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Abercych village Association v Revenue & Customs [2008] UKVAT V20746 (17 July 2008)

20746

VAT – Zero-rating – Addition to village hall – Whether an extension or an annexe within Note(16) Group 5 Schedule 8 VATA – Whether largest access was the main access : Note (17)

LONDON TRIBUNAL CENTRE

ABERCYCH VILLAGE ASSOCIATION Appellant

and –

THE COMMISSIONERS FOR HER MAJESTY'S REVENUE & CUSTOMS Respondents

Tribunal: CHARLES HELLIER (Chairman)

PAUL ADAMS

Sitting in public in Cardiff on 5 June 2008

Alan Ford, chairman of the Association, for the Appellant

David Manknell, counsel, instructed by the solicitor for HM Revenue and Customs, for the Respondents

© CROWN COPYRIGHT 2008

DECISION

Abercych Village Association appeals against the Respondents' decision that building works undertaken at Abercych village hall did not qualify for zero-rating under Item 2 Schedule 8 Group 5 VAT Act 1994.

Mr Ford based his argument principally upon the terms of the relevant paragraphs of the Respondents' notice 708 as they stood at the time the works were planned. Indeed the works were, he told us, tailored to fit the requirements for zero-rating set out in that notice. Our task is to determine whether or not the requirements of the legislation are satisfied, and that is the focus of this decision although we address certain issues relating to notice 708 at a later stage.

The building works consisted of the construction of a meeting room, a kitchen, gents and ladies lavatories, a disabled lavatory and a corridor adjacent to the village hall. We shall describe them in greater detail later. As will be seen from the legislative provisions the principal questions for us were whether these works constituted an extension to, or annexe of, the village hall, and what was the main access to the existing and new structures.

The Legislation and the cases

Item 2 Group 5 Schedule 8 provides (by virtue of section 30 VATA) for the zero-rating of:-

"The supply in the course of the construction of

(a) a building designed as a dwelling or number of dwellings or intended for use for a relevant residential purpose or a relevant charitable purpose; …

of any services related to the construction other than the services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity."

We note the requirement in this provision that what is constructed must be a "building".

Note (6) to Group 5 provides that:

"(6) Use for a relevant charitable purpose means use by a charity in either or both the following ways, namely –

(a) otherwise than in the course or furtherance of a business;

(b) as a village hall or similarly in providing social or recreational facilities for a local community."

The Respondents did not dispute that the Abercych Village Hall and the new works were intended for use for a relevant charitable purpose within Note (6).

Group 5 is not concerned solely with buildings used for relevant charitable purposes. Indeed the majority of its provisions relate to dwellings and other residential buildings and their construction. It seems to us that Note 16, which follows, must be read in that context:-

"(16) For the purposes of this Group, the construction of a building does not include –

(a) the conversion, reconstruction or alteration of an existing building; or

(b) any enlargement of, or extension to, an existing building except to the extent the enlargement or extension creates an additional dwelling or dwellings; or

(c) subject to Note (17) below, the construction of an annexe to an existing building."

Mr Manknell did not volunteer any reasoning for the policy of the legislation in relation to this Note. He did not object, however, to the tribunal's suggestion that the policy was principally that of tempering the social benefit of zero-rating the construction of dwellings, with a restriction relating to their extension and variation without which restriction the zero-rating could otherwise result in a mountain of claims for the zero-rating of improvement works to people's homes. But that purpose seems less significant in the context of relevant charitable use, and is ameliorated by Note (17):-

"(17) Note 16(c) above shall not apply where the whole or a part of the annexe is intended for use for a relevant charitable purpose and –

(a) the annexe is capable of functioning independently from the existing building; and

(b) the only access, or where there is more than one means of access, the main access to:-

(i) the annexe is not via the existing building; and

(ii) the existing building is not via the annexe."

In MacNamara v CCE (1999 Decision No.16032) the tribunal described the scheme of Note 16 thus:-

"13. The scheme of the 1995 code is to exclude from the expression 'construction of a building' a series of building works. Note (16) deals with these in descending order of their degree of integration with the existing building. Conversions, reconstructions and the alterations of existing buildings, the most closely integrated, are excluded. Enlargements of existing buildings are then excluded … Then come annexes which, as a matter of principle, are also excluded …"

This description is a most helpful insight into Note 16. it shows that what is being excluded from zero-rating are works which are integrated into the existing building. That pattern is carried on into Note 17: it is only those annexes which are sufficiently unintegrated which can escape into zero-rating.

In the same paragraph the tribunal gave its views on the meanings of enlargement, extension and annexe:

"… the word enlargement connoting structural work producing an overall increase in size or capacity."

"The word 'extension' in relation to an existing building refers, we think, to building work which provides an additional section or wing to that existing building; the degree of association is one stage less than with enlargements."

"The term annexe connotes something which is adjoined but either not integrated with the existing building or of tenuous integration."

An appeal by a Mr and Mrs Cantrell against a decision of Customs and Excise that certain construction work was not zero-rated found its way to the High Court on two occasions. On the first occasion ("Cantrell No.1") [2000] STC 100, Lightman J gave the judgment, and on the second ("Cantrell No.2") [2003] STC 486, judgment was given by Sir Andrew Morritt V-C.

In Cantrell No.2 the sole issue was whether the building in question was an annexe to an existing building (see paragraph 3 at p.488). If it was not an annexe it would be zero-rated. Thus the judgment concerns, not the difference between extension and annexe, but the difference between annexe and a free standing building.

At paragraph 16 Sir Andrew Morritt V-C says that the reference to 'annexe' in Note 16, when compared to the references to 'enlargement' and 'extension' introduces a different concept. "Thus they may be physically separate so that the connection between the two is by way of some association." He indicates that it appeared that the tribunal had considered that association was a sufficient condition for one building to be an annexe of another, and says that could not be right because that would mean that if that condition were satisfied each would be the annexe of the other. It does not seem to us that he dismisses association as either a necessary condition for, or as a touchstone of, one building being an annexe of another. Then, at paragraph 17 he says:-

"An annexe is an adjunct or accessory to something else, such as a document. When used in relation to a building it is referring to a supplementary structure, be it a room, a wing or a separate building."

Thus he makes clear that a building can be an annexe of another building only if it is supplementary to, or an adjunct or an accessory to, the other.

Mr Manknell referred us to the tribunal's decision in William Brian Evans v CCE [2003] UK VAT V.18432. At paragraph 16 of the tribunal's decision it was noted that the Vice Chancellor's test for an annexe might be more liberal than that of the tribunal in MacNamara but that both accepted that an annexe might adjoin the principal building. The tribunal then continued:-

"If, however, there is to be a meaningful distinction between an extension and an annexe – and plainly there must because the legislation is at pains to discriminate between them – it seems that for a building to be an annexe there must be some element of separation, though not necessarily a space, between it and the principal building: so much is shown by the tribunal's reference to "tenuous integration". In other words, an extension becomes an integral part of the building to which it is an extension, which an annexe does not, or has minimal integration."

With respect to the tribunal it does not seem to us that the legislation is at pains to discriminate between the concepts used in the subparagraphs of Note 16: on the ordinary meaning of the words:-

(i) a 'conversion' within (a) might be capable of being an 'alteration' within (a);

(ii) an 'alteration' might encompass an enlargement within (b);

(iii) an enlargement might encompass an extension or even an annexe.

What appears to us to be the purpose of the draftsman in Note 16 is not to create a series of mutually exclusive categories, but to find words which encompass the entire spectrum of building works which are to be regarded as so integrated as not to constitute the type of 'building' to which zero-rating applies: what matters is to ensure that there are no gaps in the spectrum rather than to ensure that each category excludes any other.

It seems to us therefore that as a matter of construction it may be possible that a building work is both an extension and an annexe, and that, if that is the case, its zero-rating is prohibited through subparagraph (b) even if it would otherwise have escaped from (c) because the requirements of Note (17) were satisfied.

This of course has much the same effect in relation to Note 16 as saying that the word annexe must exclude anything which is an extension (or vice versa), but it does affect the approach taken to the effect of Note 17 in the following way. If "annexe" and "extension" had to be mutually exclusive in Note 16, then it might be argued that the purpose of Note 17 is to zero-rate anything qualifying within its terms as an annexe and accordingly anything that was an annexe could not be an extension (rather than vice versa). However, the apparent intent of Note 16 and its wider effect in relation to dwellings rather than the narrower charitable compass of Note 17 convinces us that that is not the proper approach.

Thus it seems to us that we must test the works done at Abercych Village Hall against each of the concepts in Note 17 bearing in mind their descending degree of integration with the existing building and the light shed in particular upon the words 'extension' and 'annexe' by the cases:-

an extension connoting building work which creates an additional section or wing to an existing building which has a measure of integration with the existing building,

'annexe' connoting something associated with, and which is an adjunct of or supplementary to, the existing building, but which is in some way separate from, and not wholly unintegrated with, the existing building. Evidence of some independent function as well as physical separation might in our view point to that lack of integration.

If the works were an extension they will not be zero-rated even if they are an annexe. If they were not an extension but were an annexe they will be zero-rated if the requirements of Note 17 are satisfied.

In Cantrell No.1 Lightman J provided the following guidance (quoted by the Vice Chancellor in Cantrell No.2 – see paragraph 18 of that judgment for the correct text) for the application of Note 16 to the facts:-

"It is necessary to examine the pre-existing building or buildings in the course of construction when the supply is made. What is in the course of construction at the date of supply is in the ordinary course … what is subsequently constructed."

Then he said that the answer must be given after an objective examination of the physical characters of the two buildings having regard (inter alia) to:-

(i) similarities and differences in appearance

(ii) the layout

(iii) the uses for which they are physically capable of being put and the functions which they are physically capable of performing (we have called this the "Equipped to Function" test).

Motive, intention, subsequent actual use and the terms of any planning permission were, he said, irrelevant, save to illuminate possible use.

In Cantrell No.2 the Vice Chancellor noted that this guidance was given in the context of whether or not there was an extension and that the before and after approach was correct, but then said that in the context of an alleged annexe the requirement that it should be an adjunct or accessory might require some wider enquiry. He did not however amplify that remark.

In summary, in addressing:-

(i) whether the works are an extension or enlargement of the existing building we should consider how the objectively determined factors of appearance, layout and functions for which the building is equipped indicate:

(a) an independent function

(b) a subsidiary function

(c) physical integration

(d) physical separation

and weigh up those factors; and

(ii) whether the works are an annexe of the existing building we should consider whether and how those objective factors indicate:-

(a) association with the existing building;

(b) that the new building is supplementary to the existing building;

(c) that there is a degree of physical or functional integration;

(d) that there is more than tenuous integration,

and if (a) and (b) are satisfied and there is some (but not too much) integration conclude that the building is an annexe.

Finally in this review of the law we should mention the access condition in Note 17. There are two issues. First: the condition in paragraph (b) is that the only access or "the main access" from one building should not be via the other. As will be seen both Abercych Village Hall and the new works each had a number of means of access. The meaning of "the main access" may therefore be relevant. It seems to us that, whilst section 6 Interpretation Act 1978 might be prayed in aid to permit "the main access" to mean "the main accesses" – that is to say all of the main accesses, it cannot be used to interpret "the main access" as "the main access or one of the main accesses". Thus in our view the limitation in subparagraph (b) applies only if the main access or all the main means of access to one building are through the other, and will not apply if there are two or more main accesses, one of which is through one building and the other through the other building.

The second issue is whether the question of which access is the main access should be determined objectively by examination of physical features only, or by reference to actual use. We tend to the conclusion that an objective approach is required because the test has to be performed at the time of supply when future actual use will not be known, and because a construction by reference to intention would seem to be indicated only where expressly required by the statute (see for example the specific reference to intention in Item 2 and Note (12). But in our view all the relevant physical features may be considered and apparent convenience of access will be relevant. Lastly we note that the test is of access to a building, not from it.

The Evidence and our Findings of Fact

We heard oral evidence from Mr Ford and from Elaine Ford secretary of the Appellant. We had before us plans and photographs of the buildings and a bundle of correspondence.

The following sketch plan will illuminate the discussion which follows (Readers are warned that it is out of scale : it is for identification rather than to determine manuscript.)

26. Abercych is in a hilly part of Wales. The land on which the village hall stands would in its natural state slope, and the hall is surrounded by sloping land.

The building work which is the subject of this appeal is the area highlighted on the sketch plan. It comprises a meeting room, a corridor, a kitchen, and male, female and disabled WCs. We use the term "village hall" to refer to the complete building as it now stands, and the term the "old hall" to refer to the building prior to the new works.

The hall is approached from the village road. A small car park leads off the road. The southern half of that car park ends in a grass bank behind which is the southern part of the hall. At the northern end of the car park a ramp leads eastwards down to the hall. The ramp has a southerly extension in the direction of the Old Kitchen Door. A level concrete path runs around the building affording the possibility of entry to or exit from the building at any of the doors A to F on the plan.

Going clockwise around the building from the bottom (eastern) end of the ramp from the car park, and having passed door, A, into the Old Kitchen one comes to the double doors, F, affording access to the hall from the northern end. These doors can be opened only from the inside and have no external Yale or other lock. To the north of these doors is a small grass quadrilateral bounded by a fence.

Moving on round the old hall one turns a corner to walk along the Eastern side. To the east of the path is a small grass border and then a steep slope down from the boundary. It would be inconvenient to use this door as access to the hall.

To the southern side of the hall open doors, D, from the old hall and C, from the new works. To the south of the path there is a small area of undeveloped land. These doors afford only inconvenient access to the hall.

The new works are on the West side of the old hall. The door B opens into them from a concrete path. This is a single standard size door approached through a gap between the Old Kitchen and the new works. It can conveniently be reached from the car park.

Door A open into the Old Kitchen. Like door B it is a door with a lock operable from the outside. From the Old Kitchen there is access into the Hall. Door A is the most conveniently situated door for access to the Hall from the car park.

The old hall consisted of the Hall, a store room, male and female WCs, an entrance lobby to door F, and the old kitchen. The old hall has a pitched corrugated roof.

The new works adjoin the western side of the old hall. The new building has a sloping corrugated roof which carries down the line and angle of the roof of the old hall. The corrugated roof cover has a different texture and profile from that on the roof of the old hall. There are two openings in the western wall of the old hall into the corridor of the new works: one is a set of double doors, and the other a hatch opposite the kitchen in the new works. The external walls of the new works are rendered in a similar way to the walls of the old hall.

The following table indicates the relative areas of the constituent parts of the new works:-

Part Sq. m %

Meeting Room 15.5 25%

Corridor 13.3 22%

Kitchen 11.1 18%

Male & Female WC 17.4 28%

Disabled WC 4.5 7%

Following the completion of the new works the village hall has two sets of WCs: those at the northern end of the old hall which provide one female lavatory pan and a male lavatory pan and urinal; and those in the new works which (in addition to the disabled WC) provide two women's lavatory pans, one gents' lavatory pan and two urinals.

We record the following findings as to the use made of the village hall but they are relevant to our decision only as specifically noted in later paragraphs:-

(i) on occasions different activities take place in the Hall and in the meeting room. On such occasions the users of the meeting room will broadly restrict themselves to the use of the facilities in the new works;

(ii) the double door entrance way, F, is used at most 10 times a year: for larger occasions in the hall and when a wheelchair user needs to enter the village hall;

(iii) the normal access to the village hall is through door A, into the old kitchen and thence into the rest of the hall; this would be on about 130 occasion a year;

(iv) when the Hall and the meeting room are in separate use, users of the meeting room will generally use door B into the new works, and users of the Hall, door A.

The Parties' arguments

The Respondents' first contention is that the new works constitute an extension or enlargement of the old hall. They say that an objective examination of the physical characteristics of the old hall and the village hall after the completion of the new works shows:-

(i) in appearance the new works are substantially physically connected to the old hall and dovetail with it: the roof line continues the roofline of the existing building and the new works merge with, and extend almost along the whole of the western side of, the building'

(ii) the layout indicates that the new works are equipped to function for the benefit of the old hall. In particular the new works' provision of WCs was clearly an overprovision for the one meeting room, and the double doors into the hall showed the integration of the new works with the hall;

(iii) the kitchen and WCs were clearly equipped to function as subservient or ancillary to the use of the hall.

If an educated non-lawyer were asked whether what had been built was an extension or an annexe, Mr Manknell says that he or she would have said it was an extension.

If we were against the Commissioners on this argument and found that the new works were an annexe and not an extension, then Mr Manknell says that the requirements of Note 17(b) were not satisfied: he says that the main access to the annexe is via the existing building. He says that the plans show that the main access to both the old hall and the new works is door F. That is the access of greatest size and importance. Whether or not it was used as such (or perhaps at all), it was the main access. The only other doors were smaller with slight threshold steps.

Mr Ford put his case on the basis of the legislation thus. First he says that the legislation has not been framed with planning and building regulation in mind, and therefore that the effects that regulatory framework has on the new building should be discounted in approaching the statutory tests. Thus such regulation might dictate a particular roofline (in this case a continuation of the line of the roof of the old hall) or require a new work to abut an existing building; but those effects of the regulation should not determine whether the Note 16 tests were satisfied.

Second, he says that in determining whether a new work is an extension or an annexe (etc) account must be taken of the local geography. He had lived at one time in Winersh in South East England. The land there had been relatively level. There it was easy to build an annexe to the village hall which was physically separate from the hall. Abercych was built on a steep hillside. That constrained how buildings were designed. Long narrow buildings were not uncommon because of the slope of the hillsides: the school, the blacksmith's cottage, and the vestry were among them.

Third he said that the new works could theoretically have been built as a separate building linked by a corridor to the village hall. Had they been so built they would clearly have been an annexe (or even totally outwith Note 16). They were not so built because of the size and shape of the village hall site. He suggests that we should not construe the legislation in a way that results in artificial distinctions between the same type of works merely because in one case the new works can be separate and in another they are geographically constrained from separation.

Fourth he said that if the essence of the test is the degree of separation (or lack of integration), then both physical and functional separation are relevant, and in relation to physical separation the mere joinder along one wall could not be enough to make the new work an extension.

Fifth he says that if the question is whether or not the new works are an annexe, then he saw nothing in the legislation or the cases cited by Mr Manknell which said that a new building could not be an annexe because it supplemented the existing building – in fact the reverse was the case (see Cantrell). The new kitchen and additional toilets in the new works he accepted could supplement or aid the use of the hall, but that did not prevent the new works from being an annexe. And more importantly the new works were capable of standing alone and in fact were separately used.

Lastly, so far as the entrance doors are concerned, he says that the test for a "main door" is the quality of usage, and appearance must not dictate the answer. The Old Kitchen door was the nearest to the car park, had a Yale key, and was the most convenient for access to the old hall: it was a main entrance to the old hall if not the main entrance. The door into the new works was the most convenient access to the new works: persons wishing to use the new meeting room would not enter via the old kitchen, and unless someone had already opened the double doors, F, could not enter by those doors. Door B was the main entrance to the new works.

Discussion

(a) the degree of integration

Appearance

From the outside the new works appear physically integrated with the old hall. The most striking feature of integration is the continuation of the roofline of the old hall (albeit in a different form of corrugated material). The walls are similarly rendered and the whole has the look of what an educated layman would, in our view, call an extension.

Layout

The new works are connected to the old hall by double doors and a hatch opposite the new kitchen. These indicate a degree of physical integration between the two. The meeting room in the new works is less integrated with the old hall, not being directly connected to it.

Equipped to function

The meeting room together with the kitchen and the toilets appears clearly equipped to function independently without any recourse to the old hall. On the other hand the toilets and the kitchen appear equipped to function as part of or as an adjunct to the use of the old hall. Given the size and capacity of the new kitchen and the new WCs it seems to us that they are not equipped to function principally for the service of those using the meeting room, but (even allowing for the other WCs in the old hall) mainly for the use of those using the old hall. (The actual use made of the old hall and the new works indicates to us that our conclusion on the objective characteristics is not untenable).

(b) applying the legislation

First, it seems to us that the new works can properly be called a 'building' within Note 2. They are thus, prima facie, capable of being zero-rated.

Second, it seems clear to us that the new works lie within Note 16(b) or ( c) as an extension or annexe. The new works are not so separate from, or unintegrated with, the old hall that they fall outwith Note 16 and qualify for zero-rating by virtue of being a building intended for a relevant charitable purpose.

Fourth, it seems to us that the new works are an extension of the old hall. In reaching this conclusion we have weighed up:

(i) the independent and integrated functions which the new works are equipped to perform;

(ii) the extent to which the new works are subsidiary to the old hall;

(iii) the extent of the physical integration of the new works with the old hall in terms of appearance and layout.

Before explaining this conclusion further we should address the first four points made by Mr Ford (recorded at paragraphs 40 to 43 above). The other points are, we hope, addressed in the discussion generally.

Mr Ford's first point related to the effects of planning regulation. It seems to us that the tests in Note 16 are free standing and are not to be construed by reference to, or to the effect of, other legislation or regulation. Thus if planning constraints mean that a building has to be constructed in a particular way, the VAT tests fall to be applied to what was actually constructed regardless of the reasons for its particular construction. So much seems apparent from the emphasis on an objective approach to the question required by the Cantrell judgments.

We agree to this extent: if other independent buildings in the locality are long and thin, then thinness and narrowness in that locality should not be regarded as a strong pointer to a conclusion that the appearance or layout suggests integration. In other areas where independent buildings are more square, thinness or narrowness might point towards an integrated structure. This is not to apply different meanings of the statute in different parts of the UK or to have regard to the reasons for a particular plan; instead it is to guard against applying presumptions arising from experience elsewhere in the UK to an area with a different style of building. For that reason we attach less weight to the long thin construction of the new building than we would if the hall were in a flatter part of the UK.

In his third point, Mr Ford effectively argues that constraints imposed on the design of the building by the extent of the relevant person's ownership of the land should be taken into consideration. We do not agree. The test to be applied is objective: the question relates to the building as built, not to the reasons it was planned with a particular layout or appearance. This is different from the point discussed in the preceding paragraph: that related to the objective consideration of the actual building and the experience one might bring to that consideration; this relates to the reasons for a particular design.

Fourthly, Mr Ford argues that the mere joinder of the new works onto the old hall cannot make it an extension. We agree: if the internal layout of the new works had disclosed no integration with the old hall then we would not have found it to be an extension.

In coming to the conclusion that the new works were an extension we were influenced in particular by the internal layout (the intercommunication with the hall), and the way in which the WCs and kitchen were able to function (and mainly to function) so as to extend the facilities available to users of the hall. These factors together with some consideration of the external appearance outweighed the independent function capability of the new works and convinced us that this was an extension to the hall.

Lastly it seems to us that although the new works could be described as an annexe to the old hall, it was clear that they were an extension to the hall and they were not therefore eligible for zero-rating. We thought that they would be an annexe because: they are associated with the hall and supplementary to it but are also capable of performing a separate function. The degree of the physical connection of the works with the old hall (their connection to the western side of the hall, and the double doors and hatch) suggests a less than tenuous integration of layout, but it was clear to us that they were equipped to function sufficiently separately and that on balance they should be described as an annexe.

(c) Conclusion

We conclude that because the new works are an extension to the old hall they are excluded from the scope of Item 2 Group 5 by Note 16(b) even though they may be an annexe within Note 16(c). They are therefore not zero-rated.

Had we found that the new works were not an extension then we would have found that Note 17 saved them from Note 16 thus permitting their zero-rating. That is because we find that the new works are "capable of functioning independently from the existing building" (see paragraph 49 above), and because it seemed to us that at least one of the main means of access to the new works was via their own door, and at least one of the main means of access to the old hall was via the old kitchen door for the reasons advanced by Mr Ford. These were the most convenient means of access in each case and therefore 'main' accesses. Thus the main access to each building was not via the other.

Notice 708

Mr Ford relied upon paragraphs 3.2.5 and 3.2.6 of the version of Notice 708 current at the time the new works were built. Paragraph 3.2.5 indicated that if an

"annexe is constructed, rather than an 'extension' or an 'enlargement'"

it could, if the other conditions were met, be zero-rated. Paragraph 3.2.6 provided:

"3.2.6 when is an annexe being constructed rather than an "enlargement" or "extension"?

"When determining the first condition … you should only consider how the structure is connected to the existing building rather than what it is intended to be used for, its size or its architectural style."

"An "annexe" is a structure which has only minimal physical connection with the existing building. For example, the structure could be linked to the existing building by means of an enclosed walkway, or abut the existing building along one wall with a connecting door. It would be easily recognisable as a structure that would be a separate building, were it not for the physical connection."

Mr Ford explained that the new works had been planned so that they met the limitations in the preceding paragraph: they abutted along one wall only and had only one interconnecting door. He said it would be easily recognisable as a separate building.

It is not our job to construe, interpret, apply or comment on non-statutory material produced by HMRC, but it seems to us that this version of the notice leaves open the possibility that an annexe which abuts along one wall with one interconnecting door might still be an extension although it gives little guidance on what an extension might be. The more recent notice gives more information on HMRC's views on that issue but of course that was not available to the Appellant. It indicates that HMRC's view is that the addition of an extra function room to an existing village hall is an extension or enlargement. That is similar to our finding in this case, but our finding is based on the particular facts of the Appellant's case. We should not be taken as holding that as a matter of law the addition of an extra function room will always be an extension.

Mr Manknell indicated that if HMRC had been approached at the planning stage, it might have been possible to agree plans which were acceptable to the Respondents as giving rise to an annexe and not an extension. That may be helpful or other taxpayers in the future.

We dismiss the appeal. Our decision was unanimous. We make no award of costs.

CHARLES HELLIER

CHAIRMAN

RELEASED: 17 July 2008

LON 2007/0185