connection with any such service.

(4)  Accordingly, the supply to Mr Bokor of the materials was not zer0-rated by virtue of Group 12 or any other provision.

13.  I should add that no point was raised by HMRC that the supply in this case was not made to a handicapped person.  It was accepted in earlier correspondence that the materials were supplied to Mr Bokor on behalf of his wife.

14.  It is clear, and I do not understand Mr Bokor to have argued to the contrary, that there was no service supplied that could fall within Item 3 or Item 8.  Accordingly, neither Item 6 nor Item 13 can apply.

15.  The question is whether, as Mr Bokor argues, Item 2 applies.  Item 2 sets out, in paragraphs (a) to (f) and also at paragraph (i), a list of particular types of equipment, none of which is applicable to this case.  Mr Bokor submits, however, that paragraphs (g) and (h) apply.  He puts his case to the effect that these paragraphs apply to the decking which he designed and assembled, but of course there was no supply as such of the completed product.  What is in issue is whether the supply of the component materials that went to make up the construction of the decking can be zero-rated.

16.  Turning first to paragraph (g) this it seems to me requires two tests to be satisfied.  First, the supply must be of something that satisfies the description of “equipment and appliances not included in paragraphs (a) to (h)”.  Secondly, the equipment and appliances must be designed solely for use by a handicapped person.  Both of these tests must be satisfied in the case of each item.

17.  In considering what is meant by “equipment or appliances” for this purpose, in my judgement this expression must be construed according to its context.  The context is the list of items in paragraphs (a) to (f) which are clearly intended to be classified as “equipment and appliances”.  That list demonstrates the type of items that are intended to be included within that expression.  In my view none of the component materials that went to make up the construction of the decking fall within the meaning of “equipment and appliances” for this purpose.

18.  Nor do I consider that any of the materials can satisfy the condition that they be “designed solely for use by a handicapped person”.  All of the component parts were part of a design, and some, in particular the wood, were made to a particular specification.  But that does not mean that the wood product was designed solely for use by a handicapped person.  The wood itself was not designed for use by a handicapped person; it was the decking that was so designed.  The wood was merely specified.

19.  Nor do I consider that the component materials can satisfy the description in paragraph (h).  That applies to parts and accessories designed solely for use in goods described in paragraphs (a) to (g) of Item 2.  The argument here must be that the decking itself satisfies that description, and that the component materials were so used.  There are two reasons why in my view such an argument cannot succeed.  First, I do not accept that the decking itself can aptly be described as falling within the category of equipment and appliances in Item 2.  The decking is not equipment or an appliance within the meaning of that term.  Secondly, the terms of paragraph (h) clearly contemplate the prior existence of the goods in question, and do not apply to component materials that go to construct the goods.

20.  The fact that the suppliers of the component materials knew that they were to be employed in the construction of the decking and that this was for the use of a handicapped person does not alter any of these conclusions.

Decision

21.  For these reasons, I dismiss this appeal.

The Appellant has a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009.  The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.   

ROGER BERNER

TRIBUNAL JUDGE

RELEASE DATE: 24 November 2009