United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2004] UKVAT V18793

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Sherlock and Neal Ltd v Customs and Excise [2004] UKVAT V18793 (08 October 2004)

18793

ZERO-RATING – whether construction of a new garage as part of the alteration of a listed building is zero-rated – no

LONDON TRIBUNAL CENTRE

SHERLOCK AND NEAL LIMITED Appellant

- and -

THE COMMISSIONERS OF CUSTOMS AND EXCISE Respondents

Tribunal: DR JOHN F AVERY JONES CBE (Chairman)

SHEILA WONG CHONG FRICS

Sitting in public in London on 14 September 2004

Kevan Dodd FRICS for the Appellant

Caroline Neenan, counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004


 


DECISION

1. Sherlock and Neal Limited appeal against a decision in a letter dated 10 October 2003 that the construction of a garage at Chapel Cottage, Sussex is subject to VAT at the standard rate. The Appellant was represented by Mr Kevan Dodd and the Respondent by Miss Caroline Neenan.
2. We find the following facts.

(1) There are three buildings in a row: from left to right Chapel Cottage (a listed building built in about 1690), the Chapel (not joining the Cottage but built about 1 foot away, not listed and built in about 1896), and an agricultural shelter.

(2) The Appellant obtained listed building consent on 10 October 2002 to alter the Cottage by joining it to the Chapel and converting the Chapel into further residential accommodation, and demolishing the agricultural shelter and building a new garage sharing a wall with the Chapel. The work is accordingly an approved alteration of the Cottage.

(3) The building work was carried out by the Appellant.

(4) The Commissioners agree that all the works are zero-rated except for the construction of the garage.

3. We infer the following from these facts.

(5) The Cottage was and still is the only listed building.

(6) The Chapel and the new garage were not part of the curtilege of the Cottage before the alteration but may be now (although it is not necessary to decide this).

4. Mr Dodd contends that the garage is an integral part of the alteration to the listed building for which listed building consent has been obtained and should accordingly be zero-rated.
5. Miss Neenan contends that the building of the garage does not qualify for zero-rating within the legislation. She starts with item 2 of Group 6 of Schedule 8 to the Value Added Tax Act 1994:

"The supply, in the course of an approved alteration of a protected building, of any services…."

Protected building is defined in Note (1):

"'Protected building' means a building which is designed to remain as or become a dwelling…after the …alteration and which…is…a listed building, within the meaning of the Planning (Listed buildings and Conservation Areas) Act 1990.

6. By section 1(5) of the 1990 Act any object or structure within the curtilage of the building, which although not fixed to the building, forms part of the land and has done so since before 1 July 1948, shall be treated as part of the building. This provision determines only what is the listed building in the last limb of the definition of protected building. As we have stated, the garage is not within this definition, and in any case it id not detached.
7. Note (2) defines the expression building which is designed to remain as or become a dwelling, in the first limb of the definition of protected building:

"A building is designed to remain as or become a dwelling or number of dwellings where in relation to each dwelling the following conditions are satisfied—

(a) the dwelling consists of self-contained living accommodation;

(b) there is no provision for direct internal access from the dwelling to any other dwelling or part of a dwelling;

(c) the separate use, or disposal of the dwelling is not prohibited by the terms of any covenant, statutory planning consent or similar provision,

and includes a garage (occupied together with a dwelling) either constructed at the same time as the building or where the building has been substantially reconstructed at the same time as that reconstruction."

8. Miss Neenan contends that the garage is not itself a dwelling and can be treated as a dwelling only if it satisfies the closing words of Note (2). It does not do so because it was not constructed at the same time as the protected building [the Cottage], being constructed as part of the current alteration, and nor, as is common ground, has the protected building [the Cottage] been substantially reconstructed. Accordingly although there has been an approved alteration of the Cottage, it is not an approved alteration of a protected building as defined to mean a building which is designed to become a dwelling.
9. In our view Miss Neenan's construction is correct. As Lord Walker said in Customs and Excise Commissioners v Zielinski Baker & Partners Ltd [2004] STC 456 at [41]:

"But the requirement that the subject matter of the "approved alteration" should be (1) a building and (2) designed to become a dwelling, indicate that Parliament intended to give the benefit of item 2 of Group 6, not to the whole set of listed buildings and scheduled monuments (and structures or sites deemed to form part of them) but only to a subset (that is those which are buildings to be used for residential purposes).

In this case, even though the final structure is a single building resulting from the approved alteration of the Cottage, the garage fails to qualify because it is not a dwelling and is not treated as dwelling because the conditions for doing so are not satisfied.

10. Accordingly we dismiss the appeal.

J F AVERY JONES

CHAIRMAN

Release Date: 8 October 2004

LON/04/64