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When is a building not a building?

Interesting (and amusing) VAT case on immovable property

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HMRC assessed output tax of £638k on the basis the business was making taxable supplies rather than exempt land related supplies.

The taxpayer owned a commercial property which had been converted into a self-storage facility.  It contained mezzanine floors which were a steel frame covered with plywood. On the ground floor the base was concrete. Each floor was kept in place with bolts. The Store Pods are manufactured from single skin sheet metal with doors constructed from steel and swing outward. The mezzanine floors provide the ceilings for the Store Pods below with the exception of the top floor. On that floor the Store Pods are fitted with, what is described in the specification as, a “mesh roof to prevent any unauthorised access”. There are corridors, communal areas and stairwells. 

It sort of feels like those Ibis hotels where the bathrooms are plastic, made off site and slotted into the final bedroom.

Essentially, the taxpayer argues that the Store Pods are simply rooms in the building. They are the equivalent of flats in an apartment block.  By contrast HMRC argue that it is for taxpayer to prove that the property is immoveable. The fact that the mezzanine floors and the mesh on the top floor lie on top of the Store Pods as caps and that the walls are simply steel skins point to the inference that they should be moveable.

I think the Tribunal sums up this case very well at (58) when they state "Frankly, on even a superficial basis, we had difficulty with HMRC’s argument. The pictures demonstrated clearly that the Store Pods simply looked like rooms in a building. On each floor they are each constructed on a single steel floorplate in the building. They are all functionally and structurally linked together. It would be impossible to move a Store Pod on any of the lower floors since that would affect the adjacent Store Pods. It is conceivable, if it were possible to move it, that a Store Pod on the top floor might be capable of being moved but it would have no roof or top. Even if it were possible to move one Store Pod it would have neither a top nor a floor and the majority would have no sides since they would still be in place supporting the other Store Pods. The lease makes it explicit that the Store Pod includes tops and floors."

I guess if one took some shipping containers and stacked them inside a building, that does not itself turn it into a immovable property, so I sort of see HMRc's logic to a tiny degree, but as the storage facilities were built in and around the property, the Tribunal were satisfied the structure was permanent and not moveable as HMRC contended.  At a theoretical level, everything is moveable, buildings can be raised to the ground, so its' not clear if HMRC were trying to push the boundaries of that definition or whether the taxpayer was.



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By VATs-enough
11th Nov 2021 16:40

Thanks for sharing Jason

Reverse Sibcas ?

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Replying to VATs-enough:
Jason Croke
By Jason Croke
11th Nov 2021 17:05

Yes, I suppose it is! I know I mentioned shipping containers being stacked but I guess portacabin/temporary type buildings are not dis-similar. I can only presume HMRC are looking at these sort of constructions whereby you stick pre-fabricated boxes inside a building and call the whole thing a refit and/or a supply of land.

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