“the separate use, or disposal of the dwelling is not prohibited by the term of any covenant, statutory planning consent or similar provision”. 122. In this case as there was a statutory planning consent we do not need to look further than it. 123. Mr Heggie gave the appellant a paragraph (14170) from their VCONST Manual on this topic (see §54). VCONST 14170 is headed: “Dwellings - an explanation of terms: what ‘designed as a dwelling or number of dwellings’ means: how Note 2(c) is expressed in planning notices.” 124. It starts by saying: “You should not expect the wording of Note 2(c) to appear as an explicit condition in the planning permission. Planners tend to adopt a form of wording that meets the particular circumstances of the case and often use the word ‘ancillary’ to tie use or disposal of the permitted dwelling to something else.” 125. What in fact Mr Heggie gave the appellant was the second sentence of the extract in §124 and he did not quote or refer to the heading. Nor did he refer to the remainder of the Manual page. What the next paragraph says is: “The following are examples of how a Note 2(c) prohibition has been expressed in a planning permission:” 126. There follows a list of typical conditions in planning approvals which HMRC constituted prohibitions on separate use or disposal, including one in Planning Circular 11/95 issued by ODPM (as it then was – now DCLG). After that there is a list of cases from before 2010 where Note 2(c) was in issue and the particular prohibition in the planning consent in the case, with the Manual indicating whether the wording used in the planning consent in that case fell within Note 2(c) or not. 127. What Mr Heggie was failing to disclose then was that it was HMRC’s view that the prohibition had to be found in the conditions of the planning consent (a view wholly consistent with the wording of the Note). The appellant had supplied a copy of Circular 11/95 in his SoC. The Circular is headed “The Use of Conditions in Planning Permissions”
“Planning Permission Circular 11/95, issued by the Office of the Deputy Prime Minister, provides the following model planning condition where the creation of an additional dwelling would be unacceptable for planning purposes: The extension (building) hereby permitted shall not be occupied at any time other than for purposes ancillary to the residential use of the dwelling known as [ ]. This model condition doesn’t meet Note 2(c). Planning Authorities aren’t obliged to follow this model condition and can set their own condition. The Tribunal has examined alternative conditions in the cases below. Where a condition is framed in the same way, the Tribunal’s decision can be followed, except where indicated. If you are in any doubt about whether a covenant, planning consent or similar document meets Note 2(c), you should consult the Construction Unit of Expertise.” 128. On “Granny/Staff Annexes” the Circular says: 98. Some extensions to dwellings are intended for use as 'granny annexes'. It is possible that a 'granny annex' which provides independent living accommodation, could subsequently be let or sold off separately from the main dwelling. Where there are sound planning reasons why the creation of an additional dwelling would be unacceptable it may be appropriate, to impose a planning condition to the effect that the extension permitted shall be used solely as accommodation ancillary to the main dwelling house. See model condition 47. [The one in VCONST 14170] 99. The same is true for separate buildings (often conversions of outbuildings) intended for use as 'granny annexes'. In these cases it is even more likely that a separate unit of accommodation will be created. 129. It is in our view absolutely clear that the Condition in Note 2(c) was met. “Annexe/ancillary” 130. This is the issue which Mr Hartley did not consider in his review, but which he said might come up before the Tribunal. It didn’t because Mr Sanusi agreed it as not in issue, but he had, as we have mentioned, put forward HMRC’s contentions on the point, which he took from Mr Hartley’s letter in which he was drawing the appellant’s attention to points about the issue, and in particular Note 16(c) to Group 5 which says: “(16) For the purpose of this Group, the construction of a building does not include— … (c) subject to Note (17) below, the construction of an annexe to an existing building.”
“15. In its second decision, the Tribunal found that the new building was an annexe and dismissed the appeal. Mr and Mrs Cantrell appealed again to the High Court. In [ Cantrell No 2 ], Sir Andrew Morritt V-C defined annexe in Note (16) to Group 5 of Schedule 8, at [16] – [17] of the judgment, as follows: ‘The reference to an “annexe” in Note (16) when compared with the references to “enlargement” of or “extension” to the existing building introduces a different concept. Thus they may be physically separate so that the connection between the two is by way of some other association. But the Tribunal seems to have thought that any association is enough. In my view that cannot be right. If there were a sufficient association between building A and building B, on the Tribunal’s conclusion each would be an annexe of the other. So to hold would ignore the plain inferences to be drawn from the use of the word “annexe”.’ An annexe is an adjunct or accessory to something else, such as a document. When used in relation to a building it is referring to a supplementary structure, be it a room, a wing or a separate building. 16. Sir Andrew Morritt observed, at [20] of the judgment, that: ‘The judgment of Lightman J was directed primarily to the conclusion of the Tribunal in their first decision that the Phase I works constituted the enlargement of the New Barn. In that context, and in the context of an extension, I understand and agree that the relevant considerations are those which arise from the comparison of physical features of the existing building before and after the works in question. But in the case of an alleged annexe the requirement that such a construction should be an adjunct or accessory to another may require some wider enquiry. It is unnecessary to reach any concluded view on that question to decide this case.’” 136. Pausing there we would, were we called upon to decide, have no hesitation in saying that Xanadu was not an adjunct or accessory to the main house. We go on with Colchester : “22. … Mr Colchester criticised the FTT for omitting the final sentence of [20] of Cantrell No 2 which says: “It is unnecessary to reach any concluded view on that question to decide this case.” 23. Mr Colchester submitted that the final sentence of [20] of Cantrell No 2 showed that Sir Andrew Morritt adopted and applied Lightman J’s approach. We regard this submission as unsustainable. Reading [20] and [21] of Cantrell No 2 together, it is clear that Sir Andrew Morritt considered that there was no need for a wider enquiry where there was nothing in the physical features of a building to suggest that it was an adjunct or accessory to another and thus an annexe. He did not make a wider enquiry in Cantrell No 2 because he did not need to do so. Sir Andrew Morritt did not rule out the need for a wider enquiry in cases where the position is less clear than it was in Cantrell No 2 but rather accepted that it may be necessary in such cases. Because he did not need to undertake a wider enquiry in Cantrell No 2 , Sir Andrew Morritt’s observations on this point are obiter dicta. Nevertheless, we consider that they indicate an approach in relation to the issue of whether a structure is an annexe which is clearly correct and should be followed where the physical features of a building in themselves do not clearly lead to a conclusion as to whether or not it is an annexe. The status of the new building in this case was not as clear as in Cantrell No 2 . We consider that the FTT adopted the correct approach to determining whether the new building was an annexe of the Cottage when it undertook a wider enquiry, ie considered matters other than the physical characteristics and functionality of the new building only. … 25. Mr Colchester contended that if a wider enquiry were needed, which he did not accept, then the FTT had erred by considering irrelevant factors such as the intended use of the new building as indicated by the Written Justification document. We consider that the FTT in this case properly considered evidence that was relevant to the issue of whether the new building was an adjunct or accessory to the Cottage. In our view, such evidence includes, in addition to the physical characteristics of both structures which may or may not be determinative of the issue, the matters identified by Lightman J in Cantrell No 1 as illuminating the potential for use inherent in the building, namely “the terms of planning permissions, the motives behind undertaking the works and the intended or subsequent actual use”
“To obtain a VAT refund you must provide evidence that the works are lawful and send to us a copy of the Planning Permission.” 144. The appellant sent the planning permission. The word “lawful” here is clearly meant to be a reference to s 35(1)(b) VATA [6] , and can only we think be a reference to whether planning consent had been obtained, given the words used immediately after it in Question 12. It is surely not meant to be a requirement on the claimant that he self-certifies that he actually did everything and no more than the planning permission required whether explicitly or by implication, which is what HMRC’s submissions in this case amount to. 145. Despite the decision letter revealing no inaccuracies, the penalties letter said that HMRC required information to establish how the inaccuracies came about. One of the pieces of information required was “Please explain why you consider your claim to be eligible under the DIY scheme?”