Value added tax - Barn in curtilage of listed dwelling house converted into games room - conversion work not zero-rated for VAT purposes

Customs and Excise Commissioners v Zielinski Baker and Partners Ltd; HL (Lord Nicholls of Birkenhead, Lord Hoffmann, Lord Hope of Craighead, Lord Walker of Gestingthorpe and Lord Brown of Eaton-under-Heywood); 26 February 2004

The taxpayer, a firm of planning and development consultants, undertook the conversion of a barn in the grounds of a listed dwelling house into a games and changing room.

As the barn was a 'structure within the curtilage' of a listed building it was itself a listed building under section 1(5)(b) of the Planning (Listed Buildings and Conservation Areas) Act 1990.

The taxpayer regarded the work as an alteration to a 'protected building' within the meaning of group 6 in schedule 8 to the Value Added Tax Act 1994 and thus as zero-rated for VAT.

The commissioners disagreed and assessed the work for VAT at the standard rate.

The VAT tribunal found in favour of the taxpayers, the judge in favour of the commissioners and the Court of Appeal in favour of the taxpayers.

The commissioners appealed.

Paul Lasok QC and Paul Harris (instructed by Solicitors for Customs and Excise) for the commissioners; John Walters QC and Philip Brunt (instructed by Wallace & Partners, Mayfair) for the taxpayer.

Held, allowing the appeal (Lord Nicholls of Birkenhead dissenting), that the key part of the text of group 6 was the definition of 'protected building' in note (1); that 'protected building' was defined as (1) a building, (2) which was designed to remain as or become a dwelling after the alteration, and (3) which was a listed building within the meaning of the 1990 Act; that those elements were cumulative; that it followed that Parliament had intended to give the benefit of zero-rating under group 6, not to the whole set of listed buildings (and structures deemed to form part of them) but only to a subset (those which were buildings to be used for residential purposes); that it was accepted that the barn was not designed to become a dwelling after the alteration; and that accordingly, the barn was not a 'protected building' for the purposes of group 6 and the cost of the work done on it was subject to VAT at the standard rate.

(WLR)

Corporation tax - High Court proceedings for loss relief under group litigation order - High Court having no jurisdiction to hear claims as to tax liability other than on appeal from commissioners

Claimants under the Loss Relief Group Litigation Order v Inland Revenue Commissioners: ChD (Mr Justice Park): 3 March 2004

Under a group litigation order made under CPR rule 19.10, some 55 multi-national companies brought proceedings in the High Court against the Inland Revenue, challenging the denial of claims for group loss relief from corporation tax on the ground that UK statute law disallowing relief was overriden by articles of the EC Treaty or by double taxation relief agreements.

The Revenue contested the High Court's jurisdiction to hear the claim.

Graham Aaronson QC, David Cavender and Paul Farmer (instructed by Dorsey & Whitney) for the claimants; Richard Plender QC and David Ewart (instructed by the Solicitor, Inland Revenue) for the Revenue.

Held, dismissing the appeal, that the issue was a jurisdictional one arising from the procedure for the administration of the UK tax system; that the machinery provided was a system of appeals beginning with first instance hearings before the general or special tax commissioners; that issues as to tax liability, as opposed to questions of machinery, were properly the subject of appeals to the commissioners; and that the High Court in its capacity as the first instance trial court under the group litigation order did not have jurisdiction to entertain the claim.