VAT — Respondent paying VAT on acquisition of land — Respondent disposing of land and entering into building contract in respect of it — Tribunal holding some tax recoverable because input tax incurred on acquisition attributable partly to zero-rated supply of building work — Regulation 101(2)(d) of Part 14 of VAT Regulations 1995 — Appeal dismissed
The vendors of two London properties that had been redeveloped to provide flats have won a key High Court victory in their bid to secure a higher overage payment from the purchaser, St George North London Ltd.
In a preliminary ruling, Deputy Judge John McDonnell QC found that St George had been wrong to deduct the value of car-parking spaces sold with the flats from the calculation of the overage to be paid to the vendors, Bride Hall Estates Ltd and Openboard Ltd, in respect of the leasehold property London House, 171-173 Aldersgate Street, and the adjacent freehold property, Museum House, at nos174-176.
St George had calculated the overage to be paid on the sale as being £302,557, but, as a result of today’s ruling, the vendors could receive up to £600,000 when the matter is ultimately decided at a later hearing.
The judge said: “I infer that all 40 permitted parking spaces were in fact sold with individual flats under agreements expressing the flat and parking space to be sold for a single price, and that, where a parking space was included in the sale, both flat and parking space were conveyed by a single lease.
“In those circumstances, the defendant cannot possibly, in my judgment, justify the deduction from those prices of the elements representing the parking spaces.”
Bride Hall Estates Ltd and another v St George North London Ltd Chancery Division (John McDonnell QC, sitting as a deputy judge of the division) 30 April 2003.
James Thom QC (instructed by Watson Farley & Williams) appeared for the claimants; Jonathan Small (instructed by DLA) appeared for the defendant.
References: PLS News 30/4/03