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United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> Christ's Hospital v Revenue and Customs [2005] UKVAT V19126 (16 June 2005)
URL: http://www.bailii.org/uk/cases/UKVAT/2005/V19126.html
Cite as: [2005] UKVAT V19126
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- and –
- Christ's Hospital is an independent co-educational boarding school in Sussex.
- The school fairly recently began a major programme to convert the dormitories which accommodated 12 – 16 pupils each into more private bedroom/studies for between 1 to 4 pupils. In the course of those works, the builders engaged by the school supplied materials which were incorporated into the buildings to provide items which performed the functions of wardrobes, bed bases, desks and shelves.
- Items 2 and 3 of Group 6 Schedule 8 VATA provide for the zero rating of:
- So far as relevant to this appeal it is common ground that the school's buildings are listed buildings, and therefore "protected buildings" for the purpose of Group 6. It is not disputed that the works could not have been carried out unless listed building consent was given, consent was given and accordingly that the works constituted an approved alteration to a protected building for the purposes of Group 6.
- Note (22) of Group 5 Schedule 8 (which applies in the context of Group 6 by virtue of Note (13) Schedule 6) provides that:
- Although there was initially some suggestion that the materials could have included finished or prefabricated furniture within paragraph (a), HMRC conceded before us that, on the evidence, they did not fall within that category. The issue before us was therefore whether the materials incorporated into the buildings and used for the construction of the items fulfilling the functions of wardrobes, bed bases, desks and shelves were "materials for the construction of fitted furniture" within paragraph (b). If they were, their supply would be standard rated, if not it would be zero rated.
- The Appellant appealed against a decision of HMRC dated 28 May 2004 upholding a decision of 4 February 2004 in which HMRC determined that the supply of the relevant materials was standard rated "as being finished or prefabricated furniture, or materials for the construction of fitted furniture…". A question was raised in HMRC's letter of 28 May 2004 as to whether these materials were of a description ordinarily incorporated by builders in a building of the relevant description. That issue was not pursued before us: the skeleton argument for the respondents indicated that HMRC contended the items were excluded by reason of Note (22) of Group 5.
- We had before us a bundle of photographs of each of the four types of items and heard evidence on behalf of the Appellant from Philip Roy Anthony Obeney, who from 1999 to 2003 had been Steward at Christ's Hospital and had been in charge of managing the conversion project. He remained after 2003 as a consultant to the school. He showed us samples of the materials used in the construction of the relevant items and described, by reference to the photographs, the construction of the items for these materials.
- Mr Obeney told us that when planning the project, he had visited many other schools to see the arrangements they had made. In most cases other schools had used or incorporated items made by a furniture manufacturer. The arrangements at Christ's Hospital were in his opinion unique among boarding schools.
- From the evidence put before us we are satisfied that the following facts in relation to each category have been established.
- The items functioning as desks and shelves consisted of pieces of MDF covered with a wood veneer. They were cut offsite by the contractors and trimmed and fitted onsite. The pieces of MDF were supported on two or three sides by pieces of 2" x 2" softwood, which were cut and drilled onsite and screwed to the walls; these pieces of wood were painted to match the walls. Small metal brackets attached the MDF top to the 2" x 2" softwood. A semi-circular lip was fixed to the exposed edge of the MDF, and a supporting front edge of timber put beneath it. The shelves were stained or painted in a lightish brown colour.
- There was no provision as part of the structure of the desks of drawers or cupboards (although free-standing movable drawers could be provided): each desk and shelf consisted of a plain (supported) wood surface.
- The shelves and the desk tops were mostly fitted within alcoves consisting of three of the walls of the study/bedroom, or those walls and stud walls made of battens finished with plasterboard and plaster which protruded into the room.
- Approximately 95% of the desks were enclosed within alcoves and that the remainder (which abutted only two walls) would have a metal leg to support the third side. Some of the desks within a three-sided alcove would also have a leg for further support.
- Internally the wardrobes were divided in two. On one side (described below, for ease of description, as the left hand side) was a set of four (or five) shelves, on the other side was a shelf at the top with a hanging rail below it and hanging space below that. Between the two sides was a wooden partition.
- The base of the wardrobe was a wooden shelf at the level of the top for the skirting board in the room. The skirting board thus came across the bottom of the wardrobe and then turned to follow the adjacent walls.
- The left hand, shelf part of each wardrobe was built offsite by the contractors from MDF. These were the same size for all the wardrobes and consisted of two vertical pieces of MDF with three horizontal pieces of MDF forming the shelves. These ladder-like structures were then brought onsite and incorporated into the finished item. The floor, the top, a vertical right-hand side panel and a right-hand side horizontal shelf were cut to fit from MDF on site. The whole was fixed together and to the walls with small metal brackets.
- The back of the wardrobe was the wall of the room. The front consisted of two MDF doors cut to size offsite and fitted to the frame, and with handles, locks and hinges on site. A hanging rail would be fitted below the right hand top shelf, and a skirting along the front.
- The wardrobes were fitted within alcoves. There were generally no alcoves in the rooms and alcoves were made with stud walls. The back of each alcove was the wall of the room; the other two walls would either both be stud walls or one would be a stud wall and the other a wall of the room. Whereas the sides of the interior of the wardrobe were MDF hiding the adjacent walls, the back was the wall itself. Occasionally the width of the alcove was greater than the width of the wardrobe; in such a case MDF panels would be fixed on each side of the wardrobe between the fitting and the walls.
- The bed bases (to use a neutral wood) or cradles (as Mr Warner described them) were constructed in alcoves which consisted of one or two walls of the room and two, or one, stud walls (battens finished with plasterboard and with skirtings). There would be a wall along one side of the base and one at the head and at the foot. Mattresses for the beds were supplied separately and were not part of the appeal before us.
- On the three walled sides a 2" x 2" timber frame was affixed to the wall and painted to match the wall. On the front face a finished piece of timber about 5" x 1" was affixed between and to each of the end walls to form a front to the bed cradle. At the back of this piece of wood another 2" x 2" batten was screwed level with the pieces of 2" x 2" lining the walls. This formed a frame, level on four sides to which the bed slats were fitted. The bed slats were pre-drilled but cut to uniform lengths offsite by the contractor, and brought on site to be screwed to the frame across its width. The beds were of uniform width though some might be slightly longer than others.
- Some beds were at a normal level (1ft or 18" from the floor), others were at a higher bunk bed level. These higher beds had two metal rails along the first edge fixed onto the side walls. Ladders were provided to reach the beds. The ladders were brought ready made and bolted onto the timber fascia of the bed.
- Mr Obeney told us, and we find, that none of the items, if removed from the buildings could on their own fulfil any useful function – they would just be lengths of wood.
- We were referred to:
- McLean was an appeal by HMRC against a Tribunal decision that the supply of materials for wardrobes was zero rated and did not constitute the supply of materials for fitted furniture. In that case, Brook J said (at page 342j) that the correct approach was to consider the "natural and ordinary meaning of [the] simple English words "fitted furniture". It [was] for the Tribunal of fact to determine whether the wardrobes in question … constitute fitted furniture or not". On that basis he could not hold that the Tribunal had come to a perverse conclusion in its decision in the case. He went on to note that "there may well be … borderline cases as to whether something is furniture or not furniture" and went on to note that "however inconvenient this may be.. there may be a possibility that different Tribunals of fact may have reached different conclusions."
- In Moores there were (at least) three sorts of fitted wardrobes (Types A, B, and C). The Tribunal held that some were, and some were not, "fitted furniture". The chairman also reviewed and summarised the decisions in three other Tribunal cases about wardrobes. We found her summary at paragraphs 4 to 9 of her decision most helpful. Those decisions were:
- We also considered Sheldon School v Commissioners of Customs and Excise 1540 and Edmond Homes Ltd v Commissioners of Customs and Excise 11567, cases which involved the question of whether items other than wardrobes were fitted furniture.
- Brooke J in McLean said he was concerned with the natural and ordinary meaning of the simple English words "fitted furniture".
- The difficulty with these words (unless perhaps one limits their meaning to free-standing pieces of furniture screwed to the fabric of a building) is that they contain within them a contradiction. The ordinary meaning of furniture is something moveable. Chambers English Dictionary, edition provides the following relevant meaning:
- Of essence to the normal meaning of furniture is that it is movable, but in Note (22) is added the requirement that it be fixed and the context that it be incorporated into a building. It seems to us that for something to be "fitted furniture" it must retain the characteristics of furniture other than that it be movable. Some consideration therefore of whether, if an item were liberated from its fixings, it would be furniture, may illuminate whether, when fixed the item is fitted furniture. Thus, for example, a door into a room would not in our view be fitted furniture because a freely movable door would not be; and, because a movable bed would be furniture, a fitted bed could be fitted furniture. (This is not however the same as asking whether, if the relevant items were ripped from their fixings and looked at on their own, they would be furniture: Brooke J cautioned against this in McLean (at page 340e) where he said that the Tribunal would be adopting a wrong approach if they asked whether the materials, if put together before they were installed, could be categorised as furniture).
- Brooke J said in McLean at page 343:
- In forming that impression the Tribunals have not enunciated, nor could we formulate, any single touchstone, but it seemed to us that the following factors may be relevant to the formation of that impression although none may be determinative.
- First, if an item is part of the building rather than something attached (however firmly) to it is less likely to be fitted furniture. Thus in Warrington the Chairman said "the walls, floor and ceiling of a recess [used with additional fittings as a wardrobe] can in no sense be regarded as furniture". In McLean the Tribunal found that the wardrobes were cupboards forming part of the fabric of the building adapted by the insertion of a shelf and hanging for the storage of clothes. It was not furniture. In Simon Leon the Tribunal held that the wardrobes were fitted furniture inter alia because the "installations were designed as a complete whole, without regard to the characteristics of the room, in which they were to be installed". Before us Miss Shaw and Mr Warner agreed that a padded window seat, forming part of a window cill would be furniture. The melamine end panels in the Type C wardrobes in Moores distinguished the wardrobes from the fabric of the room and were relevant to the decision that they were furniture.
- Second, the type of function which the item performs. (This may be an elaboration of paragraph 33 above) Furniture normally performs some particular function. In relation to a living room, it normally enhances the ability to use the room. In Edmond Homes the Tribunal referred to the functions of furniture as including providing convenient places to hang or store things, to decorate a house, providing a place to sit or to take meals, or for the preparation of food or work. The Tribunal in Edmund Homes found that the basin units at issue did not function as cupboards or worktops but enabled people to use the facilities of the wash hand basin; that was not a function within the ordinary and popular meaning of furniture.
- Third, the greater the complexity or sophistication of the design or construction of the item, the more likely it is to be fitted furniture. In Moores the Tribunal noted the simplicity of the Type A wardrobes. In the same case, the manifestation of design in the melamine end panels of the wardrobe of Type C, which was held to be fitted furniture, was noted. In Wade the Chairman described a wardrobe with a large number of shelves as "well constructed and elaborate units… in reality elaborate items of furniture… fitted into Mr Wade's bungalow.": they were found to be fitted furniture. In Simon Leon the wardrobes were "carefully–joined and extremely smart" and provided a "bespoke version of storage space": they were found to be fitted furniture. We thought that shelves put up on brackets in a garage (for example to store paint pots) would not be fitted furniture.
- Lastly, an item which furnished a room was not necessarily furniture. Thus picture rails and carpets would not be fitted furniture although they would furnish the room.
- We take one other point from the decided cases. It is that the impression of whether an item is fitted furniture must be given from looking at the item in situ, i.e. fully constructed and in its final place (see paragraph 13 of Moores).
- Thus we do not believe that the fact that the items under consideration would, if moved, or before fitting, be simply a number of pieces of MDF is relevant to our decision. Rather one relevant question is whether, in situ, they look more like a few pieces of MDF than a piece of furniture.
- The shelves where clearly not part of the fabric of the building: they were attached to it but visually separate from it. They performed a function of the sort normally performed by furniture which enhanced the use of the room. But although attractive they were simple. They were not grouped as a bookcase but were single shelves: one per pupil fixed generally within reach of the desk top. Had there been several of them together, designed with sides and a top, we would have tended to view them as furniture. But although better finished than the garage shelves in our earlier example they were clearly in our view not fitted furniture.
- Miss Shaw asked us to ask the question: what are these items? If the answer was "desks" then, she said, we should conclude that they were fitted furniture, because a desk would be an item of furniture. This was attractive, but the examples of the language used in the wardrobe cases convinced us that this approach was not enough: in those cases items are sometimes described as wardrobes, even though they are held not to be fitted furniture (see for example paragraph 11 of Moores and the first paragraph of Brooke J's judgement in McLean.)
- The desk tops were not part of the fabric of the building: like the shelves they were attached to it and dependent upon it, but essentially visually separate from it. Like the shelves, they were attractive but unsophisticated. They did not have any of the normal additional items one would associate with a piece of furniture or a desk – there were no drawers, there was no ornamentation (even though some modern pieces of furniture can be very plain): they were large shelves at a convenient height for writing on, but looking at the photographs we were fairly clear that they were not fitted furniture.
- of the desks were fitted in an alcove formed by two opposing stud walls, or one room wall and a stud wall; others were shaped to fit a space under a window. The desks in the alcoves were, in the pictures we were shown, generally underneath a bunk bed and had the shelf between the desk and the bed. Whilst this gave something of the impression that the bed, the shelf and the desk were one unit, it did not persuade us to view them together or change our view in relation to the desk top and the shelf.
- We found these more difficult. They were of similar construction to a flat pack pine bed, save that they had no legs, and no headboard, and instead depended upon the end walls and the side wall to hold and support them.
- The bed bases do not look like part of the fabric of the building, they look like a bed without legs hung between two walls. Their design is not ornate, but neither is that of many pine bed bases. The design, on the other hand, is not extremely simple: they are clearly designed to have mattresses laid upon them and to be used together with the mattresses as beds. They possess more sophistication and design that the desktop or shelf. The slats are, we assume, designed to take the weight of an occupant and a mattress.
- Mr Obeney said he would view the beds as fittings rather than as fitted furniture. We agree as regards the desks and shelves; but the bed bases, even though they do not look like divan beds, look too much like part of a wooden bunk bed, or a pine bedstead not to give the impression of being fitted furniture.
- This visual impression was gained, to a large extent, from the front of the beds and the slats. The other three sides were less like normal furniture. But if furniture is to be fitted one would not expect the parts fitted into the structure to resemble normal furniture. That is a constraint imposed upon the word "furniture" by the adjective "fitted". We conclude that they were fitted furniture.
- We thought that these were fitted furniture.
- Whilst they were, to some extent, part of the structure of the room – in that they depended upon the walls (including the stud walls) of the rooms, the skirting enclosed them rather than running inside the wardrobes, and the wardrobes had at their back the wall of the room, they were more sophisticated and elaborate in their design. They were more than cupboards closing off an alcove.
- In McLean the wardrobes had a shelf with a hanging rail and depended on two walls of the room and a paramount wall, or three walls of the house. Here the wardrobes similarly depended upon walls which could justifiably be seen as part of the structure of the room, but they were more than a simple hanging cupboard. Like the wardrobes in Wade, the units consist, not only of hanging space, but of shelves; although they do not appear to be as elaborate as those in Wade – they do not have shoe racks and the shelves were fairly plain. Like the variations of Type A, B and C wardrobes considered in paragraph 24 of Moores, the wardrobes have raised wooden floors. In Moores those floors tipped the Chairman's judgment: without the floors she believed that the Type A and B wardrobes were not fitted furniture; with them the impression was materially different. In our case, the floors add to the finish and help the overall impression that these are pieces of fitted furniture.
- herefore conclude that the supply of the materials for the desk and shelves was zero rated, and that for the beds and wardrobes standard rated.
- This decision relates only to the materials used in the making of the shelves, the desktops, the bed cradles and the wardrobes. Miss Shaw made it clear before us that the supply of the service of the construction of the wardrobes was regarded as merely part of the overall supply made by the contractors. That supply fell within item 2 of Group 8.
- Whilst not argued before us, it was clear to us that the materials supplied (except, possibly, with the exception of the ladders) did not fall within Note 22(a): they were not finished or prefabricated furniture. The ladders on their own were finished and prefabricated, but we would not call them furniture. Instead they became part of the beds when they were fixed to them.
- We have held for the Appellant in two aspects and for HMRC on two. Not all the decisions we had to make were clear: there were grey areas. We do not feel it right to award costs to either side in these circumstances.
- Our decision was unanimous.
19126
Zero rating – supplies of shelves, desk tops, bed bases and wardrobes in the course of an approved alteration of a protected building VATA 1994 Group 6 Item 3 – were they fitted furniture – VATA 1994, Group 5 Note 22 – appeal allowed in part
LONDON TRIBUNAL CENTRE
CHRIST'S HOSPITAL Appellant
HER MAJESTY'S REVENUE AND CUSTOMS Respondents
Tribunal: CHARLES HELLIER (Chairman)
ROSALIND RUDD JP
Sitting in public in London on 4 May 2005
Mr Warner of Horwath Clark Whitehill for the Appellants
Nicola Shaw instructed by the Acting Solicitor for HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2005
DECISION
"2. The supply, in the case of an approved alteration of a protected building, of any service other than the services of an architect, surveyor or any person acting as consultant or in a supervisory capacity.
"3. The supply of building materials to a person to whom the supplier is supplying services within item 2 of this Group which include the incorporation of the materials into the building or site in question."
"(22) "Building Materials", in relation to any description of building, means goods of a description ordinarily incorporated by buildings in a building of that description, (or its site), but does not include –
(a) finished or prefabricated furniture, other than furniture designed to be fitted in kitchen;
(b) materials for the construction of fitted furniture, other than kitchen furniture;
(c) [certain electrical or gas appliances];
(d) carpets or carpeting material."
Desks and Shelves
The Wardrobes
The Bed Bases
Generally
The Cases
Commissioners of Customs and Excise v McLean Homes (Midlands) Ltd (1993) STC 335; and
Moores Furniture Group Ltd v Customs and Excise, a decision of Mrs Mitting sitting as chairman of the Tribunal sitting in Manchester.
Stuart Henry Wade v Commissioners of Customs and Excise 13164 Simon Leon t/a Customs Bedrooms v Commissioners of Customs and Excise 13200,
Warrington Construction Ltd v Commissioners of Customs and Excise 3470 (EDN/88/220).
Fitted Furniture
"Movables, either for use or ornament, with which a house is equipped";
The Shorter Oxford Dictionary Third Edition gives a relevant meaning as:
"movable articles in a dwelling house, place of business or a public building",
and the Concise Oxford dictionary Eighth edition:
"the moveable equipment of a house, room etc".
that "whether something was an item of furniture or not was very much a matter of impression".
The Items under consideration in the present case
The Shelves
The desk tops
The bed bases
The Wardrobes
Other Matters
Costs
CHARLES HELLIER
CHAIRMAN
RELEASED: 16 June 2005
LON/04/1041