“ 13. The scheme of the 1995 code is to exclude from the expression 'construction of a building' a series of building works. Note (16) deals with these in descending order of their degree of integration with the existing building. Conversions, reconstructions and the alterations of existing building, the most closely integrated, are excluded. Enlargements of existing buildings are then excluded, the word 'enlargement' connoting structural work producing an overall increase in size or capacity. The word 'extension' in relation to an existing building refers, we think, to building work which provides an additional section or wing to that existing building; the degree of integration is one stage less than with enlargements. Then come 'annexes' which, as a matter of principle, are also excluded. The term annexe connotes something that is adjoined but either not integrated with the existing building or of tenuous integration… 17. The scheme of Note (16) implies that the construction works falling within paragraphs (a), (b) and (c) are mutually exclusive. Moving down the degrees of integration, if the construction works are found on the facts to produce alterations to the existing building, they will not be works of enlargement or extension; and if they produce an extension, the structure will not be an annexe. ” 25. Dr Sinyor who appeared for the appellant questioned whether the observations in Macnamara were correct, or at least whether they had survived Cantrell. We are satisfied that what Stephen Oliver said in Macnamara as a statement of principle is correct and is in no way inconsistent with either of the judgments in Cantrell. Macnamara has been referred to by numerous tribunals since 1999 and as far as we are aware it has never been criticised (See for example Colchester Sixth Form College – Decision 16252 , The Roman Catholic Diocese of Shrewsbury – Decision 17900 , The Archdiocese of Southwark – Decision 18883 , East Norfolk Sixth Form College – Decision 20816 , Treetops Hospice Trust[2011] UKFTT 503 (TC) and Chelmsford College[2013] UKFTT 400 (TC) ). 26. Both parties accepted that enlargements, extensions and annexes were mutually exclusive. There was however a slightly different approach to the issue. The respondents approached the issue on the basis that it is first necessary to consider whether the structure is an enlargement or an extension and only if it is not to then consider whether it is an annexe. This may derive from [17] in Macnamara. The appellant criticised this ‘serial approach’ and submitted that the proper approach was simply to consider whether the structure was an enlargement, an extension or an annexe. 27. The concern of the appellant seems to be that HMRC’s approach would somehow pre-dispose a tribunal to decide the issue in favour of the new structure being an extension. However in our judgment the difference in approach is one of form rather than substance. We must consider all the facts and consider how the new structure is to be characterised, in particular whether it is an extension or an annexe. 28. Mrs Carroll who appeared for the respondents relied on Macnamara and submitted that Note (16) dealt with various forms of construction by reference to the degree of integration with the existing building. Conversions, reconstructions and alterations relate directly to an existing building. Enlargements and extensions one way or another increase the size of the existing building. Finally an annexe is a supplementary structure which would be less integrated than an enlargement or an extension. 29. Mrs Carroll also submitted that an extension would provide extra space for activities already carried on in the existing building. In the same way an annexe would provide extra space for activities distinct from but associated with the activities carried out in the existing building. 30. We do not consider it is appropriate to focus on the activities actually carried on in the existing building and a new structure in ascertaining whether the new structure is an extension or an annexe. Lightman J in Cantrell emphasised that what is relevant is the function of the buildings and structures, whilst accepting that the activities carried on could shed light on the uses to which the building and the new structure might be put. 31. Dr Sinyor accepted that categorisation for the purposes of Note 16 is an objective exercise. 32. The objective approach certainly applies in distinguishing an extension from an annexe. The relevance of actual use is limited to indicating what potential uses there might be. Such an approach is consistent with legal certainty and assessing the position at the date of the supply. 33. In our judgment a similarly objective approach applies to Note (17). It is necessary to consider whether the annexe is capable of functioning independently from the existing building. That must be in the form in which the annexe has been constructed and without any alteration. The way in which a building does in fact function might guide the answer to that question but it is not determinative. 34. It is also necessary to consider which is the main access to the annexe. Again, we consider this is an objective test. Actual or intended use is only illustrative and not determinative. 35. We derive the following principles from the authorities and previous tribunal decisions referred to above: (1) In determining whether works amount to an enlargement, extension or annexe it is necessary to compare the building before the works were carried out to the building afterwards. The question is to be answered by reference to a comparison at the time of the supply. (2) The comparison involves an objective examination of the physical character of the building before and after the supply. This includes comparison by reference to appearance, layout, the use to which the building is physically capable of being put and the function it is physically capable of performing. (3) Planning permissions, intended use and actual subsequent use are irrelevant, save that they may illuminate the potential for use inherent in the building and the functions it is capable of performing. (4) An annexe is a supplementary structure, but less integrated with the existing building than an extension. It may be a room, a wing or a separate building. (5) An extension may also comprise a room or a wing which is more integrated than an annexe. (6) The degree of integration should be judged as part of the comparative exercise described above. (7) If the new structure is an annexe it is necessary to ask, having regard to the character of the building and of the annexe, whether objectively the annexe is capable of functioning independently of the existing building. (8) If the new structure is an annexe it is necessary to ask, having regard to the character of the building and of the annexe, what objectively should be considered to be the main access to each. (9) In considering the conditions in Note (17) relating to annexes, the actual use of the building and of the annexe is not relevant save in so far as it might illustrate the potential capabilities of the annexe and the location of the main access. Findings of Fact 36. We heard oral evidence from Mrs Sarah Emanuel who is the crèche administrator for the appellant, and from Mr Paul Davies an officer of HM Revenue & Customs. We were also provided with documentary evidence relevant to the issues. There were no real factual issues. The area of dispute arises in relation to the inferences we should draw from the evidence. 37. We were taken to the plans and photographs of Cambridge Terrace which showed the existing building and the new structure. 38. Cambridge Terrace forms part of a row of terraced houses in a residential area of Gateshead. It comprises two houses which have been altered internally to form one building. The original building is constructed of double leaf redbrick with wooden, sliding sash windows which are white and square. There is a Welsh slate pitched roof. No 2 is the end of the terrace. 39. The existing building retains two front doors. The door on the left looking from the road is No 4. It leads to a narrow hallway with stairs up to the first floor. There is also a ground floor toilet and a small room off the end of the hallway. An exterior door leads from the rear of the hallway to the back yard. The hallway also has internal doors to two larger rooms. 40. The door on the right looking from the road is No 2 which also leads to a narrow hallway with stairs to the first floor. There is another downstairs toilet off the hallway and internal doors to three larger rooms. One of those rooms at the back of the house originally had an exterior door leading to the back yard. Prior to construction of the new structure this was a fire door. 41. The back yard is enclosed and contains a gate into an alleyway which runs the length of Cambridge Terrace. 42. Upstairs there are nine further rooms and two toilets. There is a corridor which runs the length of No 2 and No 4 giving access to the rooms. There is also a second floor which is a conversion of the loft space and gives 2 further rooms. 43. The upstairs rooms are mainly let out for use by a third party although there is an administrative office used by the appellant. The appellant does not have any staff room as such. 44. The crèche facility as it existed before construction of the new structure was on the ground floor and comprised the five ground floor rooms, with one of the rooms at the rear of No 2 being described as a “baby sleeping room”