The owners of a Suffolk nursing home have won a second High Court round in their bid to avoid paying £60,000 VAT on the construction of a new unit for elderly, severely mentally infirm patients.
Mr and Mrs Cantrell, who run the home at Foxearth Lodge, Little Green, Saxtead, Suffolk, had succeeded in an earlier High Court challenge to the decision by the VAT and Duties Tribunal that they would have to pay the VAT. However, when the matter was returned to the tribunal for reconsideration, it reaffirmed its previous ruling on the ground that the work formed either an extension, or an annexe, to the original building, rather than a replacement.
In what has been regarded as a test case, Sir Andrew Morritt V-C has allowed the Cantrells’ appeal against that second decision. He upheld their argument that the work carried out at the nursing home was zero-rated and should not therefore incur VAT liability.
The judge held that as the project was intended to be independent from the rest of the home, it could not be an annexe and should be zero-rated.
He said: “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. The tribunal does not seem to have given consideration to this, in my view, crucial aspect of an annexe.
Cantrell and another v Commissioners of Customs & Excise Chancery Division (Sir Andrew Morritt V-C) 6 March 2003.
Jonathan Peacock QC (instructed by Mills & Reeve, of Cambridge) appeared for the claimants; Raymond Hill (instructed by the solicitor to Customs & Excise) appeared for the defendant.
References: PLS News 7/3/03
