The House of Lords has given new guidelines on the VAT status of work carried out to protected buildings.
The Commissioners of Customs & Excise have successfully challenged a Court of Appeal decision that work carried out on such buildings should be exempt from VAT.
The dispute centred on the construction by Zielinski Baker & Partners Ltd of leisure facilities at the Mere, in Little Houghton, Northamptonshire. The commissioners claimed that VAT was payable on the works, but, on appeal, the VAT and Duties Tribunal held that the works qualified for zero-rating as an “approved alteration of a protected building” under Group 6 of Schedule 8 to the Value Added Tax Act 1994.
In the House of Lords, Lord Walker defined the issue as: “Whether the expression ‘protected building’ in item 2 of Group 6 in Schedule 8 to the VAT Act 1994 includes an outbuilding that is not itself listed under the Planning (Listed Buildings and Conservation Areas) Act 1990, but is protected under that Act because it is (and has been since the inception of the modern system of planning control in 1948) a structure within the curtilage of a listed building.”
In a four-to-one majority ruling, the court held that the construction work entailed in the creation of an indoor swimming pool, the conversion of a barn into changing and games facilities and a garage, for which listed building consent had been given, did not qualify for zero rating.
Lord Hoffmann maintained that, although both the Mere and the outbuildings in which the work was to take place were occupied together as a single dwelling, and, as such, fell within the definition of a listed building, only the outbuilding, which was not separately listed, was being altered.
In such circumstances, he said, the outbuilding did not satisfy the requirement that the building be “designed to remain as or become a dwelling-house”.
Commissioners of Customs & Excise v Zielinski Baker & Partners Ltd House of Lords (Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe and Lord Brown of Eaton-under-Heywood) 26 February 2004.
References: EGi Legal News 26/2/04
