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United Kingdom VAT & Duties Tribunals Decisions
You are here: BAILII >> Databases >> United Kingdom VAT & Duties Tribunals Decisions >> McCallion v Revenue and Customs [2005] UKVAT V19367 (07 December 2005)
URL: http://www.bailii.org/uk/cases/UKVAT/2005/V19367.html
Cite as: [2005] UKVAT V19367
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19367
Zero Rating – D.I.Y building – old building demolished save for internal chimney stack – no planning requirement for retention – zero rating not available – VATA 1994 s.35 Schedule 8 Group 5, Note (18).
EDINBURGH TRIBUNAL CENTRE
CATHARINE MCCALLION Appellant
- and -
THE COMMISSIONERS FOR
HER MAJESTY'S REVENUE & CUSTOMS Respondents
Tribunal: (Chairman): T Gordon Coutts, QC
for the Appellant Mrs Catharine McCallion
for the Respondents Mr Andrew Scott, Shepherd & Wedderburn, WS
© CROWN COPYRIGHT 2005.
The Appellant appeals against a decision of the Respondent to disallow the benefit of zero rating on the house built by her for her own occupation. The house was constructed on the site of an old timber chalet which has been replaced by a modern attractive construction. There remained of the old chalet an internal wall or chimney stack but nothing else.
The Appellant claimed the benefit of section 35 of the Value Added Tax 1994. The Appellant would come within that section but it requires to be noted that sub-section 35(4) provides that the notes to Group 5 of Schedule 8 shall apply for construing this section as they apply for construing that group.
An application was made to the local VAT Office to obtain a refund of VAT. The Commissioners decided that there was no entitlement to the refund because, they said, the new house did not come within the notes to Group 5 and was consequently not a zero rated construction. That decision was intimated on 15 February 2005. It was reviewed and the same conclusion was arrived at on 10 March 2005.
The Applicant appeared and represented herself. She produced photographs and the bundle of correspondence. The evidence was not an issue. The contention of Mrs McCallion was that the whole facts of the construction should be looked at on their own merits; nothing was left of the old building apart from the old chimney stack which they decided to keep. There was no planning consent in relation to that particular matter and the chimney stack was kept and the house built around it. It was internal. I heard no formal evidence.
Section 35(1A)(a) of the 1994 Act applies zero-rating to "the construction of a building designed as a dwelling …". However, note (16) to Group 5 of Schedule 8 provides that
"For the purpose of this Group, the construction of a building does not include –
(a) the conversion, reconstruction or alteration of an existing building …";
and note (18) that
(a) demolished completely to ground level; or
(b) the part remaining above ground level consists of no more than a single façade or where a corner site, a double façade, the retention of which is a condition or requirement of statutory planning consent or similar permission".
The Commissioners while recognising that the situation might appear anomalous, even harsh, contended that the retention of the chimney stack meant that the construction fell outside the statutory definition. The voluntary retention of any part of the internal construction above ground level, however unnecessary or insignificant it may have been, without specific compulsion by way of a condition of planning consent meant that by operation of Note 18 the new house was excluded from the benefit of zero rating.
As in the Tribunal case of Pugh No 17013 it seems obvious by any objective standard that a new house was built and that the incidental incorporation of the chimney stack was of no particular consequence. The legislation is, however, quite unambiguous and neither the Commissioners nor the Tribunal has any discretion in the matter and cannot look at the "whole fact of the construction". The conclusion is unfortunately inescapable. The Commissioners decision was correct. The appeal must be dismissed.
The Commissioners did not ask for expenses and there is no direction on that matter.
EDN/05/40