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HMRC internal manual

VAT Construction

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‘Approved alteration’ of a ‘protected building’ (rules prior to 1 October 2012): constructing and altering structures in the curtilage of a building

The construction of a detached building within the curtilage of a ‘protected building’ is not ‘an approved alteration’. This is confirmed by the Value Added Tax Act 1994, Schedule 8, Group 6, Note 10.

In David Leslie Wilson (VTD 15803), the Tribunal considered the demolition of a then existing garage within the grounds of a listed dwelling and the construction of a new larger garage. It decided that Note 10 prevented the work from being zero-rated.

In Martyn Arbib ([1995] STC 490), an owner of a listed dwelling demolished an outbuilding replacing it with a building to house a swimming pool. Although not structurally attached to the house, it was connected to the house by a covered way and a brick wall running between the side of the house and the swimming pool building.

In finding that the works were not the construction of a building separate from a ‘protected building’, the Tribunal relied on the dictionary meaning of ‘separate’, ‘disconnected, detached, set or kept apart’. The High Court said:

…the [Tribunal] decision continued as follows:

‘The fact that the Commissioners would accept the building as an extension of the existing building if the walk-way were enclosed on both sides is an indication of how narrow the dividing line is between those cases they consider come within the provision and those that fall outside.’

This indicates to me that the Chairman was directing herself sensibly to the resolution of a very fine distinction. Whether every Tribunal would have come to the same conclusion is another matter. But I cannot say that the Tribunal was unreasonable in approaching it the way that this Chairman did, nor can I say that she reached a perverse conclusion.

Comment: The decision of the High Court was that the Tribunal had come to a reasonable decision based on the facts it found. However, an alternative decision could have been possible. Appellants seeking to rely on this case need to show that, as a matter of fact, the works are alterations to the existing ‘protected building’.

A different conclusion was reached in Collins & Beckett Ltd (VTD 19212). This case concerned the replacement of a swimming pool enclosure by one which included extensive leisure facilities and a glazed corridor link back to the listed house. The Tribunal found that the new enclosure was a separate building. The Tribunal said:

Note 10 envisages that an alteration falling within Item 2 might involve the construction of a separate building. ‘Separate’ in this context means separate from the protected building. We can see that in one sense the pool complex can be described as not separate because it is joined to the passage which in turn is joined to the house but the pool complex may also be described as separate from the house although linked to it by the passage. Visually we prefer the second interpretation. Our conclusion is that, having formed that conclusion the Commissioners’ argument that a building which is essentially separate from the protected building cannot be taken outside Note 10 by some link back to the protected building is persuasive. And we have so concluded that the pool complex is a separate building albeit one which is physically linked to the house by the passage

In the matter of a building within the curtilage of a ‘protected building’ and linked to it by a covered walkway or some other tenuous means, we take the view that its construction is prevented by Note 10 from amounting to an alteration to the ‘protected building’.

The decision in Martyn Arbib does not undermine this position. It does not contain an endorsement that all linked buildings fall outside the scope of Note 10. It accepted that the Tribunal had not acted unreasonably in reaching its conclusion, but that not every Tribunal would necessarily come to the same conclusion.