Conservatory Roofing UK Limited v The Commissioners for HMRC

A tribunal must give sufficient reasons to identify the issues vital to its conclusion and explain how it resolved them. The required degree of detail depends on the issues, but reasons are inadequate where they do not address relevant and contested evidence or submissions, leaving the losing party and an appellate court unable to understand why they were rejected.

In determining the predominant element of a single complex VAT supply, the assessment is made from the viewpoint of the typical consumer. It is an overall assessment based on objective factors. It may take account of qualitative and quantitative aspects, and is not confined to matters known by that consumer.

Conservatory Roofing UK Limited appealed from the First-tier Tribunal decision, [2020] UKFTT 0506 (TC). The FTT held that the company’s work on conservatory roofs was a standard-rated supply of a composite insulated roofing system, rather than reduced-rated insulation for roofs under Value Added Tax Act 1994, Schedule 7A, Group 2, Note 1(a).

The company contended that the FTT had failed to give adequate reasons and had incorrectly applied the predominant-element test for a single complex VAT supply. The Upper Tribunal had to decide whether the FTT’s reasoning disclosed a material error of law and, if so, the appropriate disposal.

1. Appeal allowed. The FTT decision was set aside because its reasons were inadequate. The case was remitted for a complete rehearing before a new FTT panel.

2. The applicable reasons authorities require a tribunal to identify the issues vital to its conclusion and explain how it resolved them. It need not address every item of evidence or every peripheral submission. The Upper Tribunal must read the decision in the context of the material before the lower tribunal and decide whether the reasons nevertheless disclose why it reached its conclusion.

3. The FTT had sufficiently addressed some matters, including the asserted purpose of keeping the conservatory cool in summer and warm in winter, and the claimed factual distinction from HMRC v Wetheralds Construction Limited. However, it did not address the company’s submission that its marketing material gave a mixed message. It had reproduced and adopted only the material relied on by HMRC, without explaining why contrary passages were rejected.

4. The FTT also gave no indication that it had considered relevant live evidence about how a typical consumer would view the transaction. That issue was contested. Its conclusion that the typical consumer would regard the supply as a new roofing system rested on selected marketing material and the finished product, but did not explain why the company’s contrary evidence was rejected.

5. The omissions were material. The Upper Tribunal could not confidently determine what effect the unaddressed evidence and submissions might have had. The FTT’s method of extensively recounting the successful party’s submissions and then concurring with them was discouraged, since it did not provide a sound basis for adequately reasoned findings.

6. Although unnecessary to the result, the Upper Tribunal rejected the second ground. The predominant element of a single complex supply is assessed from the viewpoint of the typical consumer by reference to objective factors. The FTT’s reference to what such a consumer might say was simply a way of expressing that viewpoint. It was also entitled, in an overall assessment, to consider quantitative aspects alongside qualitative importance.

• Upper Tribunal (Tax and Chancery Chamber): appeal allowed; the FTT decision was set aside and the case remitted for rehearing before a new panel.
• First-tier Tribunal: Conservatory Roofing UK Limited v Revenue and Customs Commissioners [2020] UKFTT 0506 (TC). The FTT had held that the supplies were standard-rated composite insulated roofing systems rather than reduced-rated insulation for roofs.