“(16) For the purpose of this Group, the construction of a building does not include 4 (a) the conversion, reconstruction or alteration of an existing building; or … (b) any enlargement of, or extension to, an existing building except to the extent the enlargement or extension creates 5 an additional dwelling or dwellings; or (c) … the construction of an annexe to an existing building.”
“(18) A building only ceases to be an existing building when: 10 (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. 15 12. Section 29A of the VATA provides that VAT is charged at the reduced rate of 5% on any supply of a description specified in Schedule 7A to the VATA. Item 1 of Group 6 of Schedule 7A specifies the supply of qualifying services in relation to a qualifying conversion. Item 2 of Group 6 specifies the supply of building materials supplied by a supplier under item 1 who also incorporates the materials in the building 20 or its site. Note 2 to Group 6 provides that a qualifying conversion means, among other things that are not relevant, a special residential conversion. A special residential conversion is defined by Note 7 to the group as including “a conversion of premises consisting of … a building or two or more buildings” provided that two conditions specified in Note 7 are satisfied. There was no dispute that the first 25 condition in Note 7 to Group 6 of Schedule 7A was satisfied in this case. The second condition is that where the premises being converted are intended to be used for an institutional purpose, such as a nursing home, they “must be intended to form after the conversion the entirety of an institution used for that purpose”
“The development carried out by Astral retained the church as its centrepiece. Two new 2-storey wings were built, one to the north and one to the south of the church. Each wing contained, on each of the 15 two floors, en suite bedrooms situated opposite each other divided by a central corridor and at the end of each of the corridors on both floors, facing into Hall Road were large dayrooms. Each of the two wings, at their rear, were connected into a further wing running at right angles to each of them. This further wing contained further bedrooms, 20 bathrooms, dining rooms, dayroom and treatment rooms. There had therefore, in effect, been created three new sides of a square with the church and each of the ends of two of the wings making up a fourth side. To the rear of the connecting wing, and connected into it, at ground floor level were kitchen and staff facilities. The three new 25 wings were all connected into the church by five brick and glass walkways, three at ground floor level and two at first floor level.”
“Viewing the final construction here, we believe that the point is 25 certainly reached where it can only be a misnomer to describe the works as an extension. Viewed structurally and as a whole the church can only be described as being dwarfed by the new build. This is apparent from the front where the church is flanked by the two new wings each of roughly equivalent width to the church itself. It is more 30 apparent from all other views where the church is all but unseen within and behind the three new wings. We accept that the church is a focal point looked at from Hall Road but even on this easterly aspect, in the most generous definition of the word, it does not “dominate” the façade as contended by [HMRC]. Looking at the final complete 35 structure one sees a large fully functioning care home of modern design. In a very attractive way it has incorporated an old and disused church. No objective observer however could see the new build as an extension or enlargement to the church. There is just no impression of enlargement. The sheer scale of the works precludes this.” 40 21. The FTT summarised its conclusion at [20] as follows: “In summary, the structure which now exists is one single fully functioning nursing home. As a matter of impression, size, shape, function and character it is so vastly different from the existing church that it cannot be said to constitute the conversion of the church or an 45 enlargement of or extension to the church. We therefore find that the works do fall to be zero rated within Item 2 and we reject the 7 Commissioners’ contention that they are taken out of zero rating by Notes 16(a) or 16(b). The appeal is therefore allowed.”
“The stance which an appellate court should take towards a point not raised at the trial is in general well settled: Macdougall v. Knight 40(1889) 14 App Cas 194 and The Tasmania(1890) 15 App Cas 223 . It is perhaps best stated in Ex parte Firth, In re Cowburn(1882) 19 Ch D 419 , 429, per Sir George Jessel M.R.: ‘the rule is that, if a point was not taken before the tribunal which hears the evidence, and evidence could have been adduced which by 45 any possibility would prevent the point from succeeding, it cannot 9 be taken afterwards. You are bound to take the point in the first instance, so as to enable the other party to give evidence.’ Even if the point is a pure point of law, the appellate court retains a discretion to exclude it. But where we can be confident, first, that the other party has had opportunity enough to meet it, 5 secondly, that he has not acted to his detriment on the faith of the earlier omission to raise it and, thirdly, that he can be adequately protected in costs, our usual practice is to allow a pure point of law not raised below to be taken in this court. Otherwise, in the name of doing justice to the other party, 10 we might, through visiting the sins of the adviser on the client, do an injustice to the party who seeks to raise it.”
“[47] It therefore appears to their Lordships that despite the fact that the true construction of the contract was not argued before the judge, the plaintiffs could not have complained of prejudice if the point had been taken before the Court of Appeal. It was a question of law on 25 which no further evidence could have been called. The position is the same before their Lordships' Board. It is no doubt very disappointing for the plaintiffs, having succeeded in the courts below, to lose on a new point in the final court. On the other hand, it would be a miscarriage of justice if the Meat Board were required to pay some 30$7m out of public funds when it had no legal liability to do so, merely on account of the way its advisers had conducted the litigation. Mr Cooke referred their Lordships to a recent observation of Lord Bingham of Cornhill in Grobbelaar v News Group Newspapers Ltd[2002] UKHL 40 ,[2002] 1 WLR 3024 , 3034, para 21: 35 ‘Only rarely and with extreme caution will the House permit counsel to withdraw from a concession which has formed the basis of argument and judgment in the Court of Appeal.’ That is a sound policy and in deciding to allow the concession to be withdrawn, their Lordships hope they have displayed the same caution 40 as the House did in Grobbelaar's case. If there were any possibility that the outcome could have been affected if the point had been taken earlier, that would of course have been an entirely different matter. But their Lordships consider that in this case the plaintiffs can be adequately compensated by a suitable order for costs.” 45 32. In Crane (t/a Indigital Satellite Services) v Sky In-Home Limited[2008] EWCA Civ 978 , Arden LJ said at [22]: 11 “The circumstances in which a party may seek to raise a new point on appeal are no doubt many and various, and the court will no doubt have to consider each case individually. However, the principle that permission to raise a new point should not be given lightly is likely to apply in every case, save where there is a point of 5 law which does not involve any further evidence and which involves little variation in the case which the party has already had to meet (see Pittalis v Grant[1989] QB 605 ). (If the point succeeds, the losing party may be protected by a special order as to costs.) Sometimes a party will seek 10 to raise a new point because of some other development in the law in other litigation, which he could not fairly have anticipated at the time of the trial. In some cases, the court may wish to take into account the importance of the point raised. Likewise, in [Paramount Export], one of the factors which influenced the Privy Council was the fact that it 15 was in the public interest to allow a public body, which would otherwise end up liable to pay large sums, to raise on appeal a point of construction involving no new evidence.”
“Once what constitutes the relevant ‘building’ 5 has been identified, ‘construction’, as the Court of Appeal had earlier pointed out, in the absence of any reference to ‘part of a building’, means erecting the building as a whole and ‘demolition’ means destroying it as a whole, so ‘alteration’ is left to cover all works to the fabric of the building 10 which fall short of complete erection or complete demolition.”
“To my mind the meaning of Schedule 5 is clear and simple. If there is a construction of a whole building where no building was in existence 10 when the work started, or if the demolition is of the entire building, then the case falls under Items 1 and 2. If, on the other hand, there is an existing building, then the supply is almost inevitably standard-rated (which, after all, is how most supplies are treated) because, unless it is de minimis, the work will inevitably fall within a description of 15 conversion, reconstruction, alteration or enlargement. The difficulty in separating the Item 2 case from the Note (1A) case will often be in deciding whether - and this is a matter of fact and degree - what one starts with is a ‘an existing building’ or whether the original structure has been so damaged or decayed that it can no longer be properly so 20 described.”
“Where, as will ordinarily be so, it is beyond argument that a building was in existence before the work began, all that para (a) of note (9) [the 30 predecessor of Note 16 in terms that were not materially different] requires is to consider the building as it was, to consider the end result and to ask whether the work done amounts to the conversion, reconstruction, alteration or enlargement of the original building in the sense in which those words are commonly used or whether the end 35 result is a new building. If a number of buildings existed before the work began the question will be whether the work amounted to the conversion, reconstruction, alteration or enlargement of one or more of them. The matter is one of fact and degree.”
“… the reference in Note (1A)(b) [this must have been intended to be a reference to Note (1A)(a)] to existing building supports the conclusion 10 that what must still be there after the conversion, alteration or enlargement is something that as a matter of common sense must be described as the existing building. Obviously it will not be precisely the same, however minor the works of alteration that are carried out. But a reasonable person, who is fully informed as to the work that has 15 been carried out both externally and internally can say whether or not the old building has been altered. I would regard this as a jury question; and is very much a question of fact, degree and also of impression.”
“The question for the tribunal was whether the works were in the course of an ‘enlargement’ of or ‘extension’ within the meaning of note (16) or an ‘annexe’ to an existing building, so as to be excluded 17 from zero-rating. The question whether the works carried out constituted an enlargement, extension or annexe is a question of fact, not law (see [London Diocesan Fund] at 383 per McCullough J). Therefore the tribunal’s decision cannot be disturbed unless it misdirected itself in law or the true and only 5 reasonable conclusion on the facts found is inconsistent with the decision (see [Edwards v Bairstow]).”
“Mr Pleming [counsel for Customs and Excise] submits that the tribunal’s approach confuses the extent of the work of conversion, alteration and enlargement, with the fact of such conversion etc. The concept of newness is an unnecessary and confusing gloss on the 10 language of the statute. Laws J rejected Mr Pleming’s submission. The core of his reasoning is where he said (at 904): ‘If the matter were res integra, my view of the relationship between item 2 and note (1A) would be as follows: (1) The notion of ‘the 15 construction … of any building’ is capable of embracing the notion of ‘the conversion, reconstruction, alteration or enlargement of any existing building’ since otherwise note (1A)(a) would be redundant. (2) Note (1A)(a) excepts from item 2 a case where works falling within the meaning of any of the four nouns in note (1A)(a) are 20 carried out to an existing building, and such works may plainly be very substantial. (3) The touchstone for the application of note (1A)(a) is whether a reasonable person, apprised of all the facts, would conclude that the building which existed before the works started still retains its identity -in that sense, still exists- at their 25 completion, though it may have been transformed by conversion, etc. Whether that is the correct conclusion in any particular case will be a matter of fact and degree. The key is the continuity or otherwise of the identity of the building which was there before the works started.’ 30 Referring to Mr Pleming’s argument that the tribunal had confused the extent of conversion etc with the fact of it, he said (at 905): ‘His position entails the proposition that the continuity of the preexisting building’s identity is not at all the touchstone for the proper application of the note. The difficulty with this argument, in my 35 judgment, is not only that it fails to give due weight to the expression ‘existing building’, but also that it fails to confront the very sense of the four nouns used in the note-or at least three of them. The words ‘conversion’, ‘alteration’, and ‘enlargement’ seem to me to connote a state of affairs in which the building upon which 40 such works are done necessarily remains after they are done. One cannot sensibly ascribe any of these three descriptions to a case where the old building is, in effect, destroyed by the works in question. As a matter of language each of the three implies the contrary. If a building has been converted, altered, or enlarged, it 45 has plainly not been destroyed; it continues to exist though it may have been substantially transformed.’ For my part I agree with and would adopt the judge’s reasoning. It seems to me that Mr Pleming’s construction does not give any or 19 sufficient weight to the word ‘existing’. Indeed it could perfectly well be omitted.”
“The external structure of the church remains unchanged but there has been a conversion of the church in the sense of its appearance, internal layout and use having been altered. In external appearance, it is no longer freestanding but to each side gives into glass and brickwork 20 walkways. It is very obviously now a fully integrated part of another structure. Internally, it is structurally transformed from being of a single storey to having the mezzanine floor added. Additionally, further rooms have been made out of the open space in the form of a shop, activity room and office. In terms of use there is a clear 25 conversion from that of a church or former church into a fully functioning reception and office area serving a care home. However, conversion there may have been but in no way can it be said that the church has been converted into the care home. Again it involves a question of degree. The church has been structurally integrated into 30 the care home but forms a proportionately very small area of it in terms of size and a function.”
“… where the relevant residential purpose for which the premises are intended to be used is an institutional purpose [eg as a nursing home], 22 the premises being converted must be intended to form after the conversion the entirety of an institution used for that purpose.”