Metropole (Folkstone) appealed against a decision of the Customs commissioners that the supply of works to replace the balcony of a listed building was standard rated for VAT purposes. Metropole was a company representing the flat owners who had purchased the freehold to a listed building. Once Metropole purchased the freehold, the company set out restoring the building.
On the third floor of the building was a balcony. The balcony had been inspected by a surveyor who advised to demolish it as an emergency measure as it had become unsafe. Metropole did so. Metropole was then required to replace the demolished balcony by the local council architect. Metropole did so using modern materials and incorporated some additional features to ensure the structural integrity of the balcony. However, visually the new balcony was identical to the original balcony that had been demolished.
Was the replacement of the balcony zero-rated or standard rated for the purposes of VAT?
The works to replace the balcony constituted works of repair and maintenance to a listed building and fell outside the scope of the exemptions in the VAT act. Therefore, the supply of these works was standard rated. The relevant works in question was the replacement of the balcony (rather than the demolition and replacement) as the relevant consent had not been obtained for the demolition of the balcony. Although the replacement effected a radical change to one face of the building, the change to the building as a whole was not radical or fundamental.
*Full case details
Metropole (Folkstone) Ltd v Revenue & Customs Commissioners (VADT19917)
(V&DTr, 4 December 2006, Charles Hellier, Miss S Wong Chong)
Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk
In the context of the VAT legislation, supply, in the course of an approved alternation of a protected building, of any services other than the services of an architect or any person acting as a consultant or in a supervisory capacity is zero rated. However, the approved alteration must be of a fundamental nature, and therefore repair and maintenance does not fall into this category. People carrying out works to listed buildings should therefore consider whether the works are subject to VAT prior to carrying out the works.