Customs and Excise Comrs v Zielinski Baker and Partners Ltd

For VAT zero-rating, the definition of a protected building must be construed holistically. A separate structure within the curtilage of a listed building may be treated as part of that listed building under the Planning (Listed Buildings and Conservation Areas) Act 1990. The relevant building is therefore the listed main building, rather than necessarily the structure physically altered. An approved alteration to an existing curtilage structure can qualify where the main building is a dwelling and the structure forms part of it for planning purposes. The exclusion of new separate construction from alteration does not require an existing secondary structure to qualify independently as a dwelling.

The appellant provided services in converting an outbuilding within the curtilage of a listed dwelling into changing and games facilities. Listed-building consent had been obtained. The Birmingham VAT and Duties Tribunal held that the work was zero-rated under Group 6 of Schedule 8 to the Value Added Tax Act 1994. Etherton J allowed the Commissioners’ appeal on the basis that the outbuilding itself had to be a dwelling within the definition of a protected building. The appellant appealed to the Court of Appeal. The Commissioners brought a cross-appeal, arguing that the outbuilding was not a listed building within the meaning of the 1990 Act. The central issues were the meaning of protected building and whether the statutory definition should be applied step by step or as a whole.

By a majority comprising Lord Justice Rix and Lord Justice Tuckey, the appeal was allowed. The Commissioners’ cross-appeal was dismissed. Lord Justice Aldous dissented on the main appeal but agreed that the cross-appeal should fail.

1. Cross-appeal. The reference in Group 6 to a listed building within the meaning of the Planning (Listed Buildings and Conservation Areas) Act 1990 incorporated the extended definition in section 1(5). A qualifying structure within the curtilage, forming part of the land before 1 July 1948, was therefore treated as part of the listed building. The words limiting the deeming provision to the purposes of the Planning Act did not prevent its use in construing the VAT legislation.
2. Main appeal. Lord Justice Rix held that Group 6 had to be read as a whole. The statutory language did not require the court first to identify the physically altered structure and then ask whether that structure independently satisfied every part of the definition. The concept of an approved alteration was linked to the listed main building and to the planning consent granted for the works.
3. The existing outbuilding was treated as part of the listed house. The house was a dwelling with self-contained living accommodation, and the approved conversion was an alteration of that protected building. The services therefore fell within Item 2 and were zero-rated.
4. Note (10) supported that construction. It excluded the construction of a new separate building in the curtilage from being an alteration of the protected building. It would otherwise have no sensible function. The note did not require an existing secondary structure, already part of the listed building, to qualify independently as a dwelling.
5. The European VAT context and the principle that zero-rating must rest on clearly defined social reasons did not resolve the statutory construction. Lord Justice Aldous adopted the contrary step-by-step approach, treating the outbuilding as the relevant building and therefore outside the definition because it was not itself a dwelling.

The order allowed the appeal, dismissed the cross-appeal, awarded the appeal and lower-court costs to the appellant, and refused permission to appeal to the House of Lords.

• Court of Appeal: [2002] EWCA Civ 692. Appeal allowed by a majority; cross-appeal dismissed.
• Chancery Division: Etherton J, 9 May 2001. The Commissioners’ appeal from the tribunal was allowed.
• Birmingham VAT and Duties Tribunal: 4 July 2000. The appellant’s contention that the relevant work was zero-rated was accepted.