Lady Jane Blom-Cooper, wife of the former chairman of the Press Council, Sir Louis Blom-Cooper QC, has been ordered to pay VAT on the conversion of a London pub into a family home.
The Court of Appeal has overturned a High Court decision that Lady Blom-Cooper’s conversion of the former pub in Southgate Road, London N1, fell within a tax-relief system for the “do-it-yourself housebuilder”, established to encourage the conversion of non-residential buildings into extra housing stock.
The court held that the conversion work did not fall within the relief scheme because, prior to the work, part of the pub had been used for residential purposes and no additional dwellings had been created.
The Blom-Coopers purchased the former pub in July 1998. During the renovations, the interior of the building was rebuilt to form a single dwelling, while the exterior was retained substantially in its original form. The works included the creation of a third-floor living room, with a glass roof and access to a roof garden.
Lady Blom-Cooper claimed that, under section 35(1D) of the Value Added Tax Act 1994, she was entitled to recover VAT that had been paid on the conversion. In the High Court, Peter Smith J agreed, holding that, although the first and second floors of the pub had previously been used for residential accommodation, the conversion work fell within the relief category.
Chadwick LJ has now held that, pursuant to the notes contained in section 35, where a building contains a residential part prior to conversion work, the conversion of the non-residential part will not be treated as such for the purposes of the 1994 Act unless the result of the conversion was to create an additional dwelling.
Commissioners for Customs & Excise v Blom-Cooper Court of Appeal (Potter and Chadwick LJJ and Black J) 3 April 2003.
Melanie Hall QC and Jeremy Hyam (instructed by the solicitor to the Commissioners for Customs & Excise) appeared for the appellant; Susan Prevezer QC and David Scorey (instructed by Glynnes, of Norwich) appeared for the respondent.
References: PLS News 4/4/03