“…..But that the onus of adducing evidence and satisfying the tribunal that the assessment is wrong lies on the appellant under [what is now s 83 VATA] I have not any doubt at all.”
“the burden of proving that the two companies have not recovered the input tax on employee’s travel and subsistence expenses falls on the taxpayer in appeals such as the present one. And whilst only the civil standard of proof is involved, the tribunal cannot be expected to make decisions simply on the basis that a claim covers a period long ago for which a taxpayer cannot be expected to hold any records, so that its claims should be accepted without question and without evidence….”
'The first grant by a person - (a) constructing 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.'
'(1) Subject to paragraph (2) below where a taxable person constructing a building for the purpose of granting a major interest in it or in any part of it incorporates goods in any part of the building or its site which is used for the purpose of a dwelling, input tax on the supply or importation of the goods shall be excluded from any credit under sections 14 and 15 of theValue Added Tax Act 1983 . Paragraph (1) above shall not apply to materials, builder's hardware, sanitary ware or other articles of a kind ordinarily installed by builders as fixtures except - (a) finished or prefabricated furniture, other than furniture designed to be fitted in kitchens; (b) materials for the construction of fitted furniture, other than kitchen furniture; and (c) domestic electrical or gas appliances, other than those designed to provide space heating or water heating or both.'
'(d) Carpets or carpeting materials'
'Where a taxable person constructing or effecting any works to a building, in either case for the purpose of making a grant of a major interest in it or any part of it or its site which is of a description in Schedule 8 to the Act, incorporates goods other than building materials in any part of the building or its site, input tax on the supply, acquisition or importation of the goods shall be excluded from credit undersection 25 of the Value Added Tax Act 1994 '
' “building materials” means any goods the supply of which would be zero-rated if supplied by a taxable person to a person to whom he is also making a supply of a description within either item 2 or item 3 of Group 5, or item 2 of Group 6, of Schedule 8 to theValue Added Tax Act 1994 '
“ ‘Building materials’, in relation to any description of building, means goods of a description ordinarily incorporated by builders in a building of that description, (or its site), but does not include - (a) finished or prefabricated furniture, other than kitchen furniture; (b) materials for the construction of fitted furniture, other than kitchen furniture; (c) electrical or gas appliances, unless the appliance is an appliance which is - (i) designed to heat space or water (or both) or to provide ventilation, air cooling, air purification or dust extraction; or (ii) intended for use in a building designed as a number of dwellings and is a door entry system, a waste disposal unit or a machine for compacting waste; or (iii) a burglar alarm, a fire alarm, or fire safety equipment or designed solely for the purpose of enabling aid to be summoned in an emergency; or (iv) a lift or hoist; (d) carpets or carpeting material. Note (23) provided: “For the purpose of Note (22) above the incorporation of goods in a building includes their installation as fittings.”
‘united in, or into, one body, combined with another thing’
‘combine or unite into one body or uniform substance, or mix together, or put one thing in or into another to form one whole, including absorb’
“This Order disallows deduction of input tax by builders on certain fittings incorporated as fixtures in dwelling accommodation in which they own a major interest.”
“This latter change complements and produces the same net effect for speculative builders as the amendment to Note (2A) does for contract builders.”
“2. The supply in the course of construction…of any building…of any services other than the services of an architect, surveyor or any person acting as consultant or in a supervisory capacity.” 3. the supply, in connection with a supply of services falling within item 2, of materials or of builder’s hardware, sanitary ware or other articles of a kind ordinarily installed by builders as fixtures.”
“materials or of builder’s hardware, sanitary ware or other articles of a kind ordinarily installed by builders as fixtures”
“Where an Act refers to an enactment, the reference, unless the contrary intention appears, is a reference to that enactment as amended, and includes a reference thereto as extended or applied, by or under any other enactment, including any other provision of that Act.”
“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.”
“…the trees and shrubs, are plainly incorporated into the site of the buildings….”
“Goods which are not articles of a kind ordinarily installed by builders as fixtures are always liable to a positive rate of tax. This applies even when they are supplied in connection with zero-rated construction services….However, if such goods are incorporated in a dwelling which the builder is constructing on his own land in order to grant a zero-rated major interest in it, he is not making a separate taxable supply of the goods but in this case may not deduct input tax in respect of them….”
“…you cannot reclaim as input tax VAT you are charged on any of the goods mentioned in paragraph 21(a)-(c) which you incorporate in the parts of the building to be used as a dwelling or its site….”
“[12.1] What is the liability of goods I sell to the purchaser of a zero-rated property? First you will need to know if the goods are ‘incorporated’ in the building (or its site). This is explained at paragraph 13.3. Goods that are incorporated in a zero-rated building (or part of a buiding) are zero-rated as part of you zero-rated supply of the building. But you may be ‘blocked’ from reclaiming input tax… 12.2 When am I ‘blocked’ from reclaiming input tax? …if you intend to make a zero-rated sale..in a building, you cannot deduct input tax on goods that: · Are ‘incorporated’ in the building (or its site) – see paragraph 13.3; and · Would not be zero-rated to you if a VAT registered builder were to construct that building from scratch for you – see paragraph 11.2 Typically, this means that you cannot reclaim input tax on items such as carpets, most fitted furniture, and most ‘incorporated’ gas and electrical appliances. ….”
“There is no doubt that the general maxim of the law is, that what is annexed to the land becomes part of the land; but it is very difficult, if not impossible, to say with precision what constitutes an annexation sufficient for this purpose. It is a question which must depend on the circumstances of each case, and mainly on two circumstances, as indicating the intention, viz, the degree of annexation and the object of the annexation. When the article in question is no further attached to the land, then by its own weight it is generally to be considered a mere chattel….On the other hand, an article may be very firmly fixed to the land, and yet circumstances may be such as to shew that it was never intended to be part of the land, and then it does not become part of the land…… ……Perhaps the true rule is, that articles not otherwise attached to the land than by their own weight are not to be considered as part of the land, unless the circumstances are such as to shew that they were intended to be part of the land, the onus of shewing that they were so intended lying on those who asset that they have ceased to be chattels, and that, on the contrary, an article which is affixed to the land even slightly is to be considered as part of the land, unless the circumstances are such as to shew that it was intended all along to continue a chattel, the onus lying on those who contend that it is a chattel...”
“In fact these items remain in position by their own weight and not by virtue of the links between them and the building...All these items can be bought separately and are often acquired on an instalment payment basis, when ownership does not pass to the householder immediately. Many of these items are designed to last for a limited period of time and will require replacing after a relatively short number of years. The degree of annexation is therefore slight. Disconnection can be done without damage to the fabric of the building and normally without difficulty. The purpose of such links as there were to the building was to enable these machines to be used to wash clothes or dishes or preserve or cook food. Absent any evidence other than the photographs, it was not open to the judge, in my opinion, to infer that these items were installed with the intention that they were to be a permanent or lasting improvement to the building...”
“...I do not think that an item of electrical equipment eg a dishwasher, a refrigerator, a deep freeze or a washing machine, affixed, if that is an apt word, by no more than a plug in an electric point, could ever be held to have become a fixture” but then once affixed “in a sufficiently substantial manner to enable a contention that it has become a fixture...the critical question will be that of intention.”
'holding such items to be fixtures simply because ...they are linked...to the building...in cases of washing machines by the necessary plumbing would cause difficulties and such findings should only be made where the intent to effect a permanent improvement in the building is incontrovertible....'
“They are not installed , in the case of new buildings, by the builders when the building is constructed, but by the occupier himself ...or by specialist contractors who supply and install such items.”
“I very much doubt whether fitted carpeting could ever be held to be a fixture. It is relatively easy to take up fitted carpeting. A leaky radiator often necessitates that a carpet be taken up in order to allow the floor underneath to dry out...”
“one cannot just confine one’s attention to the particular development in question…” but one must look at “the building of new houses in general”
“[21] Our decision on this issue is that 'any description of building' means 'any description of building' including for instance 'a luxury dwelling house...If...one is addressing what is ordinary incorporated in high-rise flats or luxury dwelling houses, it seems to us that those categories of buildings are 'buildings of a description' and they both falls within the overall category of 'dwelling houses'. Furthermore, the list of 37 items that HMRC give in their Public Notice ….only makes sense if one adopts this approach. Hoists, lifts and air conditioning are not ordinarily incorporated in dwelling houses in general, though they are ordinarily incorporated in high-rise flats, ….Saunas and swimming pools are ordinarily incorporated in luxury dwelling houses, rather than dwelling houses in general. If Note (22) had meant to refer to what was ordinarily incorporated into the various generic categories of building referred to in the Items of Group 5, it could have said precisely that, rather than refer to 'buildings of any description'.”
“that takes one back, applying the statutory hypothesis in the Blocking Order, to a building of a kind described in items 2 or 3 of Group 5 and for the present purposes that is a 'building designed as a dwelling or a number of dwellings'...”
“…reduced rates or even exemptions with refund, if appropriate, of the tax paid at the preceding stage, where the total incidence of such measures does not exceed that of the relief applied under the present system. Such measures may only be taken for clearly defined social reasons and for the benefit of the final consumer….”
“Zero rating differs from the system of exemption with refund inasmuch as no VAT is charged on zero-rated goods and services at the various stages of the marketing chain. Consequently, at the retail stage there is no VAT to refund. Despite that difference, the Commission accepts that, as far as the fiscal result is concerned, the system of zero-rating as applied by the UK is equivalent to the system of exemption with refund of the VAT paid at the preceding stage, provided for by art 28(2) of the Sixth Directive”
“[5] Let me state right away that the system itself [ie zero-rating system] is not challenged by the Commission, which considers it to be equivalent to the system of exemption and refund. However, the Commission disputes the application of zero-rating to certain categories of goods and services... Much the same comment was made by the CJEU itself at §10. The CJEU considered the UK zero rating provisions more recently in Talacre and again accepted that they were equivalent to exemption with refund. At §8 the CJEU said: “It is not disputed that that zero-rate [the caravan zero rate] may be treated as an exemption with refund of the tax paid within the meaning of Art 28(2) of the 6VD….”
“Exemptions with refund of the tax paid at the preceding stage and reduced rates lower than the minimum rate laid down…..”
“[33] …The right to deduct in Art 17(2) is confined to the case of ‘taxable transactions’. Zero rated transactions…are, however, in the scheme of the [6VD], a class of ‘exemption with refund of tax’; consequently they are not covered by the mandatory direction in Art 17(2). Art 17(3) reinforces this…Art 17(6) which is expressed permissively appears therefore to be referring back to Art 17(2) and 17(3) and is limited in its application….It is also significant…that art17(2) by using the word deduct appears to be confined in its scope to the case of positive-rated transactions where there is in a real sense an output tax from which the related input tax can be deducted…”
“…Member States may retain all the exclusions provided for under their national laws when this Directive comes into force.”
“….[art 17(6) of the 6VD] precludes, in any event, a member state from subsequently amending its legislation which entered into force on [the date the 6VD entered into force], so as to extend the scope of those restrictions as compared with the situation existing prior to that date.”
“….[art 17(6) of the 6VD] precludes, in any event, a member state from subsequently amending its legislation which entered into force on [the date the 6VD entered into force], so as to extend the scope of those restrictions as compared with the situation existing prior to that date.”
“the effect of that legislation was to extend, after the entry into force of the [6VD], the scope of existing exclusions….”
“By 1984 changes to the VAT rules had evidently been called for. The increase in the range of fixtures ordinarily installed by builders in new houses and flats had resulted in goods that would otherwise have been standard-rated such as domestic electrical appliances being installed by both contract builders and speculative builders in the ordinary course. The result was that both the home owner buying from the speculative builder and the client who had his house built by a contract builder were getting these goods at effectively zero-rated prices ….Consequently the 'tax base' was being diminished and the scope for avoidance was increasing. Further , changes had to be made to the VAT rules which covered both contract builders and speculative builders. To have removed the benefit of zero-rating for non-standard fixtures installed by contract builders while leaving speculative builders unaffected would have produced a similar distortion to the one that the 1972 Order was designed to cope with.”
“[32] The Tribunal accepts of course that the 1984 Order extends the class of goods for which credit to input tax is denied.”
“[36] Article 28(2)...authorises the zero rating system....The words used 'exemption with refund...may be maintained' briefly described the systems covered by the derogation but they are in no sense designed to establish a comprehensive code. [37] Taking the UK zero-rating system for buildings as it existed on31 December 1975 , Art 3 of the 1972 Order was an integral part of it. This provided that the consequence of a speculative builder making a zero rated supply by granting a major interest in a building was for the builder to be excluded from the right to deduct the input tax incurred by him on non-standard fixtures. Thus at that time the description 'exemption with refund' did not appropriately cover the zero-rating system in the UK. The Tribunal does not therefore accept the Company's argument that the words 'with refund' must be taken literally...... [38] The Tribunal considers that the 1984 Order, in just the same way as the 1972 Order, was a necessary annexure to the zero-rating system relating to buildings.....the Tribunal has concluded that the effect of the 1984 Order has been, to adopt the contention put forward by the Crown, 'to move closer to the end result that would be achieved by the application of the normal rules laid down by the 6VD, and so reduce rather than to enlarge the extent to which the national measures derogate fro those rules.”
“….reduced rates or even exemptions with refund, if appropriate, of the tax paid at the preceding stage,….”
“[24] …the case law on the taxation of single supplies…does not relate to the exemptions with refund of the tax paid with which art 28 of the [6VD] is concerned. While it follows…from that case law that a single supply is, as a rule, subject to a single rate of VAT, the case law does not preclude some elements of that supply from being taxed separately where only such taxation complies with the conditions imposed by art 28(2)(a) of [6VD] ….”
“Any departure from that basic system of taxation and deduction must, as a derogation from a general principle, be interpreted strictly.”
“[44]…persons coming within an exemption necessarily waive the right to deduct input tax if they claim the exemption….”
“Where such a question is raised before any…tribunal of a Member State, that ...tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon.”
“if the facts have been found and the Community Law issue is critical to the court’s final decision, the appropriate course is ordinarily to refer the issue to the Court of Justice unless the national court can with complete confidence resolve the issue itself….If the national court has any real doubt, it should ordinarily refer.”
“…A measure of self-restraint is required on the part of the national courts, if the Court of Justice is not to become overwhelmed…. …[a] development which is unquestionably significant is the emergence in recent years of a body of case-law developed by this court to which national courts and tribunal can resort in resolving new questions of Community law. Experience has shown that, in particular in many technical fields, such as customs and value added tax, national courts and tribunals are able to extrapolate from the principles developed in this court’s case law. Experience has shown that the case-law now provides sufficient guidance to enable national courts and tribunals – and in particular specialised courts and tribunals – to decide many cases for themselves without the need for a reference…”