18905
VAT – Zero-rating of construction services supplied in the course of an approved alteration of a protected building – item 2 of Group 6 of Schedule 8, VATA 1994 – whether a barn which had been used as a garage before an approved alteration to it qualified as a garage within the statutory definition of a building designed to remain as or become a dwelling or number of dwellings, in Note (2) of Group 6, which is an ingredient in the statutory definition of protected building in Note (1) of Group 6 – whether instead it is required that a structure should have been built as a garage before it could qualify as a garage within the definition in Note (2) of Group 6 – held that use as a garage as a matter of fact and reality before an approved alteration was sufficient to qualify as a garage within the definition in Note (2), and that it was not required that the barn should have been built as a garage – appeal allowed 

LONDON TRIBUNAL CENTRE

	GRANGE BUILDERS (QUAINTON) LIMITED	Appellant

-	and –

	THE COMMISSIONERS OF CUSTOMS AND EXCISE	Respondents

				Tribunal:	JOHN WALTERS, Q.C.  (Chairman)
						 MICHAEL SILBERT, F.R.I.C.S.

Sitting in public in London on 16 December 2004

John Brown F.C.A., C.B.E., for the Appellant 

Nicola Shaw, of Counsel, instructed by the Solicitor for the Customs and Excise, for the Respondents

© CROWN COPYRIGHT 2005

DECISION

1.	In this appeal, the Appellant is represented by Mr. John Brown and the Commissioners by Miss Nicola Shaw.  Mr. Brown is a senior member of the “panel of other members of VAT tribunals for England and Wales” referred to in paragraph 7(1) of Schedule 12 to the VAT Act 1994 (“VATA”).   In his capacity as a member of that panel he has in the past sat on one or more appeals with the chairman of this Tribunal (Mr. Walters) and also he has sat in the past on one or more appeals with the other member of this Tribunal (Mr. Silbert).  In these circumstances this Tribunal raised (as a preliminary issue, and privately) with Mr. Brown and Miss Shaw together, the issue of whether either of them considered that the hearing of this appeal, with this representation and before this Tribunal, would not be a fair trial in terms of article 6 of the European Convention on Human Rights, having regard in particular to the decision of the House of Lords in Lawal v Northern Spirit Ltd. (HL) [2003] UKHL 35; [2003] HRLR 29.  Mr. Brown said that he foresaw no difficulty with proceeding with this representation and before this Tribunal, and Miss Shaw, having taken instructions from her Clients, agreed.  We would add that we also consider that this procedure does not exhibit any bias or other unfairness.  The appeal therefore proceeded – the Chairman mentioning in court at the beginning of the hearing that the issue had been raised and resolved as recorded above.
2.	Grange Builders (Quainton) Limited (the Appellant) appeals against an assessment to VAT (dated 10 October 2002) of £14,602, representing output tax allegedly underdeclared in the periods 09/01 to 03/02 inclusive.  Mr. Brown, for the Appellant, submits that a proportion of the supplies concerned, being supplies of construction services supplied “in the course of an approved alteration of a protected building” within item 2 of Group 6 of Schedule 8 to the VATA (we refer to that Group hereinafter simply as “Group 6”), are zero-rated and that therefore output tax is not due in respect of them.
The relevant legislation

3.	Schedule 8 to the VATA, which provides descriptions of the types of supply which are zero-rated, is introduced by section 30, VATA.
4.	Within Schedule 8 to the VATA are two Groups, Group 5 and Group 6, which are relevant to this appeal.
5.	Group 5  “Construction of buildings, etc.” provides relevantly to this appeal as follows:
“Item 1: The first grant by a person–
a.	constructing a building … designed as a dwelling or number of dwellings …; or
b.	converting a non-residential building or a non-residential part of a building into a building designed as a dwelling or a number of dwellings …
of a major interest in, or in any part of, the building, dwelling or its site.”
“Item 2: The supply in the course of the construction of–
(b)	a building designed as a dwelling or number of dwellings …
of any services related to the construction other than the services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity.”
“Item 3: The supply to a relevant housing association in the course of conversion of a non-residential building or a non-residential part of a building into–
(a)	a building or part of a building designed as a dwelling or number of dwellings …
of any services related to the conversion other than the services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity.”
“Note (3): The construction of, or conversion of a non-residential building to, a building designed as a dwelling or a number of dwellings includes the construction of, or conversion of a non-residential building to, a garage provided that–
(a)	the dwelling and the garage are constructed or converted at the same time; and
(b)	the garage is intended to be occupied with the dwelling or one of the dwellings.”
“Note (8): References to a non-residential building or a non-residential part of a building do not include a reference to a garage occupied together with a dwelling.”
6.	Group 6 (Protected Buildings) provides relevantly as follows:
“Item 1: The first grant by a person substantially reconstructing a protected building, of a major interest in or in any part of the building or its site.”
“Item 2: The supply, in the course of an approved alteration of a protected building, of any services other than the services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity.”
“Note (1): “Protected building” means a building which is designed to remain as or become a dwelling or number of dwellings (as defined in Note (2) below) … and which … is–
(a)	a listed building, within the meaning of–
(i)	the Planning (Listed Buildings and Conservation Areas) Act 1990 (“the 1990 Act”) …”
“Note (2): A building is designed to remain as or become a dwelling or a number of dwellings where in relation to each dwelling the following conditions are satisfied–
… and includes a garage (occupied together with a dwelling) either constructed at the same time as the building or where the building has been substantially reconstructed at the same time as that reconstruction.”
The Facts
7.	The construction services with which the assessment appealed against is concerned were (it is common ground) works of alteration to a small timber-framed barn and an adjacent witchert and rubble boundary wall.  This description is taken from the relevant entry in the relevant list maintained for the purposes of the 1990 Act and exhibited in our papers.  The Commissioners accept that the works of alteration concerned were “approved alterations” for the purposes of item 2 of Group 6.  “Witchert”, we were told, is a Buckinghamshire corruption of “white earth”.  (The issue for our decision is whether the supply of the construction services relative to the alteration of the barn is properly zero-rated.  The supply relative to the wall is (it is also common ground) standard-rated.)
8.	The barn stands within the curtilage of Mulberry House (formerly The Old Vicarage), High Street, Long Crendon, Aylesbury, Buckinghamshire.  Mulberry House is a dwelling house, also listed under the 1990 Act, and it is common ground that the barn was constructed “to all intents and purposes at the same time as the original part” of Mulberry House – this being the unchallenged evidence of one of the two witnesses who gave evidence before us, Mr. Martin Robert Gervas Andrew, the Conservation and Urban Design Manager for Wycombe District Council.  The Commissioners accept for the purposes of this appeal that the barn was constructed at the same time as Mulberry House for the purposes of Note (2) to Group 6.  The parties agree (and we find) that the barn is also occupied together with Mulberry House.
9.	The other witness who gave evidence before us was Mrs. Catrin Weston, who (with her husband) has lived at Mulberry House since 1996.  Her evidence, which the Tribunal accepts, was that the barn has been used, during the time of their ownership and before, “continually and exclusively as a garage for two cars”.  The works of alteration to the barn did not enable the building to be used as a garage: it was so used before the works of alteration were carried out.  The works of alteration enhanced the use of the barn as a garage by the provision of a concrete floor (replacing an earth floor) and by the provision of new doors creating a better, more convenient, vehicular access to the barn from the road. The works included the replacement of the former corrugated iron roof by a thatched roof – the barn had originally been thatched.  Mrs. Weston also said, and we accept, that there is no other facility, either covered or open, within the curtilage of Mulberry House where cars may either be parked or kept, and that parking in the road outside or adjacent to the curtilage of Mulberry House is inconvenient, and not entirely safe, particularly at certain times, on account of congestion.  A restrictive covenant prohibits the use of the barn for business or domestic purposes, but use of the barn as a garage is not contrary to the covenant. 
10.	Mr. Andrew told us that many new buildings are constructed in a form which disguises their intended use.  For example new garages are often constructed in the form of “imitation” barns.  He acknowledged that this practice would be offensive to modernists who consider that “form should follow function”.  He said that the vast majority of listed buildings were originally built before 1900.  He thought it was likely that the barn in issue in this case was originally used for storing carts, “or a gig for the vicar”.  He said that the first house with a dedicated “motor house” (outbuilding where a motor vehicle could be kept) was constructed in 1898.  He told us that the coach houses of many older houses were adapted as garages from about that time, adding that persons employed as coachmen often became chauffeurs. He said that it was not commonplace to build garages with mixed-class housing before the 1950s.  This became the norm in the 1960s.  We accept Mr. Andrew’s evidence, which was not seriously challenged by Miss Shaw.
The Issue

11.	It is accepted that the construction services in issue were supplied in the course of an approved alteration of the barn and they were not services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity.  They are thus to be zero-rated under item 2 of Group 6 if, but only if, the barn is a “protected building” within the meaning of that item.
12.	For these purposes Notes (1) and (2) of Group 6 provide that “protected building” means, in effect, a building designed to remain as or become a dwelling or a number of dwellings, which is a listed building – and, pausing here, it is agreed that Mulberry House itself is such a building – and this “includes a garage (occupied together with a dwelling) … constructed at the same time as the building”.
13.	There was at one point an issue as to whether the fact that the barn and Mulberry House are separately listed under the 1990 Act impacted on the application of Group 6, but we were told at the start of the hearing that this issue had been resolved and the Commissioners accepted that the separate listing was immaterial to the case.
14.	As we have found above, the barn is occupied together with Mulberry House and was constructed at the same time as Mulberry House.  Thus the point at issue is whether it is “a garage” within the meaning of Note (2) of Group 6.
The dictionary definitions of “garage”
15.	The Tribunal was supplied by the parties with two similar dictionary definitions of “garage” in its substantival sense, viz:
“A building for the storage or refitting of motor vehicles”; and
“A building or shed for the storage of a motor vehicle or vehicles”
 (The alternative meaning – “an establishment selling petrol etc., or repairing and selling motor vehicles” – was noted in one of the dictionaries, but is obviously not relevant in the context of Note (2) which speaks of a garage being occupied together with a dwelling.)
16.	Both dictionaries note that the word derives from the French word garer, meaning “to shelter”.  One dictionary notes that the first usage of the word in English was in 1902.
The parties’ submissions in summary
17.	Miss Shaw, for the Commissioners, submits that the barn is not a “garage” within the meaning of Note (2) of Group 6, because it was not constructed as a garage, i.e. as a building for the storage of one or more motor vehicles.  She contended that only a building constructed for that purpose – a dedicated garage – can come within the category of buildings referred to in Note (2) as a garage.
18.	Mr. Brown, for the Appellant, contends that the statutory wording does not require that the building concerned should have been constructed as a garage, but that it must “now” be a garage, which we take to mean that it must have been a garage at the time of the approved alteration.  
Decision
19.	The crucial words “and includes a garage (occupied together with a dwelling) either constructed at the same time as the building or where the building has been substantially reconstructed at the same time as that reconstruction” in Note (2) of Group 6 are, both parties agree, a reflection of Note (3) of Group 5 of Schedule 8, VATA which extends the zero-rating for the construction of, or conversion of a non-residential building to, a building designed as a dwelling or a number of dwellings to include the construction of or conversion to a garage, provided that the dwelling and the garage are constructed or converted at the same time and the garage is intended to be occupied with the dwelling or one of the dwellings.
20.	It is relatively easy to identify a rational policy behind Note (3) of Group 5.  Where a new dwelling or dwellings is/are being created by construction or by the conversion of a non-residential building, the construction services or the conversion services will (subject to the other restrictions provided) qualify for zero-rating, and such zero-rating will extend to the construction or conversion of another building or part of a building, namely a garage intended to be occupied with the new dwelling or one of the dwellings, which is constructed or converted at the same time.
21.	This policy recognises that an adjunct to the normal occupation of a dwelling these days is the use of what may be a different building as a garage – a building in which to store, or house, the occupier’s car securely.
22.	The zero-rating of the construction or conversion of a garage in this way is an exceptional extension of zero-rating treatment for construction or conversion services to a building which is not itself a dwelling.  
23.	The extension of zero-rating treatment is hedged about by the conditions that the building (which is not itself a dwelling) must be 
•	A garage; and
•	Constructed or converted at the same time as the dwelling; and
•	Intended to be occupied with the dwelling (or one of more that one dwellings being created together).
24.	The meaning of “a garage” in the context of Note (3) of Group 5 would, we consider, be a building intended to be used for the purpose of storing one or more motor vehicles.
25.	A “garage” in this context would, almost inevitably, be a building designed as a garage, in other words, a dedicated garage.  But this is not a result of the meaning of the word “garage” so much as a result of the context, namely that the garage (a building or shed for the storage of one or more motor vehicles) must be constructed or converted at the same time as the dwelling and that the garage is intended to be occupied with the dwelling (or one of the dwellings).  Furthermore, in the context of Group 5, we are of course concerned with dwellings and garages which are constructed in the present era.
26.	Therefore it can simply be asked in relation to a building, to ascertain whether or not it is a garage within the meaning of Note (3) of Group 5: is this building being constructed or converted as a building to store one or more motor vehicles?  If the answer is “yes”, it is almost certain that the building is a building designed as a garage, a dedicated garage, or, in the terms of Miss Shaw’s submission (at least in a case of construction rather than conversion), a building constructed as a garage.
27.	The Commissioners’ case essentially is that this shows that the meaning of “garage” in Group 5 is a building constructed as a garage and it is to be applied also for the interpretation of the word where it appears in Group 6.
28.	We disagree.  As we have said above, we consider that the word “garage” in Group 5 imports no more than a building or shed for the storage of one or more motor vehicles.  It is the context in which the word “garage” appears in Group 5 that leads to the conclusion (in a case of construction rather than conversion) that a building which qualifies for zero-rating as a garage under that Group will almost certainly be “constructed as a garage”.
29.	It must however be noted that a non-residential building converted to a building to store one or more motor vehicles can also, plainly, be a garage within the meaning of Group 5, notwithstanding that it is not a building constructed as a garage.  (The resultant building will, however, almost certainly be designed as a garage, or be a dedicated garage, as a result of the conversion.)
30.	Turning now to Group 6, one is concerned chiefly not with the creation of a new dwelling – and garage – whether by construction or conversion, but with an approved alteration of an existing dwelling and garage.  Group 6 does also cover certain restricted circumstances where a new dwelling – and garage – are created, namely when on a substantial reconstruction of a protected building one or more new dwellings (and garages) are created, and a major interest in the building is subsequently granted.
31.	But if (consistently with what we consider is the proper approach to the construction of Group 5), when Note (2) of Group 6 is considered, the word “garage” connotes only a building or shed for the storage of one or more motor vehicles, it follows that Note (2) imposes no requirement additional to: (1) that such a building or shed must be occupied together with a dwelling and (2) that it must either have been constructed (a) at the same time as the building designed to remain or become that dwelling, or (b) where that building has been substantially reconstructed, at the same time as that reconstruction. 
32.	As in Group 5, so in Group 6, the word “garage” is not used in a way that requires interpretation as a building or shed for the storage of one or more vehicles and constructed as such.
33.	The context of Group 6 will almost certainly require that a garage forming part of a protected building which is substantially reconstructed and in which the first grant of a major interest is made by the person substantially reconstructing it (cf. Item 1) will be designed as a garage, or be a dedicated garage, whether this is because it has been constructed as a garage (at the same time as the reconstruction) or converted to a garage (as part of the reconstruction).  But this is because the conditions require that the garage is created at the time of the reconstruction, which will of course take place in the present era.
34.	But in the case of an approved alteration to a protected building within Group 6, the context only requires that the garage (i.e. the building or shed for the storage of one or more motor vehicles) must be occupied together with a dwelling and that it must have been constructed at the same time as the building designed to remain as or become that dwelling.  There is no additional requirement that the garage must have been constructed as a garage, or that it must have been designed as a garage or have been a dedicated garage at the time of its construction.  It is enough if it was built at the same time as the building designed to remain as or become the dwelling together with which it is occupied.
35.	The garage must however be a “garage” (a building or shed for the storage of one or more motor vehicles) at the time when it is required to qualify as part of a protected building for the purposes of zero-rating under Group 6.  In the context of zero-rating under Item 2 of Group 6 that time is the time when the services in the course of the approved alteration are supplied. 
36.	Our approach is determined by the nature of the dictionary definitions of “garage” to which both sides urged us to have regard. They indicate that a building is or is not a garage, depending on whether it is or is not used for the purpose of the storage of one or more motor vehicles.  The use to which the building is put is the determinative factor, not some inherent characteristic of the building or its design.  In this sense a garage can be contrasted to a tower, for example.  A building is a tower if it has certain physical characteristics, never mind what use it is put to.  A garage, it seems, is different.  Although we all may have in our mind’s eye a view of what we expect a garage to look like, when one has regard to the dictionary definitions of “garage”, it is clear that a building may be a garage even if it looks like a barn – or indeed a tower – provided it is used for the purpose of the storage or housing of one or more motor vehicles.
37.	Indeed in argument Miss Shaw accepted that the barn in question in this appeal “is now a garage”, although later she modified this to a submission that “the barn here is used as a garage”.  But, faced with the dictionary definition, which Miss Shaw adopted, use as a garage makes the building or shed concerned a garage.
38.	Miss Shaw submitted that if Parliament had intended to include alterations of buildings which were to become garages within the scope of zero-rating under Group 6, it would have made specific reference to that.  We understood this submission to be that because there is a reference (in the definition of “protected building” in Note (1) of Group 6) to “a building which is designed to remain as or become a dwelling or number of dwellings”, but no parallel reference to a building designed to remain as or become a garage, it is illegitimate to interpret “garage” as including a building which at some time in its existence has not been used for the storage of motor vehicles but has, at a time after its construction, been converted to that use.
39.	We find the logic of this submission hard to follow.  As a result of the drafting technique adopted in Notes (1) and (2) of Group 6, a garage occupied together with a dwelling and constructed at the same time as the building which is designed to remain as or become a dwelling (or at the same time as a relevant substantial reconstruction of that building) is included in the concept of a building designed to remain as or become a dwelling, and thus (providing the listing conditions are satisfied) in the meaning of “protected building”.  The conditions laid down concern the occupation of the garage – it must be occupied together with a dwelling – and the time of construction of the garage – it must have been constructed at the same time as the building which is designed to remain as or become a dwelling, or at the same time as a relevant substantial reconstruction.  The conditions laid down do not impact on the history of the use of the building which is or may be the garage.
40.	Miss Shaw also submitted that the statutory phrase “a garage (occupied together with a dwelling) either constructed at the same time as the building or where the building has been substantially reconstructed at the same time as that reconstruction” must be construed as a whole.  In so construing the phrase, the reference to a garage “being constructed at the same time as the building”, etc. (so she submitted) colours the reference to “a garage” so as to give it the meaning of a building constructed as a garage at the same time as the building, etc., in other words a dedicated garage constructed for use as such with the building designed to remain as or become a dwelling.
41.	Dealing with this submission, Mr. Brown contended that Miss Shaw was arguing for the insertion of additional words into the statutory formulation, namely “a garage (occupied together with a dwelling) either constructed as such at the same time as the building or where the building has been substantially reconstructed at the same time as that reconstruction”.  Miss Shaw denied that this was the effect of her submission.
42.	We consider that Mr. Brown is right on this point and that Miss Shaw’s argument does require us to read in the words “as such” into the formulation at the position indicated.  The recurrent problem with Miss Shaw’s submissions is that according to the dictionary definition, the word “garage” describes the use to which a building is put, whereas the condition that the building should have been constructed at a particular time is concerned not with the use to which the building is put or how it is designed, but with the time when it was constructed. 
43.	We consider that the legislative purpose in transposing the condition that the garage must be occupied together with the dwelling from the zero-rating for construction in Group 5 to the zero-rating for approved alterations in Group 6 is easy to understand.  Zero-rating is not to be allowed for approved alterations, for instance, to listed garages independent of their occupation with a listed dwelling.  However it is not so easy to understand the transposition of the condition that the garage must have been constructed at the same time as the dwelling.  As we have indicated above, this is readily understandable in the context of Group 5, but this is not so in the context of Group 6.  Apart altogether from the point on the meaning of “garage” raised in this case, we can see no rationale for the result, for which Mr. Brown contends, that an approved alteration to a listed Georgian coach house built at the same time as a listed Georgian dwelling is zero-rated (provided the coach house is used as a garage) whereas zero-rating is denied for an approved alteration to a listed Tudor gatehouse (also used as a garage) within the curtilage of a listed Georgian dwelling.
44.	The condition that the garage (however that is interpreted) must have been constructed at the same time as the building designed to remain as or become a dwelling (or at the same time as a relevant substantial reconstruction) is, however, plainly laid down by the words of Note (2).  It cannot be sidestepped by any process of interpretation, whatever anomalies may result.  The decision of the House of Lords in Customs and Excise Commissioners v Zielinski Baker & Partners Ltd. [2004] STC 456 – a case on Group 6 itself – particularly at [43] per Lord Walker, is authority for such an approach: “these are the sort of grey areas which will always be found at the edges of any statutory code … zero-rating [is] a matter for Parliament (within its margin of appreciation under Community law) and … (as zero-rating is in the nature of an exemption) the language used by Parliament should not be stretched beyond its natural meaning”.
45.	However the condition that the garage must have been constructed at the same time as the building designed to remain as or become a dwelling (or at the same time as a relevant substantial reconstruction), plain as it is, and hard as the rationale for it is to discover, does not in our view (as we have already said), compel the further step that we are required to interpret the word “garage” in the context of Note (2) of Group 6 as if it means a building which was a garage when it was constructed.
46.	Mr. Brown urged on us in support of his submissions, that the Commissioners’ interpretation would in practice render the zero-rating for alterations of listed garages virtually ineffective.  He used the expression “self-frustrating” to describe the provision construed in accordance with Miss Shaw’s submissions.  He relied on the fact that no building was constructed as a garage before 1898, and the vast majority of listed buildings were originally built before 1900.  In effect, his submission was that if “a garage” in Note (2) of Group 6 meant a garage constructed at the same time as the dwelling which is a listed building, there would be hardly any garages which could benefit from the zero-rating provided by item 2 of Group 6.
47.	While we are reassured that our construction of “a garage” in Note (2) of Group 6 does not have this “self-frustrating” effect, we have not placed any reliance on this argument in reaching our conclusion.  It seems to us that the question of construction raised in this appeal is one which must be resolved by a consideration of the statutory words in their context without regard to extraneous evidence of the kind referred to in the previous paragraph.
48.	Likewise we have not been persuaded by Miss Shaw’s argument that the fact that the appellant in Zielinsky Baker did not argue that the outbuilding in that case qualified as a garage within Note (2) of Group 6, when it appears that, on the facts, this was a possible argument which might have been put forward, suggests that there is some flaw in Mr. Brown’s suggested construction.  Points which are, or are not, taken in one case can be no guide to the correct interpretation of statutory wording in the circumstances of another case. 
49.	Also, we have not been assisted by Miss Shaw’s argument that, following Stichting Uitvoering Financiële Acties v Staatssectretaris van Financiën (Case 348/87) [1989] 1737, we should adopt a “narrow” (according to her skeleton argument) or “strict” (according to her oral submissions) approach to considering whether a particular building qualifies as a garage constructed at the same time as a dwelling.  We asked Miss Shaw whether she was urging us to adopt the construction which appeared to us to lead to the lowest possible number of buildings qualifying as such a garage.  She said that was not her submission and eventually agreed that her argument on “strict construction” did not take the matter much further and that it was for the Tribunal to construe the statutory words according to their ordinary meaning having regard to the legislative context.
50.	Miss Shaw also accepted that no consideration of “clearly defined social reasons”, as that concept was considered in EC Commission v United Kingdom (Case 416/85) [1988] STC 456, favours one interpretation of “garage” in Note (2) of Group 6, rather than another.
51.	We are, however, impressed by Miss Shaw’s argument that her construction of “garage”, with its requirement that the building concerned should have been originally constructed as a garage, would favour a straightforward and even-handed implementation of the legislation by the Commissioners.  Either a building was constructed as a garage or it was not: one assumes that this is a point capable of objective verification.  Miss Shaw put the point in her skeleton argument: “a change of use cannot operate retrospectively so as to transform the barn into a garage constructed as such at the same time as Mulberry House”.  While agreeing with Mr. Brown that his argument does not involve any retrospective transformation, we find unattractive the aspect of his submission that a building not hitherto used for the storage of motor vehicles can be converted into a garage, simply by introducing vehicles into it, rendering approved alterations to the building at any time thereafter eligible for zero-rating (on the assumption that the other statutory conditions are fulfilled).
52.	 We think the answer to this point is that in the application of the legislation, it must be established whether or not the building being constructed at the same time as the “substantial reconstruction” of a protected building (Item 1 of Group 6) or being subject to an “approved alteration” (Item 2 of Group 6) is in fact and reality “a garage” (occupied as and constructed at the time indicated by Note (2)), when the respective supplies for which zero-rating is sought are made.  That is, was the building at that time “a building or shed for the storage of a motor vehicle or vehicles”?  This test must be applied on a realistic basis and it seems to us that (as Mr. Brown submitted) this would normally require that use had been made of the building or shed for the storage of a motor vehicle or vehicles for a significant time before the first supply in issue was made.
53.	In conclusion, our decision is that a building is a “garage” for the purposes of Note (2) of Group 6 if it is (as a matter of fact and reality) used for the storage of a motor vehicle or vehicles at the time of the supply in relation to which zero-rating is sought.  The barn in this case clearly was a “garage” for these purposes on this basis, and so we allow the appeal.
54.	As a consequence of our decision, the amount assessed by the assessment must reduced to the amount of tax referable to supplies relative to the alterations to the witchert and rubble boundary wall.  This will require an apportionment of the amount assessed by the assessment as between tax on supplies relative respectively to the alteration of the barn and the alteration of the wall.  We direct the parties to try to agree the appropriate apportionment and reduction of the assessment, but grant liberty to apply to a Chairman of these Tribunals sitting alone in the event that agreement is for any reason impossible.
     Costs
        55. Mr. Brown made an application for costs if he was successful.  We therefore 
direct pursuant to rule 29(1)(b) of the VAT Tribunals Rules 1986 that the                                                                                                Commissioners shall pay to the Appellant within 28 days after the date of the release of this Decision the Appellant’s costs of and incidental to and consequent upon the appeal to be assessed as provided by rule 29(1)(b), if not agreed.                                 

JOHN WALTERS Q.C.
CHAIRMAN

RELEASED: 17 January 2005

LON/02/982