18660

ZERO RATING – work on a listed building – whether an approved alteration –whether needing approval – whether sufficiently extensive to qualify as an alteration – remaining relevance of Viva Gas – appeal allowed.

LONDON TRIBUNAL CENTRE

	    E C OWEN	Appellant

-	and –

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	RICHARD BARLOW   (Chairman)
						MRS E R ADAMS FCA ATII

Sitting in public in London on 23 April 2004

The Appellant in person

Mr James Maxwell-Scott of counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2004

DECISION

1.	The appellant appeals, as the recipient of a supply, against the commissioners’ ruling in a letter dated 2 April 2003 by which they maintained their ruling of 25 March 2003 that certain works effected at the appellant’s home were not zero rated supplies and, by implication at least, were standard rated supplies.

2.	The appellant and his wife own Devizes Castle and occupy the major part of it as their home.  The building is listed Grade 1 and consists of a large stone built house which is constructed in a mixture of architectural styles.  Much of the building was constructed in the early Victorian era and the part with which this case is concerned was substantially altered in 1891.  Further alterations occurred at other times but it is sufficient for the purposes of this appeal to record that the work in question was carried out on a first floor bedroom which is referred to as room 11 in a plan which we were shown and in an application for listed building consent under section 7 of the Planning (Listed Buildings and Conservation Areas) Act 1990 (the 1990 Act), made to Kennet District Council. 

3.	The consent was in the form “the council hereby grant listed building consent for the above development to be carried out in accordance with the application and plans submitted by you subject to [conditions applying to some specific items of work]”.  The reference to the “above development” was to particulars stated to be “internal alterations, to install modern amenities, remove recent partitions and repair plaster”.  It is common ground between the parties that the conditions did not refer to room 11 and so in order to see what the permission related to it is necessary to refer back to the plans and application.

4.	It was agreed that the application was contained in a letter dated 17 March 1999, which we had before us, and the plan already referred to.  The letter so far as material reads:

“Along the southern side of the room, we intend to construct a new stud wall, on which will be continued the skirting boards and coving of the room.  The new wall will reduce the width of the room by between 60cm and 70cm.  Within this wall, we shall construct three wardrobes and a passageway through to the chapel.  Above the wardrobes and passageway will be four cupboards.  Where the room’s width is planned to be reduced by 70 cm it is in front of where we believe that a chimney used to be in the 1860s house.  Although the chimney was probably removed in the 1890s and evidence is only in the stonework of the wall, we feel that it is worth indicating that the old fireplace existed in the line of the new wall.  The doors of the wardrobes will be in oak with pointed arch panels in order to reflect a development of styles within the room between the rounded Norman style entrance doors and the Jacobean style stone windows.”

5.	Group 6 of Schedule 8 to the VAT Act 1994, so far as is material, zero rates the following:

“2. The supply, in the course of an approved alteration of a protected building, of any services other than those of an architect, surveyor or any person acting as a consultant or in a supervisory capacity,
  3. The supply of building materials to a person to whom the supplier is supplying services within item 2 of this Group which include the incorporation of the materials into the building (or its site) in question.”

So far as is material to this case an approved alteration is one which “could not” be carried out without permission under Part 1 of the 1990 Act and works of repair and maintenance are excluded.  It was agreed that the work was not repair or maintenance.

6.	Although the commissioners had referred to notes 22(a) and (b) of Group 5 of Schedule 8 to the VAT Act 1994 in their decision letter those notes were not relied on at the hearing of the appeal or in the statement of case.  (The claim to zero rate the work was under Group 6 but note 3 to that Group incorporates note 22 of Group 5).  Note 22 excludes zero rating for finished or prefabricated furniture and materials for construction of fitted furniture.  By abandoning their reliance on the note it is clear that Customs and Excise no longer contend that the work amounted to the installation of finished or prefabricated furniture.

7.	They relied upon two points.  Firstly, that the work was not such as to require listed building consent and secondly that it did not constitute a structural alteration of the building.

8.	The words “could not be carried out unless authorised” in the definition of an approved alteration mean that it is not enough that the work was carried out with permission.  It is necessary for the appellant to establish that the permission was required, if that is in issue.  The tribunal has on several occasions held that it must decide whether permission was required (see Gibbs 5596 and Evans 4415) and that the views of the planning department do not bind the tribunal.

9.	Before deciding the issues we will make our findings of fact.

10.	The work in question had originally been planned as a means of dividing room 11 into two rooms, a bedroom and a dressing room, and although that did not happen, because it was decided that the bedroom would be too narrow, we regard that as an indication of the substantial nature of what was planned.  The only difference between the original plan and that submitted for approval and built was that what was built did not need to be finished on the side away from the wardrobes, so as to look like a wall when viewed from the second room, as it was built against an existing wall and could not be viewed from the other side.  What had originally been planned was a stud wall incorporating wardrobes and cupboards and what was built was essentially the same structure built against an existing wall.

11.	Wooden strips or battens were attached to the existing stone wall both horizontally and vertically.  The framework of the new structure was attached to these and runs along the full width and height of the wall which is about 12 feet high.  It is mostly wooden but at the ends there are vertical plastered parts and at the tops is coping to match the rest of the room and at the foot is a skirting board to match the rest of the room.  The front has several glazed doors with pointed tops (to produce an appearance in keeping with an old building) which form the wardrobe doors and above the wardrobes are cupboards.  At the end nearest to the window there is a gap which forms an extension of the entrance to the private chapel which was constructed within the building many years ago.  That entrance also has a cupboard above it.  We were shown photographs and it is clear that the whole structure is substantial.  It also has features that could not normally be expected in a wardrobe however large, especially the coping, the skirting and the gap into the chapel.  The result of the construction is that the existing room 11 has been reduced in width by nearly two and a half feet along the full length of one of its sides.

12.	The construction had to be carried out inside the room.  The carpenter brought the materials in, partly formed, but the scale of the materials was too great to construct everything off site in one piece because it would have been impossible to bring it in.  The floor and the ceiling of the room are both uneven so that the final incorporation of the work into the room required adjustment to the materials in situ, being adjustments beyond what could be measured in advance.

13.	Section 7 of the 1990 Act, so far as is relevant,  reads:

“… no person shall execute or cause to be executed any work … for [the alteration of a listed building] … in any manner which would affect its character as a building of special architectural or historic interest, unless the works are authorised.”

14.	Customs and Excise wrote to Kennet District Council on 14 July 2003 describing the work as the installation of wardrobes within a bedroom and enclosing the planning application and consent and asking “Could you confirm for me whether, if Mr Owen wished to install the wardrobes in isolation, he would need to seek listed building consent for them”.  The senior planning officer answered on 14 August saying that he considered that the work did not require listed building consent.  He added:

“The key test when deciding whether listed building consent is required is whether the works would materially affect the special architectural and historic character of the listed building.  Stud walls are an integral part of the fabric of the building and their re-siting would alter the proportions of the affected rooms, thereby impacting on the character of the listed building.  Notwithstanding the fact that they may be physically attached to the building integral wardrobes do not have the same degree of permanence and may be removed without detriment to the listed building’s fabric and character.  For this reason, therefore, I do not consider that listed building consent would be required for the wardrobes.”

15.	 Mr Owen told us, and we accept it as accurate, that the planning officer he dealt with at the material times was a good deal more difficult to satisfy than the one who wrote the letter and whom he considered to be easily persuaded to take a laisser faire attitude when some neighbours wanted to do work to other buildings.  Indeed, the planning officer he dealt with had been the person who expressed doubts about dividing room 11 that had led to the changed plan which was adopted before the formal application was submitted.  In addition she had stressed that good quality work and materials should be used even to the extent of insisting on seeing photographs of bathroom fittings to be used before the plan for the bathroom was agreed.

16.	We find as a fact, so far as it may be material, that other planning officers would have been very likely to take a different view to the one who wrote the letter.  We would also point out that the extent of the construction used in this case was such as to make it at least as permanent as a stud wall and that it did indeed affect the proportions of the room to a significant extent.

17.	We bear in mind that in the past it has been held that even repainting can amount to an alteration requiring permission.

18.	Our conclusion is that the extent of the work and its nature was such that it would have and did amount to an alteration of the building affecting its character as a building of historical and architectural interest and that it therefore required permission.

19.	 We therefore have to decide whether the work falls within the zero rating provisions in items 2 or 3 of Group 6 and we remind ourselves that the supply must “be in the course of an approved alteration to the building”.  We have held that the work was approved but it must consist of an alteration to the building.  Not all approved work would necessarily amount to an alteration of the building, an example might be the re-painting in cases where special paints or colours have to be used to avoid affecting the character of the building and so would need approval but could not be said to be an alteration of the building.

20.	In this context we were referred to full reports of the cases Customs and Excise Commissioners –v- Viva Gas Appliances Ltd [1983] STC 819 and St Anne’s Catholic Church –v- Customs and Excise Commissioners [1994] VATTR 102.

21.	What is now Note 22 to Group 5 of Schedule 8 of the VAT Act 1994 was originally introduced by the Finance Act 1984 and it is clear that its effect was to reverse the House of Lords decision in Viva Gas to some extent.  However, except so far as it is affected by that Note the Viva Gas case is still good law and binding upon us.  As Customs and Excise have not relied upon the Note we need to consider the effect of that case.  Lord Diplock pointed out that the word “structural” did not appear in the legislation as a modifier of the word alteration and that remains the case.  He held (at page 822h – 823a) that work will qualify as an alteration to the building as long as it affects the structure of the building to some material extent and that he meant by that that the work needs only to exceed that which could be described as de minimis.  He added that as long as the work affects the fabric of the building to an extent beyond de minimis it will qualify for zero rating.  He also disavowed (at page 823d – e) any suggestion that the extent of the work had to be viewed in proportion to the size of a building and supported the Court of Appeal’s conclusion that it is the substance of the work which indicates whether or not it is an alteration.  

22.	We do not regard the St Anne’s case as being relevant.  In that case the tribunal held that the work was merely decoration.

23.	In light of Viva Gas and on the facts as we have found them to be we hold that the work in this case did materially affect the structure of the building and the fabric of the building to a material extent beyond what could be termed de minimis.  If the gas fires in that case were within the zero rating provisions as they were then worded, the work here clearly falls within them.  (Gas fires would certainly normally no longer qualify because of Note 22 but that is beside the point).

24.	It might be worth adding that the purpose of the zero rating provisions for protected buildings appears to be to encourage their preservation and continued viability and to recognise the fact that work on such buildings when permitted by planning authorities may generally be more costly than work on non-listed buildings.  If so, the work in this case clearly falls within that objective.

25.	We therefore allow the appeal.  Mr Owen did not seek an award of costs and we make no order.  

RICHARD BARLOW
CHAIRMAN

RELEASED:28/05/2004

LON/03/462