Exhibition centre — Premises burned down and then reconstructed — Carrying on of business — Commercial letting and non-business purposes — Statutory duty to maintain exhibition centre — Establishing primary purpose of reconstruction — Whether for business purposes or compliance with statutory duty — Court finding that letting parts of building was for purposes of a business — Question of attribution reasonably decided
The Mayor and Burgesses of Haringey were the trustees of Alexandra Palace and were at all material times obliged to maintain and manage it by statute. In 1980, most of the palace interior was destroyed by fire, and it was decided that the statutory obligation extended to the need for a “substantial reinstatement” of the palace. That was effected between 1984 and 1990. VAT for each period was refunded by the Customs & Excise Commissioners to Haringey. In 1990, the Commissioners assessed to VAT the sum of £5,738,547 and Haringey appealed. Under the Value Added Tax Act 1983, where tax was chargeable on a supply to a local authority, and the supply was not for the purposes of any business, that amount should be refunded. Where the supply of goods and services could not be distinguished from supplies made for business purposes, a proportion could be attributable to the carrying on of a business.
Haringey argued, inter alia: (i) that the supplies comprising the reconstruction were not for the purposes of a business carried on by them but was for the purpose of discharging their statutory duty; and (ii) that apportionment should be conducted on the basis that if certain parts of the palace had been used and were used for commercial letting from time to time, a time apportionment was necessary based on the use in 1990/1991. The tribunal decided that just over 50% was refundable to Haringey. The Commissioners appealed.
Held The appeals on those two issues were dismissed.
1. The existence of a statutory duty to restore the building was not inconsistent with a business purpose and the dichotomy was rejected. A public authority might be under a statutory duty to construct a building for the express purpose of running a business in it.
2. There was thus no inconsistency in saying that Haringey reconstructed the palace for the purpose of: (a) complying with their statutory obligation to maintain and repair; (b) providing a public amenity; and (c) using part of the palace for the purpose of a business.
3. In this case it was a question of fact whether the rebuilding of the palace was in part for the purposes of a business of letting parts of the building commercially.
4. The tribunal was entitled to conclude on the facts that Haringey in part rebuilt the palace for business purposes.
5. The word “predominant” should not be brought into the construction issue. There would have to be either no business purpose whatsoever contemplated, or it was so insignificant that it could not sensibly be described as a purpose at all. Any business purpose more significant than that, in a mixed case use, would trigger the application of the statutory provisions.
6. With regard to the time apportionment exercise for the days when the Great Hall was not let, the tribunal was right to hold that it was not legitimate to ignore the days when the hall was unused. The amenity aspect was nevertheless real and was enjoyed whether or not the Hall was let.
David Milne QC and Roger Thomas (instructed by the solicitor to Haringey London Borough Council) appeared for the trustees of Alexandra Palace; Kenneth Parker QC (instructed by the solicitor to Customs & Excise) appeared for the Commissioners.
