The defendant had a contract to remove about 425,000 tonnes of material from the site of a new warehouse and lorry park. The claimant sought to require the defendant to register for the aggregates levy pursuant to Section 24(2) of the Finance Act 2001 ("the Act"). The defendant maintained that it was exempt from registration. The VAT and Duties Tribunal agreed with the defendant. This was the claimant's appeal to the High Court from the decision of that tribunal.
It was not in dispute that the materials being removed by the defendant fell within the definition of "aggregate" in Section 17(1) of the Act. The defendant sought to rely upon Section 17(3)(b) which exempted the aggregate from the levy otherwise imposed by the Act if:

"it consists wholly of aggregates won by being removed from the ground on the site of any building or proposed building in the course of excavations lawfully carried out –

(i) in connection with the modification or erection of the building; and

(ii) exclusively for the purpose of laying foundations or of laying any pipe or cable.

The defendant argued that "the site of the proposed building" extended to the full area to be developed. The claimant argued that the site of the proposed building was limited to its footprint.

Reference

The court held that "the site of the proposed building" was the entire area on which the builders would be working for the purpose of constructing the building and laying any services serving it. The aggregate therefore was exempt from the levy. *Full case details Customs and Excise Commissioners vs East Midlands Aggregates Limited, 23 April 2004, High Court Chancery Division, Judgment of Mr Justice Rimer.

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Postscript

The defendant had priced its contract on the basis that it would not have to pay tax upon the aggregate it was moving. The result was an intriguing argument between the tax authorities and a member of the building industry about what is the "site of a building". The contractor won the argument, and preserved its profit margin for the job. In rejecting the claimant's contention that the "site of the building" should be precisely that area upon which the building was situated, the judge commented as follows: "I cannot accept that it could have been the intention of Parliament that the exemption should extend only to the material removed from the footprint of the building in order to accommodate such pipes and cables, while aggregate removed from the immediate area of building operations but outside the footprint of the building itself would be taxable. I am satisfied that the word "site" is to be construed so as to include the whole area of land on which the work of erecting a building is to be undertaken." The industry will no doubt be grateful to the High Court for upholding the tribunal's common sense conclusion.