Grade II listed building — New building to house swimming pool — Walkway to main building — Commissioners deciding that work was taxed at standard rate for VAT — VAT tribunal holding that building work zero-rated — Court of Appeal dismissing Commissioners’ appeal against that decision
The taxpayer owned a Grade II listed farmhouse at Rotherfield Greys, Oxfordshire. In 1988 he decided to carry out work to the house and its outbuildings including demolishing a barn and replacing with a building to house a swimming pool. The plans for that building showed that although it was not to be structurally attached to the house, it was to be connected to the house by a covered way and a brick garden wall running between the side of the house and the swimming pool. As the house was a listed building, the taxpayer required not only planning permission, but also listed building consent. The necessary applications were made and granted. The planning officer for South Oxfordshire District Council expressed the view that listed building consent was required for the swimming pool building and extension to the house because of the walkway. Consent was granted on that basis.
When the work was carried out, the question arose whether the cost of the building work should be zero-rated for VAT purposes. Zero-rated supplies were described in Schedule 5 to the Value Added Tax Act 1983 by reference to groups. Group 8A, item 2 provided: “The supply, in the course of an approved alteration of a protected building, of any services other than the services of an architect, surveyor or any other person acting as a consultant or in a supervisory capacity”. The notes defined a “protected building” as including a dwelling-house which was a listed building. The Commissioners decided that the swimming pool building was a separate building from the house and ruled that the building work was liable to VAT at the standard rate. The taxpayer appealed successfully to a VAT tribunal. The Commissioners in turn appealed.
Held The appeal was dismissed.
1. The tribunal had to resolve a very fine distinction. The fact that the Commissioners would have accepted the building as an extension of the existing building if the walkway had been enclosed on both sides was an indication of how narrow the dividing line was between those cases falling within and those outside the provisions for zero-rating.
2. The fact that the planning officer had expressed the opinion, in the context of the planning legislation, that the swimming pool building could be considered an extension was of some persuasive force which the tribunal was entitled to take into account.
3. The tribunal was also entitled to take account of the purpose of Group 8A. In enacting provisions to give certain exemptions to owners of listed buildings, Parliament must have had in mind the onerous responsibilities which were imposed on them by the Town and Country Planning Acts by virtue of such ownership. Where as here the dividing line was so thin, albeit the onus was on the taxpayer to show on the balance of probabilities that it came within the provisions of zero-rating, where the ambit of a paragraph was not clear, it was reasonable to construe it in the taxpayer’s favour.
4. Accordingly, the tribunal was entitled to conclude that the swimming pool building should be zero-rated for the purposes of VAT in that it was for those purposes an extension of the farmhouse.
Kevin Prosser (instructed by Lovell White Durrant) appeared for the taxpayer; Peter Mantle (instructed by the Solicitor to Customs & Excise) appeared for the Commissioners.