18737
VAT	— zero-rating — detached stone cottage — whether works carried out to detached residential building those of new construction or those of alteration and extension — on facts finding works of alteration and extension — appeal dismissed

MANCHESTER TRIBUNAL CENTRE

 
 	
	DAVID ROY GRIFFITHS 	Appellant

	- and -

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal: 	Mr J D Demack	 (Chairman)
						Mrs G Pratt
						Mr H Middleton FCA			

Sitting in public in Manchester on 9th August 2004 

The Appellant in person

Mr N Poole of counsel instructed by the Solicitors office of HM Customs and Excise for the Respondents

	© CROWN COPYRIGHT 2004

DECISION
1.	In this appeal by Mr David Roy Griffiths, the only question for decision is whether certain works of construction carried out to a cottage known as  Dyfnant Pontrobert  Meifod, Powys, were those of new construction  qualifying for zero-rating, as he claims, or were those of extension and alteration, as the Commissioners of Customs and Excise contend.
2.	To assist us in making our decision Mr Griffiths gave evidence.  He produced the planning permission authorising the building works in point, an architect’s drawing, which unfortunately was not that approved by the local planning authority for planning purposes, and six photographs of the cottage: two taken before the construction works began, and the other four after they were completed.
3.	From that evidence it emerged that Mr Griffiths and his wife inherited Dyfnant from his father about 3 years ago.  It was then a two up, two down stone cottage with a slate or stone roof in an isolated position in Powys, mid Wales, which was inhabited until 1997 despite having no services.  From the photographs of the cottage taken before construction works began, it would appear, and we find, that the cottage was essentially wind and water tight, its walls and roof being complete.
4.	The planning application submitted by Mr Griffiths  provided for the demolition of a lean-to extension to the west of  the cottage.  It also provided for the original cottage to be increased to three times its original size and to form a 4 bedroom detached house faced with dressed stone. The walls of the original cottage were to form the living room of the detached house at ground floor level, and the master bedroom, en–suite bathroom and wardrobe at first floor level. 
5.	On 6 September 2000 Powys County Council, as planning authority, granted Mr Griffiths full planning permission for “alterations and extensions to existing dwelling, installation of septic tank and construction of new vehicular access”.  The works authorised  were to be completed in accordance with drawings submitted on 3 August 2000.  The planning permission itself did not require Mr Griffiths to retain any of the existing structure.  (The accompanying drawing  may have done so, but as it was not produced we are unable to confirm that it did).
6.	Although the drawing produced to us was not that approved by Powys County Council, it would appear, and we proceed on the basis, that it differed if at all in but minor respects from that approved.  The drawing clearly shows that all four external walls of the old cottages were to be retained in the detached house.  We find from Mr Griffiths own evidence and careful examination of the photographs produced that subject to their being broken into only to the limited extent necessary to enable certain windows and door openings to be constructed, the original four walls of the cottage were retained to their full two storey height.  (We might add that we accept that in the process of the walls being broken into they may have required certain repairs; but those repairs did not, in our judgment, amount to their demolition).
7.	The construction of a new residential building is zero-rated under Group 5 of Schedule 8 to the Value Added Tax Act 1994.  But an existing building only ceases to be such if it is demolished completely to ground level, or the part remaining above ground level consists of no more than a single façade or, where a corner site, a double façade, the retention of which is a condition or requirement of statutory planning consent or similar permission (see Note 18 to the said Group 5).
8.	It is common ground that the old cottage was not demolished completely to ground level.  The question then arises whether the part remaining above ground level consists of no more than a single façade, as Mr Griffiths submits, or of the four external walls of the old cottage, as the Commissioners contend.  As our findings of fact clearly indicate, all four walls of the old cottage were incorporated in the new dwelling house thus preventing the construction work on the detached house from qualifying for zero rating.
9.	We dismiss the appeal.

David Demack
Chairman
Release Date: 27 August 2004

LON/02/732