“1. The following transactions shall be subject to VAT: … ( c ) the supply of services for consideration within the territory of a Member State by a taxable person acting as such; …”
“ 1. 'Taxable person' shall mean any person who, independently, carries out in any place any economic activity, whatever the purpose or results of that activity. Any activity of producers, traders or persons supplying services, including mining and agricultural activities and activities of the professions, shall be regarded as 'economic activity'. The exploitation of tangible or intangible property for the purposes of obtaining income therefrom on a continuing basis shall in particular be regarded as an economic activity. …”
“(1) VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. (2) A taxable supply is a supply of goods or services made in the United Kingdom other than an exempt supply.”
“In this Act “business” includes any trade, profession or vocation.”
“A supply of goods or services is zero-rated by virtue of this subsection if the goods or services are of a description for the time being specified in Schedule 8 or the supply is of a description for the time being so specified.”
“Item 2: The supply in the course of the construction of — ( a ) a building … intended for use solely for … a relevant charitable purpose; … of any services related to the construction other than the services of an architect, surveyor or any person acting as a consultant or in a supervisory capacity. … Item 4: The supply of building materials to a person to whom the supplier is supplying services within item 2 or 3 of this Group which include the incorporation of the materials into the building (or its site) in question. … Note 6: Use for a relevant charitable purpose means use by a charity in either or both the following ways, namely— ( a ) otherwise than in the course or furtherance of a business; … … Note 11: Where, a service falling within the description in items 2 or 3 is supplied in part in relation to the construction or conversion of a building and in part for other purposes, an apportionment may be made to determine the extent to which the supply is to be treated as falling within items 2 or 3. … Note 16: For the purpose of this Group, the construction of a building does not include— ( a ) the conversion, reconstruction or alteration of an existing building; or ( b ) any enlargement of, or extension to, an existing building …; or ( c ) subject to Note 17 below, the construction of an annexe to an existing building. Note 17: Note 16( c ) above shall not apply where the whole or a part of an annexe is intended for use solely for a relevant charitable purpose and ( a ) the annexe is capable of functioning independently from the existing building; and ( b ) the only access or where there is more than one means of access, the main access to: (i) the annexe is not via the existing building; and (ii) the existing building is not via the annexe. Note 18: A building only ceases to be an existing building when: ( a ) demolished completely to ground level; or ( b ) the part remaining above ground level consists of no more than a single facade or where a corner site, a double facade, the retention of which is a condition or requirement of statutory planning consent or similar permission. …”
“To promote the advancement of education and the advancement of the Islamic faith by the establishment of an institution in particular for the purposes of:- A) training adults and children for the Islamic priesthood and for the further education of suitably qualified Islamic priests. B) making adequate provision for higher studies of the Holy Qur’an, Hadith, Fiqah, Tafseer, Islamic history and philosophy. C) assisting such persons as aforesaid to engage in missionary activities designed to spread the Islamic faith to any part of the world. D) otherwise achieving the objects of the charity as the trustees reasonably think fit.”
“the construction of a building does not include - ( a ) the conversion, reconstruction or alteration of an existing building; or ( b ) any enlargement of, or extension to, an existing building …; or ( c ) subject to Note 17 below, the construction of an annexe to an existing building.”
“[52] Whether there is a supply of goods or services for consideration for the purposes of art 2 and whether that supply constitutes economic activity within art 9 are separate questions. A supply for consideration is a necessary but not sufficient condition for an economic activity. It is therefore logically the first question to address. It requires a legal relationship between the supplier and the recipient, pursuant to which there is reciprocal performance whereby the goods or services are supplied in return for the consideration provided by the recipient: see, for example, the judgment in Borsele at para 24. That is what is meant by 'a direct link' between the supply of the goods or services and the consideration provided by the recipient: see Borsele at para 26 and contrast Apple and Pear Development Council v Customs and Excise Comrs [(Case 102/86),[1988] STC 221 ]. There is no need for the consideration to be equal in value to the goods or services. It is simply the price at which the goods or services are supplied. This requirement was satisfied in both Finland and Borsele . [53] Satisfaction of the test for a supply for consideration under art 2 does not give rise to a presumption or general rule that the supply constitutes an economic activity. However, as Mr Puzey for HMRC pointed out, the Advocate General remarked in her opinion in Borsele at para 49, 'the same outcomes may often be expected'.”
“[54] Having concluded that the supply is made for consideration within the meaning of art 2, the court must address whether the supply constitutes an economic activity for the purposes of the definition of 'taxable person' in art 9. The issue is whether the supply is made for the purposes of obtaining income therefrom on a continuing basis. For convenience, the CJEU has used the shorthand of asking whether the supply is made 'for remuneration'. The important point is that 'remuneration' here is not the same as 'consideration' in the art 2 sense, and in my view it is helpful to keep the two terms separate, using 'consideration' in the context of art 2 and 'remuneration' in the context of art 9. [55] Whether art 9 is satisfied requires a wide-ranging, not a narrow, enquiry. All the objective circumstances in which the goods or services are supplied must be examined: see the judgment in Borsele at para 29. Nonetheless, it is clear from the CJEU authorities that this does not include subjective factors such as whether the supplier is aiming to make a profit. Although a supply 'for the purpose of obtaining income' might in other contexts, by the use of the word 'purpose', suggest a subjective test, that is clearly not the case in the context of art 9. It is an entirely objective enquiry. [56] In describing the relationship between the supply and the charges made to the recipients in the context of art 9, the CJEU has used the word 'link'. … [58] … The word 'link', whether 'sufficient' or 'direct', is used as no more than shorthand to encompass the broad enquiry as to whether the supply is made for the purpose of obtaining income. It is not a separate test, or one of the factors to be considered when addressing the central question. For my part, I think it is apt to cause some confusion to use the same word for both art 2 and art 9 and I have not myself found it particularly helpful or illuminating in considering whether there exists an economic activity. [59] Each case requires a fact-sensitive enquiry. While cases concerning the supply of legal aid services or school transport will provide helpful pointers to at least some of the factors relevant to the supply of subsidised educational courses, there is not a checklist of factors to work through. Even where the same factors are present, they may assume different relative importance in different cases. The CJEU made clear in Borsele at para 32 that it was for the national court to assess all the facts of a case.”
“ The Group 5 sch 8 provisions 16. By Item 2 the legislation grants zero-rating for the supply in the course of the construction of a building intended for use solely for a relevant charitable purpose, of any services related to the construction other than the services of an architect, surveyor, consultant or supervisor. Item 4 extends the zero-rating to building materials (defined by Note 22) supplied by the supplier of Item 2 services which include incorporation of the materials into the building. Note 6 defines “relevant charitable purpose” and it is common ground that the Diocese satisfies that test in relation to the Church. Note 12 requires the customer to certify the supply relates to such purpose, and the Diocese issued such a certificate. 17. Notes 16 & 17 adopt a restrictive definition of what construction can qualify for zero rating. “Construction of a building” does not include: · The conversion of an existing building · The reconstruction of an existing building · The alteration of an existing building · Any enlargement of an existing building · Any extension to an existing building · The construction of an annexe to an existing building except where: o the whole or part of the annexe is intended for use solely for relevant charitable purposes, and o the annexe is capable of functioning independently from the existing building, and o the only or main access to the annexe is not via the existing building (and vice versa). 18. Note 18 provides that a building only ceases to be an “existing building” when (a) demolished completely to ground level; or (b) the part remaining above ground level consists of no more than a single façade (or double façade on a corner site) the retention of which is a condition or requirement of statutory planning consent or similar permission. The approach 19. The approach to be followed in cases such as this one is set out in High Court authorities, and I adopt the explanation provided by the Upper Tribunal in Colchester[2014] STC 2078 (for clarity, although similar in name this is a different case from Colchester Sixth Form College cited above): “[12] The leading authorities on the meaning of annexe for the purposes of Group 5 of Sch 8 to the VATA are two decisions of the High Court which both relate to the same appellant and supplies. Mr and Mrs Cantrell operated a nursing home which consisted of two units, in separate buildings, accommodating patients with different needs. Having obtained planning consent, Mr and Mrs Cantrell demolished an existing building at their nursing home and built a new one to house elderly severely mentally infirm patients. The new building was completely self-contained. It abutted an extension ('the New Barn') to the other unit's building at one corner; a fire door, which was for emergency use only, connected the two units. HMRC considered that the construction of the new building was standard rated as the enlargement of or an extension or annexe to an existing building. Mr and Mrs Cantrell appealed to the VAT and Duties Tribunal which held that the new structure was an enlargement and might also be an annexe. Mr and Mrs Cantrell appealed to the High Court. [13] In Cantrell (t/a Foxearth Lodge Nursing Home) v Customs and Excise Comrs[2000] STC 100 (' Cantrell No 1 '), Lightman J held that the tribunal had made a material mistake of fact and had taken into account extraneous and irrelevant considerations. He remitted the matter for a rehearing. In his judgment, Lightman J observed, at para 4 of the judgment, that the question was one of fact, not law, to be determined by applying a two-stage test as follows: 'The two-stage test for determining whether the works carried out constituted an enlargement, extension or annexe to an existing building is well established. It requires an examination and comparison of the building as it was or (if more than one) the buildings as they were before the works were carried out and the building or buildings as they will be after the works are completed; and the question then to be asked is whether the completed works amount to the enlargement of or the extension or the construction of an annexe to the original building … I must however add a few words regarding how the question is to be approached and answered … First the question is to be asked as at the date of the supply. It is necessary to examine the pre-existing building or buildings and the building or buildings in course of construction when the supply is made. What is in the course of construction at the date of supply is in any ordinary case (save for example in case of a dramatic change in the plans) the building subsequently constructed. Secondly the answer must be given after an objective examination of the physical characters of the building or buildings at the two points in time, having regard (inter alia) to similarities and differences in appearance, the layout and how the building or buildings are equipped to function. The terms of planning permissions, the motives behind undertaking the works and the intended or subsequent actual use are irrelevant, save possibly to illuminate the potentials for use inherent in the building or buildings.' [14] Lightman J remitted the case to the VAT and Duties Tribunal with the guidance at para 12 that: '… regard must be only to the physical character of the buildings in course of construction at the date of the relevant supply and that the subjective intentions on the part of Mr and Mrs Cantrell as to their future use, their subsequent use and the terms of the planning permission regulating their future use are irrelevant, save only in so far as they throw light upon the potential use and functioning of the buildings.' [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 (t/a Foxearth Lodge Nursing Home) v Customs and Excise Comrs (No 2)[2003] EWHC 404 (Ch) ,[2003] STC 486 (' Cantrell No 2 '), Sir Andrew Morritt V-C defined annexe in Note (16) to Group 5 of Sch 8 as follows: '[16] … 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”. [17] 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 inquiry. It is unnecessary to reach any concluded view on that question to decide this case.' [17] The reason why Sir Andrew Morritt considered that it was not necessary for him to reach a concluded view on the issue of whether a wider inquiry was necessary in Cantrell No 2 is made clear in the next paragraph of the judgment. At [21], Sir Andrew Morritt said: 'It is clear from the quotations of the Tribunal's findings I have set out … above and from the plans and photographs put before the Tribunal and me that there is nothing in the physical features of the building … to suggest that it was an adjunct of or accessory to the New Barn so as to be an annexe to the New Barn. Neither contiguity, common ownership nor inclusion in the building complex as a whole does so. If it is legitimate to look more widely than the purely physical characteristics then the medical requirements for the separation of [one] unit from [the other] unit show clearly that the latter is in no sense an adjunct of or accessory to the former.'”