DECISION
Background
1. The
appellant is the proprietor and operator of Tallington Lakes which is a substantial
holiday park and water sports complex near Stamford in Lincolnshire. The site
includes a large number of static caravans which for present purposes we will
describe as “mobile homes”. The appellant’s income includes pitch fees from the
owners of mobile homes on the site.
2. This
appeal concerns the refusal of a voluntary disclosure for VAT purposes made by
the appellant on 17 December 2008. The net sum claimed in the voluntary
disclosure was £508,238. It covered the VAT periods 04/89 to 12/03 and included
a claim for repayment of output tax in the sum of £531,698 which the appellant
had accounted for in those periods. The claim was made on the basis that the underlying
supplies of pitches were in fact exempt supplies. It was rejected by HMRC in a letter
dated 25 February 2009 on the basis that it was partly capped and in any event
the supplies made by the appellant were all taxable at the standard rate and
output tax had been properly accounted for by the appellant.
3. This is
not the first such claim made by the appellant. On 9 January 2007 the VAT &
Duties Tribunal, allowed an appeal against HMRC’s refusal of a similar claim
for periods 03/01 to 12/03 – see Tallington Lakes Ltd v HMRC [2007]
UKVAT Decision 19972. That
decision was subsequently reversed on an appeal by HMRC to the High Court – see
HMRC v Tallington Lakes Ltd [2007] EWHC 1955 (Ch). We describe these
proceedings (“the 2007 Proceedings”) in more detail below.
4. Subsequent
to the 2007 Proceedings the House of Lords delivered judgment in the case of Fleming
(t/a Bodycraft) v HM Revenue & Customs [2008]UKHL 2. It was this
decision which effectively opened the door to certain repayment claims going
beyond the 3 year capping which was introduced in 1996. This prompted the
appellant to make the present voluntary disclosure going back to April 1989.
5. Mr Neil
Morgan is a director of the appellant and represented the appellant before us.
He also gave evidence on behalf of the appellant. In the course of
correspondence in 2011 Mr Morgan accepted that the appellant could not maintain
any claim to repayment arising after 4 December 1996. We are therefore concerned
with the appellant’s claim for repayment of output tax in the period 1 April
1989 to 4 December 1996.
6. The
essence of the dispute between the parties is whether or not mobile homes on
the site were subject to an occupancy restriction in the period 1 April 1989 to
4 December 1996. In particular a restriction preventing owners from occupying
in the month of February in each year. If there was such a restriction in place
the pitch fees charged by the appellant would be standard rated. If there was
no such restriction the pitch fees would be exempt from VAT.
7. An issue
also arises as to the extent to which the appellant is bound by certain
findings in the 2007 Proceedings. In our view and in the circumstances set out
below the findings of fact in the 2007 Proceedings could only apply in relation
to the period from 1991 to 1996. That period does not cover the whole period of
the voluntary disclosure and on that basis we will deal with our findings of
fact before considering the effect of the 2007 Proceedings on the present
appeal. We shall deal with the issues before us in the following order:
(1)
The legal framework
(2)
Facts not in dispute
(3)
The evidence
(4)
The parties’ submissions on the evidence
(5)
Findings of fact
(6)
The 2007 proceedings
(7)
Decision
The Legal Framework
8. We are
concerned in this appeal with the VAT position in relation to caravan pitches
from April 1989 onwards. However it is necessary for us to consider the
position prior to April 1989 in order to understand the evidence as to how the
appellant came to account for output tax on supplies of pitches after that date.
9. The supply
by way of sale of a caravan or mobile home has always been zero rated for VAT
purposes. We are not directly concerned with such supplies but we mention it
because some of the evidence refers to zero rated supplies made by the
appellant.
10. Prior to April 1989 Group
1 Schedule 6 VAT Act 1983 exempted the grant of a licence to occupy
land save in relation to a number of exceptions which included:
“(a) the
provision of accommodation in a hotel, inn, boarding house or similar establishment
or of holiday accommodation in a house, flat, caravan or houseboat;
(b) the
granting of facilities for camping in tents or caravans”
11. This was the position until
April 1989. The Finance Act 1989 introduced wholesale amendments to Group 1
Schedule 6. The corresponding exclusion from exemption was by reference to
supplies of “seasonal pitches” for caravans. For these purposes seasonal
pitches were defined as follows:
“A seasonal pitch is a
pitch –
(a) which is provided for a
period of less than a year; or
(b) which is provided for a
year or a period longer than a year but which the person to whom it is provided
is prevented by the terms of any covenant, statutory planning consent or
similar permission from occupying by living in a caravan at all times
throughout the period for which the pitch is provided.”
12. We understand that the
amendment by reference to seasonal pitches was intended to reverse or at least
clarify the decision of the VAT Tribunal in Warner v Commissioners of
Customs & Excise MAN/86/385 which was released on 23 June 1987. In that
case the Tribunal was concerned with both “short stay” and “long stay”
caravans. Long stay caravans on the site could not be occupied in the period
November to February in any year. The Tribunal held that the supply of a pitch
for camping in a caravan was excluded from exemption and that in practice
camping would generally involve a stay on the site of up to 4 weeks. It appears
from that decision that HM Customs & Excise (as it then was) considered, at
least until 1984, that the right to place a caravan on a site for longer than a
temporary stay was exempt. In VAT leaflet 701/20/84 they appear to have adopted
a different approach as follows:
“A supply is regarded as
the provision of facilities for camping if the pitch is let for a period of
less than a year. A supply may be treated as exempt under the Group if the
terms of any written agreement, or the invoices issued pursuant to the
agreement, make it clear that an annual agreement is intended.”
13. The Tribunal in Warner
did not agree that this approach reflected the law as set out in VAT Act
1983. The term “camping” was much more restrictive and therefore the long
stay caravans were exempt. It can be seen that the amendments introduced in
1989 gave more certainty to the scope of the exemption in relation to caravans,
including mobile homes. It also closely reflected the approach in leaflet
701/20/84.
14. Apart from the VAT position,
we were also referred to various provisions in relation to the regulation of
caravan sites. In particular Mr McGurk, who appears on behalf of the
respondents, referred us to the Caravan Sites and Control of Development Act
1960 (“the 1960 Act”).
15. Section 1 of the 1960 Act
provides that no occupier of land shall permit it to be used as a caravan site
unless he is the holder of a site licence. Breach of the provision is a
criminal offence. Schedule 1 of the 1960 Act sets out those situations where a
site licence is not required. None of those situations arise on the facts of
the present appeal.
16. Importantly, section 3(3)
provides that the local authority can only issue a site licence if the
applicant is entitled to the benefit of planning permission to use the land as
a caravan site.
Facts Not in Dispute
17. This section deals with our
findings of fact in relation to various background matters not in dispute.
18. The appellant was registered
for VAT on 1 January 1982. The site which it owns and operates comprises
various lakes which were originally gravel pits and which have been developed for
leisure use since at least 1982. There is a water-ski lake, a windsurfing and
sailing lake, a jet ski centre and a coarse fishing lake. There are also bar,
catering and entertainment facilities.
19. Surrounding the lakes there
are a large number of mobile homes together with areas for touring caravans.
They are pitched on a number of separately identified areas of the site. There
are also a small number of woodland lodges. Almost all the mobile homes are
owned by individuals who pay pitch fees to the appellant. The woodland lodges
are held by individuals on long leases from the appellant.
20. The shares in the appellant
were originally held by a consortium of 9 shareholders. In 1989 the business
was run by a general manager who was an accountant called Mr R Robinson. Mr
Morgan, who was not a member of the consortium, purchased all the shares in the
appellant in 2004. However he had been present at the site since the summer of
2003 whilst the transaction was going through. He has a background in business
and had previously owned and run property businesses and a small manufacturing
business.
21. Both parties accept that
there were 240 mobile homes at Tallington Lakes in 1993.
The Evidence
22. The evidence before us as to
the position in the period 1 April 1989 to 4 December 1996 comprised witness
statements and documentary evidence produced by the appellant and documentary
evidence produced by the respondents.
23. The witness evidence relied
on by the appellant included two witness statements from Mr Morgan upon which
he was cross-examined. We also had a witness statement from Ms Valerie Green
which she had made in connection with the 2007 Proceedings. During the course
of the hearing Mr Morgan also sought permission to adduce a witness statement
from Ms Janet Jones and a further witness statement from Valerie Green. We
granted permission for those witness statements to be adduced. Neither Valerie Green
nor Janet Jones was tendered for cross-examination and we refer to their
evidence in more detail below.
24. In order to put Mr Morgan’s
evidence into context it is relevant to note that he purchased shares in the
appellant in 2004. He had some involvement and direct knowledge of the
appellant’s activities during 2003 but his knowledge of the position prior to
that date was second hand, derived either from persons who might have been
expected to have first hand knowledge such as employees and mobile home owners or
from the documents themselves.
(a) Appellant’s
Historical Dealings with HMRC
25. We deal firstly with evidence
as to the appellant’s historical dealings with HMRC. The documentary evidence
included a “Summary of Trading Activities and Records”. This is a “rolling
record” maintained by HMRC on a printed form containing details in relation to
the appellant. Entries were made in manuscript and it was periodically updated.
It shows the main business activity as a leisure park with subsidiary
activities described as “caravan park: zero rated residential caravans
bought and sold. site rentals received sale of Kawasaki jet skis.”.
26. Significantly in a section headed
“Principal Outputs Exempt” the document has a manuscript entry which
reads “site rentals – standard rated w.e.f. 1.4.89”.
27. On the second page there is
a heading “Special and unusual features …”. This includes the following
manuscript entry:
“Potential for complex
liability problems and partial exemption. – position simplified from 1.4.89
with standard rating of caravan pitch rentals and Trader opting to tax residue
of the various businesses operating at the lakes WEF 1/1/90”
28. Various dates are identified
and initialled on the document to show when it had been completed and when it
had been reviewed and if necessary amended. These show that it was initially completed
on 22 February 1988 and thereafter reviewed on 17 October 1989, 12 December
1991, 18 January 1993, 20 July 1995 and 5 September 1996.
29. On 3 April 1989 HMRC wrote
to Mr Robinson of Tallington Lakes. We set out the content of this letter in
detail:
“With regard to the
question of caravan rent … I can now provide you with an answer, having regard
to the new regulations:-
a)
If the company lets holiday accommodation in a caravan, that
supply is standard rated.
b)
If the company provides pitches for siting permanent residential
caravans (ie those which can be legally occupied throughout the whole of the
year) the supply is exempt. Accommodation rented in such caravans is also
exempt.
What the change in the law
and consequently the regulations made under it, has done is to standard rate
the letting of all pitches at caravan parks, except where used for permanent
residential caravan accommodation (which remains exempt from VAT). Thus,
nightly, weekly yearly or any other agreement for the siting of caravans are to
be standard rated if the caravan so sited cannot be lawfully occupied at all
times throughout the year…”
The Notice from which these
facts have been taken is No 742 ‘Land and Property’, to be published on 1 April
1989. ”
30. It is not clear who signed
this letter on behalf of HMRC. We also had what appears to be an extract from
an HMRC visit report of an officer called R J Revell. It is undated but it is clear
from its face that this was made following a visit in 1989 and states in
manuscript:
“Mr Robinson aware of the
significant liability changes from 1.4.89 and is taxing at the standard rate
(a) All caravan pitch rentals on the basis that none can be legally occupied
throughout the year, and (b) the sale of woodland lodges as these also are not
legally available for year round occupation.”
(b) The Planning
Position
31. We were provided with a
schedule of planning applications for Tallington Lakes (“the Planning
Schedule”). The Planning Schedule appears to have been produced in connection
with Mr Morgan’s purchase of the appellant’s shares. It was faxed by the
vendors’ solicitor in February 2004 to Mr Morgan’s solicitor. It is a one page document
and briefly describes 40 planning applications dating back to 1951, including
the outcome of each application and some very brief remarks which are
reproduced below where relevant. It refers to the following planning
permissions in particular which we summarise from planning permissions
available in the documentary evidence:
|
Date
Planning Permission granted
|
Description
|
Reference
|
Restriction
(if any)
|
Remarks
|
|
01.09.84
|
Residential
Caravans Plots 21 and 22
|
953/84;
954/84
|
Use by
employees until 31.12.89
|
“Expires
31.12.89”
|
|
09.06.87
|
6
Residential Chalets
|
274/87
|
|
|
|
08.03.88
|
34
Static Caravans for “Leisure Homes”
|
1668/87
|
|
“No
Conditions”
|
|
16.02.93
|
2
Caravans
|
1329/92;
1330/92
|
Use by
employees until 16.02.98
|
“Renewed
953/84 [and 954/84 – 16.02.98”
|
|
26.10.93
|
Use of
land for caravan park
|
92/1328
|
February
Restriction
|
“Authorised
853/84 – Refd”
|
|
26.10.93
|
Continuation
of use of building as Clubhouse and use of land for caravan park
|
93/0189
|
February
Restriction
|
|
|
26.10.93
|
Use of
land and lake for leisure and siting of caravans
|
93/0007
|
February
Restriction
|
“Thurlby”
land – Condns”
|
|
04.01.94
|
Use of
land for caravan park
|
93/1200
|
|
“Extended
‘island’ site”
|
|
11.07.00
|
Use of
land for caravan park
|
00/0407
|
February
Restriction
|
[plots
1-52 “South Bank”]
|
32. A letter dated 8 February
2011 from Valerie Green to South Kesteven District Council requested full
copies of all planning permissions in the period 1951 to 1996 enclosing a
document based on the Planning Schedule. The letter states “We have records
of some of the planning permissions in this period as per the attached
schedule. However we do know that this schedule is incomplete and that several
permissions are missing from the list, particularly in the period 1965 through
to 1990”.
33. Mr Morgan’s evidence as to
the planning history was that at the time of the 2007 Proceedings he had been
under the impression that there were many historical planning permissions for
mobile homes at Tallington Lakes going back to the 1970s and 1980s. He said
that he believed this because he knew there had been caravans on the site since
the mid-1970s and because there was a long schedule of historical planning
permissions from which he inferred permissions had been granted. Mr Morgan did
not say and was not asked whether this was the Planning Schedule referred to
above. If it was, there was nothing in that schedule from which permission for
the siting of caravans or mobile homes could be inferred until the permission
granted on 1 September 1984. Even then, the permissions granted at that time
were for employee occupation only.
34. Mr Morgan went on to say
that following the 2007 Proceedings he came to realise that his understanding
was incorrect. He believed that there were no planning permissions for mobile
homes until the permission granted on 8 March 1988. He said that this planning
permission “almost certainly … related to a new area of development”.
35. In order to establish that
mobile homes were on the site prior to 1988 Mr Morgan relied on what he had
been told by ex-employees and other persons. He also relied on the fact that
VAT on pitch rentals was accounted for in the sum of £24,062 in the period 1
April 1989 to 31 March 1990. Mr Morgan stated that the average pitch fee in 1989
was £750 and VAT was then charged at the rate of 15%. Based on these figures Mr
Morgan inferred that there were approximately 210 mobile homes on the site in
1989. He also inferred on the basis of 10 pitches being developed each year
that by 1993 there were approximately 240 mobile homes at Tallington Lakes. HMRC did not dispute these calculations or inferences.
36. HMRC’s rolling record includes
some information on turnover, split between taxable (including zero rated),
zero rated and exempt. Under the date 12/87 the exempt turnover is stated to be
£60,000. Under the date 6/89 the exempt turnover is apparently nil. It is not
clear to us and it was not canvassed in evidence whether this is annual
turnover or whether the dates refer to VAT periods. There is a reference
elsewhere in the evidence to the appellant preparing annual accounts to 31
March in each year.
37. Annex A (a document we refer
to in more detail below) identifies that two planning permissions granted on 26
October 1993 (92/1328 and 93/0189) relate to 206 pitches on various parts of
the site. This was not disputed between the parties. Mr Morgan’s evidence was
that these were new areas to be developed. Of these, he said that 27 pitches on
Centre Bank had not been developed to this day.
38. It was common ground that the
existing mobile homes on site at the time of these permissions totalled 240. Mr
Morgan inferred that these were present without any planning permission and
therefore without any occupancy restriction.
39. The Planning Schedule
includes the remark “Authorised 853/94 – Ref’d ” for planning permission
1328/92 granted on 26 October 1993. The entry 853/84 refers to a proposed use
of “Continue use of Leisure Park and buildings”. The decision appears to be
that this application was refused on 2 April 1985. It is not clear from the
Planning Schedule how these two planning applications relate to one another, or
whether application 853/84 related to the siting of mobile homes.
40. Mr Morgan’s evidence was
that planning permission SK/93/0007 granted on 26 October 1993 related to
touring caravans which was not disputed. Annex A also identifies that the
planning permission granted on 4 January 1994 (93/1200) relates to 30 pitches
on Island Bank.
41. Mr Morgan suggested that in
March 1988 there were 210 mobile homes on Tallington Lakes. The planning
permission granted on 8 March 1988 provided for a further 34 mobile homes. By
December 1993 there were approximately 240 mobile homes on the site of which
only 34 had planning permission. Following the planning permissions granted in
October 1993 mobile homes were added at the rate of about 14 pitches per year.
(c) Site Licences
42. The evidence before us included
site licences issued by South Kesteven District Council pursuant to the 1960
Act as follows, together with our observations:
|
Date of Licence
|
Terms
|
Observation
|
|
22.05.93
|
1
residential caravan
|
Plot 21
for employee occupancy
|
|
22.05.93
|
1
residential caravan
|
Plot 22
for employee occupancy
|
|
01.02.94
|
Not to
exceed 241 static caravans
|
|
|
18.08.03
|
Not to
exceed 322 static caravans
|
|
|
11.09.03
|
Not to
exceed 385 static caravans
|
|
|
29.03.04
|
Not to
exceed 51 touring caravans
|
|
|
26.11.04
|
1
residential caravan
|
Renewal
re plot 21
|
|
26.11.04
|
1
residential caravan
|
Renewal
re plot 22
|
43. The only site licences which
had an expiry date were those issued on 22 May 1993 which were expressed to
expire on 16 February 1998. This appears to have been because the planning
permissions were also limited in time.
44. The site licence dated 1
February 1994 contained the following conditions:
“1. The number of static
holiday caravans on site shall not exceed 241.
2. This
licence is issued subject to the 1989 Model Standards for Holiday Caravan
Sites.”
45. The evidence did not include
the 1989 Model Standards. However we understand that these are standards set by
the Secretary of State pursuant to section 5(6) of the 1960 Act. As such they
are a form of regulation and we understand that they deal with practical and
safety issues regarding the siting of caravans.
46. This site licence also
recorded the planning permissions to which the appellant was entitled. These
were 92/1328, 93/0006; 93/0007 and 93/0189. We did not have a copy of 93/0006.
93/0007 related to an unspecified number of touring caravans not relevant for
the purposes of this appeal. 92/1328 and 93/0189 related to 206 pitches as
noted above.
47. There was no evidence of any
correspondence relating to the site licence issued in February 1994. There was documentary
evidence that in 1999 and 2000 there were various visits from South Kesteven
District Council in connection with site licences under the 1960 Act following
the granting of planning permissions. These related to the two residential
caravans used for employees and the permission for 52 holiday caravans granted
on 11 July 2000.
48. In 2001 and 2002 there were
further site visits and correspondence from which it is clear that the District
Council was seeking to ensure that there were planning permissions in place for
all pitches so that a single site licence could be granted. On 23 October 2002
the appellant applied for a site licence covering 358 static caravans described
on the application as “Seasonal between … March 1st – January 31st
”. As a result of that application a site licence was issued on 18
August 2003, although it only covered 322 pitches.
49. The site licence issued on
11 September 2003 contained a condition that “static holiday caravans shall
be sited in accordance with Annex A which forms part of this licence”. It
appears that this licence was granted immediately following the previous
licence on the basis that the appellant had provided details of further
planning permissions. Annex A was attached to the licence setting out details
of planning permissions covering 385 pitches. We had copies of some but not all
of the planning permissions referred to on Annex A. This is the Annex A we have
previously referred to and we reproduce it as a schedule to this decision.
50. Mr Morgan contended that the
figure of 385 pitches referred to in this site licence supported his
calculation that by September 2003 there were 389 mobile homes on the site. The
latter figure was calculated on the basis that there were 240 pitches by
October 1993 without any form of planning permission. The 1993 and 1994
planning permissions provided for a further 236 pitches although 27 of those
were not developed and 12 were not developed until 2011. He said that there had
been scope to develop about 14 pitches a year for 10 years giving a total of
380.
51. Annex A was before the VAT
Tribunal and the High Court in the 2007 Proceedings. It describes 12 areas of
the site with the number of mobile homes on each area cross-referenced to the
planning permission relevant to that area. In fact the parties were agreed that
not all these areas had been developed at the date of the licence. There was some
dispute as to when certain areas were developed, however it is not necessary
for us to resolve that issue.
52. At one stage in his evidence
Mr Morgan stated in relation to the position prior to the 1993 site licence “I
don’t know if a site licence existed or not”. His evidence in this regard reflects
the fact that he has no direct knowledge of the operation of Tallington Lakes in the relevant period other than that which he has gleaned from the documents
and from discussions with persons who were employed by the appellant at that
time. When asked whether his position was that since the late 1970’s it was
more probable than not that Tallington Lakes had operated without a site
licence he replied “no, I don’t know if there was a site licence. I don’t
know if one was required”.
(d) Terms and
Conditions
53. The evidence before us also
included various sets of terms and conditions for pitch licences granted by the
appellant to owners of mobile homes. Mr Morgan stated that terms and conditions
would be updated annually, however we do not have terms and conditions covering
the whole period of the claim. The dates of some of the documents were hotly
disputed. We can summarise the relevant documents and the position of both
parties as follows.
54. The appellant produced a
document which Mr Morgan contended was the terms and conditions in 1991 (“the
1991 Terms and Conditions”). We adopt that description for ease of reference
although the respondents do not accept that these terms and conditions were in
place in 1991. We describe later terms and conditions in a similar way without
prejudging the date on which they were introduced.
55. The 1991 Terms and
Conditions comprised a 3 page document containing “General Park Rules” and
“Caravan Pitch Licence Rules”. There is no date on the document, but Mr Morgan
said that it had been located by his staff in an old storage location and he
had been told by his staff that it dated from 1991 or 1992. The staff members
concerned were Valerie Green, Janet Jones and Mike Smith. There was no evidence
from any of these employees as to the circumstances in which the document was
found or their recollection that it in fact applied in 1991 or 1992. Mr Morgan
himself had no direct knowledge of the 1991 Terms and Conditions.
56. We note that clause 12 of
the licence rules states that “From 1993 the caravan owner will be required
to pay a reservation fee … to reserve his pitch for the following season”.
No reference was made to this clause during the evidence or in submissions but
it does at least support Mr Morgan’s assertion that the document pre-dates
1993.
57. The 1991 Terms and
Conditions contained no occupancy restriction other than at clause 4 where there
was a restriction in the following terms:
“The caravan owner and all
persons occupying the caravan shall occupy the caravan for residential purposes
only and no trade or business shall be carried out in or from it.”
58. The respondents produced a
document headed “Terms and Conditions for Caravan Ownership and Annual Plot
License”. They contended these were the terms and conditions in 1995 (“the
1995 Terms and Conditions”). Mr Morgan contends that they date from some time
between 1999 and 2004. They included an occupancy restriction as follows:
“ The licensee and all
persons occupying the caravan shall occupy the caravan for holiday purposes
only and no trade or business of any description shall be carried out in or
from it. The site licence rules state that no caravan/tent shall be used for
the purposes of human habitation during the month of February, nor for more
than 28 days in any period of six consecutive weeks.”
59. We note clause 10 of the
1995 Terms and Conditions:
“The Licensee and all
persons occupying the caravan shall conform to and observe the condition of the
Site License granted to the Company by the Local Council under the [1960 Act]…”
60. This set of terms and
conditions had the following receipt stamp on it:
“RECEIVED 08 SEP 1995 ENV.
HEALTH SERVICES”
61. We should say that it is
the Environmental Health Services department of South Kesteven District Council
which deals with the issue of site licences under the 1960 Act. The document
also had a fax header which showed that it was faxed between unknown parties on
15 January 2000.
62. There was considerable
disagreement between the parties as to the date on which the 1995 Terms and Conditions
were effective and the significance of the receipt stamp. Mr Morgan gave
evidence that the computers and software used by the appellant in 1995 could
not have produced these terms and conditions. He said that terms and conditions
were always produced in house. However Mr Morgan himself had no direct
knowledge of these matters.
63. The appellant produced a
document which Mr Morgan contended was the terms and conditions in 1999 (“the
1999 Terms and Conditions”). This had the same heading as the 1995 Terms and
Conditions. There did not appear to be any significant dispute as to the date
of this document. The document had a reference V5 29.03.99 and contained an
occupancy restriction as follows:
“The Licensee and all
persons occupying the caravan shall occupy the caravan for residential purposes
only and no trade or business of any description shall be carried out in or
from it. In accordance with the planning permission any caravan which is not
permanently sited and connected to site drainage shall not be used for
overnight occupation during the month of February. Any caravan may be used as a
principle (sic) private residence throughout the year provided it is
permanently sited and connected to site drainage.”
64. Mr Morgan contended that a
document produced by the appellant in the 2007 Proceedings was introduced with
effect from April 2004 (“the 2004 Terms and Conditions”). He refers to a
reference on the document in the form “V5.2 07.04.04” and said that he drafted
the document. The respondents contend that the appellant is estopped by reference
to findings in the 2007 Proceedings from asserting that these terms and
conditions were introduced in 2004.
65. The 2004 Terms and
Conditions contained a February occupancy restriction at clause 7 in the
following terms:
“The Licensee and all
persons occupying the mobile home shall occupy the home for private residential
purposes only and no trade or business of any description shall be carried out
in or from it. In accordance with the planning permission no mobile home shall
be occupied during the month of February. The mobile home may be used as a
principal private residence. ”
66. Apart from this
documentation and Mr Morgan’s evidence the only direct evidence as to what
terms and conditions were in effect came in the form of a witness statement
from Valerie Green made on 28 November 2005 in connection with the 2007 Proceedings.
This was supplemented by her witness statement made on 11 October 2012, and the
witness statement of Janet Jones also made on 11 October 2012.
67. In her first statement
Valerie Green said that she had worked as the general manager of Tallington Lakes since 1991. She had owned a caravan at Tallington Lakes since 1986. The
thrust of her first witness statement was that “the previous plot licence
conditions contained a mistake in that they required caravan owners not to
occupy during the month of February … This condition has never been enforced …
We always thought that this situation, with apparently some of the
residents able to occupy during the day in February but not stay overnight,
whilst the remainder of the residents were able to occupy and stay overnight in
February, as exceptionally silly. Hence we ignored it and so did all of the
residents”.
68. In her second witness
statement, made overnight during the course of the hearing, Valerie Green states
that there was no restriction on occupancy until late 1997 or early 1998. That
restriction was subsequently removed then later reintroduced and then again
removed. Mr Morgan reinstated it after his purchase in 2004. Janet Jones’
witness statement supports this evidence. She was connected with Tallington Lakes from 1993 onwards and became general manager in 1995.
69. In January 2005 Valerie Green
wrote to residents in connection with the VAT status of pitch fees and said:
“I am pleased to inform you
that following a review, you may use your caravan pitch throughout the entire
year without restriction in February.”
70. Mr Morgan gave evidence that
when he took over in April 2004 he had re-imposed the occupancy restriction. He
did this in the 2004 Terms and Conditions.
71. The evidence included a
sales brochure produced by Humberts Leisure Chartered Surveyors at the time the
business was being marketed for sale in 2004. This was subject to the usual
disclaimers concerning reliance generally contained in such documents. It
refers to 233 existing mobile home pitches with planning consent for a further
150 pitches and a site licence for 385 pitches “all for 11 Month occupancy
from the 1st March to 31st January”. It also refers
to 3 additional lodges being held on long leases. In relation to the lodges the
brochure states:
“The three ‘A frame’ lodges
are each held on similar individual 99 year, repairing leases from 1st
June 1998 … The use is restricted to a holiday home which may not be occupied
in February …”
72. Mr Morgan maintained that
the sales particulars were wrong in their description of the lodges and the
restriction on 385 pitches. He said that the lodges were held on 999 year
leases without restriction. He did not produce copies of the relevant leases.
He referred us to the planning permission dated 9 June 1987 for 6 residential
chalets said to refer to the lodges and correctly pointed out that there was no
residential occupancy condition.
73. The witness statements of
Valerie Green and Janet Jones also stated that the woodland lodges were sold on
999 year leases.
Outline of Parties Submissions on the Evidence
74. Mr Morgan contends that in
1988 when permission was granted for 34 static caravans there were already 210
caravans on the site for which there was no planning permission. He submitted
that the planning permissions granted in 1993 and 1994 were indicative of the District
Council trying to do something about the previously established use as a
caravan park which had occurred without planning permission and therefore
without any restrictions. He accepted that the 1993 permissions did impose an
occupancy restriction although they affected only the discrete areas of land
identified in Annex A. He submitted they were for the development of 167 new
mobile home pitches in addition to the 240 pitches which already existed
without any occupancy restriction at that time.
75. The heart of Mr Morgan’s
submissions was that prior to October 1993 there was no document which placed
any restriction on the occupation of mobile homes. Further there was no
planning permission in place for use of the land as a caravan park until 1988
and the permission granted in 1988 contained no restriction. If the planning
permission contained no occupancy restriction it was extraordinarily unlikely
that any site licence, even if one existed, would contain such a restriction.
He relied upon the position in law that a site licence could not be granted by
the District Council unless there was a planning permission in place.
76. Mr Morgan maintained that at
the time the first planning permission for mobile homes was granted in 1988 the
site had been operating for some 15 years. When the 1993 permissions were
granted it was a case of the District Council acting retrospectively to
regularise the position.
77. For the period after October
1993 Mr Morgan did not accept that the existing 240 mobile homes were subject
to any occupancy restriction. Whilst the planning permissions contained an
occupancy restriction, he did not accept that the mobile homes were occupied
subject to that restriction. However he said that he was prepared to accept for
the sake of argument that a proportion of pitches developed between 1993 and
1996 should be treated as being subject to an occupancy restriction.
78. Following some adjustments,
Mr Morgan produced a schedule calculating that proportion as follows. There
were 280 pitches for which planning permission was granted in the period 1988
to 1996. Of these, 145 were developed and were subject to an occupancy
restriction and 64 were developed without any occupancy restriction. The
remaining pitches for which planning permission was granted were not developed
in that period. Hence he said that 70% of those developed had an occupancy
restriction and 30% had no occupancy restriction.
79. Mr Morgan’s explanation for
the change in VAT treatment in 1989 was what he described as “pressure”
placed on Mr Robinson by HMRC such that Mr Robinson wrongly agreed to treat the
pitch rentals as standard rated. Mr Robinson had told him as much. He did not
accept that Mr Robinson had made any enquiry as to the effect of the change in
the law in 1989. He did not accept the accuracy of officer Revell’s visit
report in 1989, suggesting that what was recorded there was wrong. For example,
he said that the woodland lodges were sold on 999 year leases and not 99 year
leases and that there was no occupancy restriction in the leases or in the
planning permissions. They were completely residential. If Mr Robinson told
HMRC this then he was wrong.
80. The appellant’s position was
that the decision in 1989 to treat the pitch fees as standard rated was simply
wrong and that we should find that there was no restriction on occupancy
between 1989 and 1996. Mr Morgan also relied on a reference in the HMRC rolling
report to the effect that the caravan park was zero rated and if that was the
case then it would have been exempt following the 1989 changes to the
legislation.
81. Mr Morgan did not accept
that the 1960 Act applied to Tallington Lakes, although he did not refer us to
any reason why that might be the case other than to say “maybe this Act
didn’t apply because this was a residential park home site”.
82. In relation to the 1995
Terms and Conditions Mr Morgan was adamant that they were not in effect in 1995.
He submitted that the first terms and conditions to include an occupancy
restriction were introduced in 1997/98. They were amended in 1999, subsequently
tightened up by the document incorrectly stamped 1995, later removed, reimposed
by Mr Morgan in July 2004 and finally removed in January 2005.
83. Mr Morgan sought to support
this sequence of events by reference to a term in the 1995 Terms and Conditions
which prevented caravans manufactured more than 12 years prior to the date of
commencement of the licence to be kept on the pitch. It is not disputed that
the 1999 Terms and Conditions contained a similar provision but by reference to
caravans manufactured more than 14 years prior to the commencement of the
licence. Nor is it disputed that the 2004 terms and Conditions contained a
similar provision but with reference to 12 years. Mr Morgan submitted that this
provision would not have been altered in this way. It was more likely that the relevant
age was originally 14 years in 1999 and was then subsequently reduced to 12
years some time between 1999 and 2004 from which it could be inferred that the
1995 Terms and Conditions were actually introduced sometime after 1999.
84. Mr McGurk submitted that if
the repeated insertion and removal of an occupancy restriction really occurred
as Mr Morgan suggested then Valerie Green would undoubtedly have said so in
her 2005 witness statement. She would have been able to say that for long
periods, including all periods prior to 1997/98, residents were not restricted
from occupying caravans for the whole year. In this regard her first witness
statement was inconsistent with the case now put forward by the appellant.
85. Mr Morgan maintained that
there was no inconsistency between Valerie Green’s witness statements. He did at
least accept that her first witness statement might have been clearer.
86. Based on the evidence Mr
Morgan invited us to find that in the late 1980s the shareholders in the
appellant wished to prepare the company for sale. There were more than 200
mobile homes on Tallington Lakes without planning permission, and mobile home
owners did not move out during February. The local council would only grant
planning permission with an occupancy condition and that is what they did in
1993. However that condition only applied to new areas at the site to be
developed rather than existing mobile homes. To impose such a condition on the
existing occupiers would have caused uproar. Attempts were made to do so by the
appellant in late 1997 or early 1998 but the adverse reaction of owners led to
it being removed, re-introduced and then removed again.
87. It followed, so said Mr
Morgan, that because there was no planning permission for more than 200
pitches, there could be no site licence. It was only once the planning
permissions had been granted in October 1993 that the council could grant a
site licence which it did in February 1994.
88. Mr McGurk submitted that it
was inconceivable that 240 mobile homes could have been on site in 1993 without
planning permission or a site licence. That would have been a criminal offence
under the 1960 Act. He invited us to infer that there must have been a site
licence and planning permission in place prior to 1993. Further that it was a
reasonable inference that the planning permission imposed an occupancy restriction
on mobile homes which it covered.
89. In support of the
respondents’ positive case that there were such restrictions Mr McGurk relied
heavily on the correspondence between Mr Robinson and HMRC in 1989 and the HMRC
rolling record of visits since 1988. There was, he said, no evidence of any
pressure placed on Mr Robinson by HMRC, as alleged by Mr Morgan. This evidence
supported the existence of a restriction in the planning permission. We note
that Mr McGurk did not suggest that it was likely an occupancy restriction
would have been imposed in the absence of a planning restriction.
90. In the alternative Mr McGurk
pointed to the absence of documentary evidence as to the terms of the planning
permission and site licence. If we were satisfied that there was a planning
permission in force, Mr McGurk said that the appellant could not satisfy the
burden on it of establishing that there were no occupancy restrictions prior to
1993.
91. Mr McGurk also relied on the
description “leisure homes” in the 1988 planning permission which he said
implicitly restricted use to holiday accommodation for less than a year. Mr
Morgan’s response was that this was not the test. The test was whether there
was a restriction in occupancy.
92. Mr McGurk submitted that the
Planning Schedule was not reliable as a comprehensive planning history of the
site. Whilst it appeared to have been produced for the purposes of Mr Morgan’s
purchase of shares in the appellant there is no evidence as to the
circumstances in which it was produced, whether it was subject to any
reservations or indeed whether it was a draft or final version.
93. In relation to the evidence
as to the terms and conditions pursuant to which owners occupied mobile homes,
Mr McGurk submitted that this supported the existence of an occupancy
restriction going back to at least 1995. Valerie Green’s evidence in her 2005
witness statement clearly supported the existence of an occupancy restriction
going back to 1986. She speaks of a “mistake” in the “previous”
terms and conditions. Her reference to previous terms and conditions must have
referred to those pre-dating the 2004 Terms and Conditions which were in
evidence in the 2007 Proceedings. At the date of this witness statement
everyone including Mr Morgan accepted that the 2004 Terms and Conditions in
fact went back to 1991. If there was a significant period of time during which
the terms and conditions did not contain a restriction she would have said so.
Her evidence was also consistent with the 1995 Terms and Conditions.
94. Mr Morgan’s evidence in
relation to the 1995 Terms and Conditions was, said Mr McGurk, pure speculation
and not reliable. There was no reason not to take the document at face value
and accept it as a record of the terms and conditions in place in 1995. The
occupancy restriction contained in those terms and conditions was then repeated
in the 1999 terms and conditions.
95. Similarly, Mr McGurk
submitted that the witness statement of Janet Jones and the second witness
statement of Valerie Green, both dated 11 October 2012, should carry no weight.
They were inconsistent with other documentation, in particular the 1995 Terms
and Conditions, and inconsistent with Valerie Green’s first witness statement.
Neither had been made available for cross examination. Their evidence and Mr Morgan’s
submissions were inherently implausible because they gave rise to the following
sequence of events:
(1)
Terms and conditions introduced in late 1997/early 1998 which we have
not seen imposing a general occupancy restriction.
(2)
The restriction was amended in the 1999 Terms and Conditions.
(3)
The restriction was subsequently “tightened up” in the 1995 Terms and
Conditions.
(4)
The restriction was removed prior to Mr Morgan’s purchase of the shares
in 2004.
(5)
The restriction was re-introduced by Mr Morgan in July 2004.
(6)
The restriction was removed by Mr Morgan in January 2005
96. There was no evidence at all
before the tribunal to support the alleged changes at (1) and (4). Mr McGurk
also submitted that it was implausible that a mobile home owner occupying a
site subject to the October 1993 planning restriction would not also be subject
to terms and conditions similarly restricting occupation. Otherwise the
appellant would have been exposed to being in breach of the terms of the
planning restriction. We note that it has never been suggested by the appellant
that some owners were subject to terms and conditions containing an occupancy
restriction whilst others were not.
Findings of Fact
97. The issues which we have to
resolve on this appeal arise against the background of the planning
permissions, site licences and terms and conditions in force at various times.
The burden is on the appellant to satisfy us on the balance of probabilities
that there was no occupancy restriction affecting mobile homes at Tallington Lakes in the period 1 April 1989 to 4 December 1996.
98. The documentary evidence
which we have described above was not in issue, in the sense that the documents
were all accepted as genuine documents. The dates and the truth of the content
of a number of documents was hotly disputed, in particular the 1995 Terms and
Conditions, the HMRC rolling record and the visit report. In general however
the real dispute between the parties was as to the inferences which could
properly be drawn from the documentation.
99. We deal with our findings of
fact by reference to the same headings under which we have described the
evidence. In making our findings of fact we have taken into account the
totality of the evidence and the submissions of Mr Morgan and Mr McGurk.
(a) The Appellant’s Historical Dealings
with HMRC
100. The dealings
between Mr Robinson and HMRC in 1989 were in part evidenced by the letter from
HMRC to Mr Robinson dated 3 April 1989. There was also the rolling record
which evidences contact in 1988 and 1989 and a visit record also from 1989.
101. We regard these
documents as cogent and contemporaneous evidence as to the correct VAT position
with effect from 1 April 1989.
102. Reference in the
rolling record to “caravan park: zero rated” refers to the sale of
mobile homes. It establishes to our satisfaction that there were mobile homes
on Tallington Lakes in 1989. We consider it unlikely that there would have been
any business selling mobile homes which was not connected with the rental of
pitches to the purchasers. The HMRC rolling record describes the caravan park
as being a “subsidiary business activity” to the main activity of the
leisure park.
103. Mr Morgan’s
evidence was that there were 210 mobile homes on the site in 1989 without
planning permission. The number of mobile homes on site at this time was not
challenged by HMRC. It is not entirely clear to us how this reconciles with
some of the documentation. For example the site licence granted in September
2003 was for up to 385 mobile homes for which there was planning permission.
That would suggest a total of 595 mobile homes either on the site or for which
there was planning permission. However the sales particulars from 2004 indicate
that at that time there were 233 existing pitches with planning permission for
a further 150 pitches. Notwithstanding this apparent inconsistency we do not
intend to go behind the agreed basis on which the parties have dealt with the
evidence. We approach our task on the basis that there were 210 mobile homes on
the site in 1989 and make a finding of fact to that effect.
104. The letter from
HMRC dated 3 April 1989 indicates that there had been some prior discussion
between Mr Robinson and HMRC as to the VAT treatment of mobile home pitch rentals.
It clearly summarises the prospective 1989 legislation in relation to pitch
rentals. We do know that the appellant was treating pitch rentals as exempt.
That must have been on the basis that owners of mobile homes were not “camping”,
in other words that their stays on the site were not temporary. What was
regarded as temporary at that time was a matter of some uncertainty as appears
from the Tribunal decision in Warner.
105. It is clear that
Mr Robinson and an officer of HMRC were both addressing their minds to the
issues arising in relation to the 1989 changes and how the appellant should
treat pitch rentals in the future. From 1 April 1989 the appellant standard
rated the pitch fees.
106. The visit report
from officer Revell some time later in 1989 records in terms the basis on which
the appellant was standard rating the pitch fees. It was expressly on the basis
that mobile homes could not be legally occupied throughout the year. The same
treatment is recorded in relation to woodland lodges.
107. We do not accept
Mr Morgan’s submissions that Mr Robinson was pressured into conceding that the
pitch fees were standard rated. There is simply no evidential basis for that
submission. Given the significance of the change introduced with effect from 1
April 1989 we consider it unlikely Mr Robinson would have agreed to that
treatment without at least some discussion with the directors of the appellant.
Indeed Mr Morgan gave evidence and we accept that caravan parks such as Tallington Lakes are intensely competitive in terms of pitch fees. Against that background
we are not satisfied that Mr Robinson was in any way pressured into agreeing
that pitch fees were properly standard rated with effect from 1 April 1989.
108. We acknowledge
that we have not heard evidence from the officers who dealt with the appellant
in 1989. Nor indeed have we received any evidence from Mr Robinson. In those
circumstances, and without more, there is no reason not to accept the contents
of those documents at face value. They are prima facie evidence that there were
occupancy restrictions on all mobile homes at Tallington Lakes in 1989.
109. It does remain a
possibility that Mr Robinson was mistaken as to the occupancy conditions
attaching to the mobile homes. We must therefore consider whether there is any
evidence to support such a finding and whether it is sufficiently cogent, in
the absence of evidence from Mr Robinson, for us to conclude on the balance of
probabilities that there were no occupancy restrictions.
(b) The Planning Position
110. The planning
history of the site was fairly described by Mr Morgan as “a patchwork quilt”.
He also fairly described the documentation covering both planning and site
licensing as “inconsistent and erratic”. Both parties have attempted to
obtain as much information as possible about the planning history of Tallington Lakes with varying degrees of success. At no stage does South Kesteven District
Council confirm that the planning history as set out in the Schedule is
complete. What is at least clear is that we do not have a complete picture and
we must do the best we can with the material we have.
111. We accept Mr
McGurk’s reservations about the reliability of the Planning Schedule. We cannot
be satisfied that it is a reliable and comprehensive schedule of the planning
history of Tallington Lakes. We would have expected planning to have been a
significant issue in the negotiations for purchasing the site and that there
would have been much more by way of documentation and correspondence addressing
the issue than a single page schedule. We have seen no such documentation.
112. It is clear to
us from the planning permissions which we do have that when permission was
granted in terms for “use of land as caravan site” such permissions did
not extend to the whole of the Tallington Lakes site. The permissions were
granted in relation to specific areas of the site. Without reference to the
planning applications themselves, which were not in evidence, it is impossible
to be sure which planning permissions relate to which areas. However both
parties were content to rely on the accuracy of Annex A which identified to
some extent the various areas to which some of the planning permissions
related.
113. We acknowledge
Mr Morgan’s submission that the first relevant permission on the Planning Schedule
which relates to mobile homes is dated 8 March 1988. We accept that it did not
contain any occupancy restriction as such, although it is arguable, as Mr
McGurk submits, that the description of “leisure homes” suggests that
occupation for less than a year is permitted. In the light of our findings of
fact generally it is not necessary for us to determine that issue, but we
accept that it does at least imply some restriction on occupation.
114. There was no
evidence to support Mr Morgan’s assertion that in the late 1980s and early
1990s the previous shareholders and the District Council were seeking to
regularise the planning position. Nor was there any evidence that the previous
shareholders were looking to sell the business at that time.
115. Considering the
planning evidence in isolation we accept that it does at least support Mr
Morgan’s submission that there were no planning restrictions prior to 1993.
However we are not satisfied that the evidence shows the complete picture and
in any event we must consider all the evidence before us in reaching our
findings on the issue.
(c) Site Licences
116. The site
licences themselves contained no restrictions on the period of occupation,
although they do refer to “holiday caravans”. It is not suggested that
the conditions on which the site licences were issued would themselves have contained
such restrictions.
117. It is clear from
the site licence application in 2002 that the appellant was treating all mobile
homes on the site, apart from the employee caravans, as subject to an occupancy
restriction. That evidence is inconsistent with Mr Morgan’s assertion that at
least 210 mobile homes on the site had no such restriction.
118. We are left with
Mr McGurk’s submission that as a matter of law Tallington Lakes required a site
licence. A site licence could only be granted if there was planning permission
in place. It does seem to us unlikely that Tallington Lakes would have been
operated in such substantial breach of the 1960 Act without any planning
permission or site licence covering any mobile homes on the site prior to 1993.
The appellant’s contention that in 2003 when Mr Morgan was negotiating the
share purchase more than half the mobile homes on the site were not covered by
the site licence seems equally unlikely. As does the suggestion that the
solicitors acting for Mr Morgan in the purchase would not have addressed the
issue with him directly if there had been any cause for concern. The absence of
a site licence and planning permission would undoubtedly have been a cause for
concern.
119. Mr Morgan’s
evidence in relation to site licences was less than satisfactory. It was part of
the appellant’s case that a site licence could not be issued unless a planning
permission was in place. It is also clear that site licences were issued as
identified above, including site licences after Mr Morgan had purchased the
shares in the appellant. However he professed not to know whether it was
necessary for Tallington Lakes to have a site licence in order to comply with
the 1960 Act. He could point to no exemption applicable to Tallington Lakes. He had apparently taken no steps to satisfy himself as to the need for a site
licence.
120. We found Mr
Morgan’s lack of knowledge as to the regulatory requirements for Tallington Lakes surprising to say the least. Whilst he is not a lawyer, he is an
intelligent businessman running a substantial holiday park. We have no reason
to doubt Mr McGurk’s analysis of the requirements of the 1960 Act and their
application to Tallington Lakes.
121. Putting that to
one side, Mr Morgan’s evidence was that he did not know if there was a site
licence prior to 1993. It does appear to us that the Environmental Health
Department of South Kesteven District Council was seeking to ensure compliance
with the 1960 Act in the period 2001 to 2003. There was some correspondence in
this period which refers to site visits but it does not identify any
substantial number of mobile homes for which there was either no planning
permission or no site licence. In the light of that correspondence and the
evidence as a whole it seems unlikely to us that there would have been a
substantial number of mobile homes at Tallington Lakes at that time without
planning permission or without a site licence.
(d) Terms and Conditions
122. It was not
suggested to us that there would be any reason for the terms and conditions on
which owners rented pitches to contain an occupancy restriction if there was no
such restriction in the planning permissions. Equally, if planning permissions
in place did contain an occupancy restriction we think it likely that a similar
restriction would have been included in the terms and conditions for pitches.
Otherwise the appellant risked a significant breach of the planning condition.
123. We do not
consider that much if any weight can be attached to the 1991 Terms and
Conditions. We had no reliable evidence as to the provenance of the document or
indeed reliable evidence that those terms were ever in force. It may have been
a final document, it may have been a draft. In the absence of any reliable
corroboration we simply cannot make any findings in relation to this document.
124. We cannot accept
Mr Morgan’s evidence in relation to the production of the 1995 Terms and
Conditions. He was not connected with the appellant in 1995 and we have no
direct evidence in relation to the date of this document save the document
itself. We were told by Mr McGurk on instructions that Mr Gray, an officer of
HMRC, had obtained the document but it was not clear where he had obtained it
from or in what circumstances.
125. We do not
consider that the reference in the 1995 Terms and Conditions to the restriction
in relation to caravans manufactured more than 12 years prior to the
commencement of a licence supports Mr Morgan’s submission that it post-dated
1999. In this context Mr Morgan did not refer to the 1991 Terms and Conditions
which also contained a similar provision with a reference to 12 years. We are
not satisfied that the 1991 Terms and Conditions were ever in force, but in any
event we do not consider that we can read anything into any pattern in the
references to the age of caravans.
126. It is notable
that the 2004 Terms and Conditions are in a very similar format to the 1999
Terms and Conditions. The 1995 Terms and Conditions, which Mr Morgan submits
were dated between the two, are in a quite different format.
127. Whilst the
evidence as to the provenance of the 1995 Terms and Conditions is incomplete,
we find that the document was received by the Environmental Health Services
department of the District Council and stamped by them on receipt in 1995. It
contains the terms and conditions for pitch licences from at least 1995 onwards.
128. It is notable
that the occupancy restriction in the 1995 Terms and Conditions refers to the “site
licence rules”. The site licences which we have seen include a site licence
dated 1 February 1994. This licence does not expressly include the occupancy
conditions referred to in the 1995 Terms and Conditions. It does refer to the
licence being issued subject to certain 1989 model conditions. However there is
no evidence that this site licence imposed an occupancy condition. Indeed none
of the site licences referred to above contain any occupancy restriction. Mr
McGurk did not suggest that site licences would normally contain such
restrictions.
129. We infer that
the most likely explanation is that the reference to “site licence rules” is to
a separate set of rules and refers to the licences granted by Tallington Lakes to the owners rather than to site licences granted by the District Council. We
note that there is a reference in clause 9 of the 1995 Terms and Conditions to
“Membership and park rules”. There is no evidence before us as to the
content of those rules.
130. It is also
notable that the occupancy restriction in the 1995 Terms and Conditions goes
beyond the conditions imposed by the 1993 planning permissions. The terms
restrict occupancy not just in the month of February but also occupation for
more than 28 days in any 6 week period. It is not clear to us why that should
do so and the most likely explanation is that they reflected a restriction to
be found elsewhere.
131. It was common
ground that the 1999 Terms and Conditions contained an occupancy restriction.
It is notable that they do so by reference to planning permission, although
again it uses different terminology for some reason arguably imposing a lesser
restriction than that contained in the 1993 planning permissions.
132. Subject to any
estoppel arising out of the 2007 Proceedings we would accept Mr Morgan’s
evidence that he drafted the 2004 Terms and Conditions after he purchased Tallington Lakes. The 2004 Terms and Conditions impose an occupancy restriction in line
with the 1993 planning permissions. That is consistent with his evidence that
he was not aware of any other planning restrictions although it does not shed
any light on whether other planning restrictions existed.
133. For the reasons
given above we do not consider that we have a complete picture of the planning
history of Tallington Lakes. Against that background, it is difficult to assess
the significance of language used in the various terms and conditions. We do
however find that the 1995 Terms and Conditions were in place in 1995 and no
terms and conditions prior to these have been produced. The language used in
the 1995 Terms and Conditions and the 1999 Terms and Conditions supports the
existence of a planning restriction in addition to that imposed in 1993.
134. We are unable to
accept the evidence of Valerie Green and Janet Jones that the terms and
conditions contained no occupancy restriction until 1997 or 1998. Their
evidence has not been tested by cross-examination and is inconsistent with the
1995 Terms and Conditions. We accept Mr McGurk’s submission that Valerie Green
would have made a very different witness statement in the 2007 Proceedings to
the one she made in November 2005 if the first occupancy restriction was
introduced in 1997 or 1998 and subsequently removed and re-instated. If there
had been a long period of time prior to 1997 when the terms and conditions
permitted owners to live in mobile homes without restriction she would no doubt
have said so.
135. We agree with Mr
Morgan’s submission that to impose an occupancy restriction on existing
occupiers would have caused uproar. We do not accept that such a restriction
would have been imposed unilaterally some time after 1993 when there were more
than 240 mobile homes on the site. If that were the case we are sure that
Valerie Green or Janet Jones would have remembered and would have said so in
their witness statements.
136. Subject to any
impairment of memory due to the passage of time, one might expect Valerie Green
to be able to provide direct evidence as to the terms of occupation going back
to 1986. Unfortunately she was not called to give oral evidence and HMRC have
not been able to cross-examine her on her witness statements. Similarly in
relation to Janet Jones. The absence of such evidence does not assist the
appellant in discharging the burden of establishing that there was no
restriction prior to 1993.
(e) Generally
137. The evidence
contained in the sales particulars in 2004 supports the respondent’s case. It
expressly states that all existing mobile homes on the site were subject to an
occupancy restriction. It also states that 3 woodland lodges on 99 year leases
from 1 June 1998 have a similar restriction.
138. We are not
satisfied that the reliability of the sales particulars is brought into question
because they refer to 99 year leases rather than 999 year leases. Mr Morgan
adduced no direct evidence as to the length of the leases. For the reasons give
above we cannot accept the evidence of Valerie Green and Janet Jones on this
issue. Mr Morgan referred us to the planning permission for 6 residential
chalets (274/87) which he said were the woodland lodges and contained no
occupancy restriction. It was not clear to us whether this planning permission
related to the woodland lodges. We do note however that the sales particulars
are consistent with Officer Revell’s visit report from 1989.
139. Taking all the
evidence and submissions into account we find as a fact that Mr Robinson
treated pitch fees as standard rated from 1 April 1989 because at that time there
was a planning restriction on occupation throughout the year. We are not
satisfied that he was mistaken to do so.
140. We do not accept
Mr Morgan’s submission that Tallington Lakes operated without any planning
permissions or site licences for 210 mobile homes in the period up to 1989.
Indeed, the implication of Mr Morgan’s submissions is that Tallington Lakes continues to this day to operate without planning permission or a site licence
for a substantial number of mobile homes. We appreciate that there is some
evidence which supports Mr Morgan’s submission but, on the balance of
probabilities, we are satisfied that there were occupancy restrictions in
1989.
The 2007 Proceedings
141. In the light of
our findings above it is not necessary for our decision to address the
respondents submission that the appellant is seeking to re-litigate issues
which were determined against the appellant in the 2007 Proceedings. We shall
therefore deal with Mr McGurk’s submissions on this issue relatively briefly.
142. Mr McGurk made two
principal submissions:
(1)
That the issue of whether the supply of pitches by the appellant was
exempt or standard rated was determined in favour of the respondents in the
2007 Proceedings and the appellant is barred from re-litigating it by cause of
action estoppel.
(2)
The 2007 Proceedings involved certain fundamental findings of fact and
law and the appellant is barred from re-litigating those matters by issue
estoppel.
143. The 2007
Proceedings, and the judgment of Richards J in particular, determined the nature
of the appellant’s supplies of pitches in the period 1 January 2001 to 31
December 2003 (“the relevant period”). It was held that the supplies were
standard rated rather than exempt during this period because there was a
restriction on occupation during February of each year. Richards J stated at
[31]:
“I conclude
therefore that the Tribunal's decision cannot stand and that HMRC's appeal
should be allowed. Both the contractual and planning restrictions on occupation
during February applied during the relevant period, with the result that the
company was providing "seasonal pitches". VAT was therefore
chargeable on the grant of the pitch licences.”
144. In reaching that
conclusion the learned judge considered the findings of fact of the Tribunal
including those findings in relation to the 2004 Terms and Conditions we have
considered in this decision and the planning history of the site. Following
the judgment Mr Morgan applied to have the appeal remitted to the VAT Tribunal
for it to make further findings of fact as to the terms and conditions
applicable in the relevant period and the planning history of the site. He
sought to persuade the judge that he should be permitted to re-open the
position in relation to these matters. The application was refused on the basis
that the material was all available at the time of the tribunal hearing and
could have been put before the tribunal.
145. Mr Morgan has adduced
all the relevant evidence in the present appeal. Mr McGurk objects to that
course on the basis of issue estoppel.
146. Both the VAT
Tribunal and Richards J were concerned with the 2004 Terms and Conditions
which, on the basis of Valerie Green’s evidence, they appear to have accepted
covered the position going back to 1991. They were also concerned with the
planning permissions granted on 26 October 1993 and 4 January 1994 (SK92/1328
and SK93/0189 respectively). They were not concerned with any other planning
permissions or terms and conditions. In particular it does not appear that the
2007 Proceedings considered the position prior to 1991.
147. On that basis Mr
McGurk accepted that in making his findings, Richards J considered the position
from 1991 onwards in relation to the terms and conditions and from 1993 onwards
in relation to the planning permissions in force.
148. Mr McGurk raised
cogent arguments that both for the period from 1989 to 1991 and for the period
from 1991 to 1996 the appellant is barred by a cause of action estoppel and/or
issue estoppel from asserting that the supplies of pitches are exempt. Our
impression is that those arguments are stronger in relation to the later period
than in relation to the earlier period. However with respect to Mr McGurk’s
submissions we do not propose to decide those issues. Firstly because it is
necessary for us to make appropriate findings of fact even if Mr McGurk were
right in his submissions. Having made those findings of fact we have decided to
dismiss the appeal in any event. Secondly because Mr Morgan, who is not a
lawyer, was not in a position to offer any contrary legal argument.
149. We also note,
for the sake of completeness, that Mr Morgan told us that he has referred the
decision of Richards J to the European Court of Human Rights. We were provided
with no documentation to substantiate that the reference had been accepted or
was still outstanding but in any event both parties agreed that it should not
affect our decision.
Decision
150. We have found
that in the period 1 April 1989 to 4 December 1996 there was a restriction on
owners occupying mobile homes at Tallington Lakes throughout the year.
151. In the light of
that finding of fact we are bound to find that supplies of pitches by the
appellant in that period were properly standard rated. In the circumstances we
must dismiss the appeal.
152. In the light of
our decision an issue of unjust enrichment relied on by the respondents does
not arise. In any event we would not propose to finally determine that issue
before the decision of the Upper Tribunal in Reed Employment v HM Revenue
& Customs FTC/39/2011 which we are told is due to consider that issue. For the sake of completeness we record
that Mr Morgan’s evidence relevant to the issue of unjust enrichment was not
challenged by HMRC. Consequently we find as a fact that caravan parks such as Tallington Lakes are intensely competitive in terms of pitch fees. By way of illustration
the appellant has not been able to increase pitch fees over the last 7 years.
The burden of accounting for output tax on pitch fees over the period in
question led to a lack of maintenance and investment at the site.
153. This document
contains full findings of fact and reasons for the decision. Any party
dissatisfied with this decision has a right to apply for permission to appeal
against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal)
(Tax Chamber) Rules 2009. The application must be received by this Tribunal
not later than 56 days after this decision is sent to that party. The parties
are referred to “Guidance to accompany a Decision from the First-tier Tribunal
(Tax Chamber)” which accompanies and forms part of this decision notice.
JONATHAN
CANNAN
TRIBUNAL JUDGE
RELEASE DATE: 28 February 2013
SCHEDULE
ANNEX A
TALLINGTON
LAKES, BARHOLM ROAD, TALLINGTON
This forms part
of Site Licence number 84/2
Area No of
Static Holiday Planning Reference
Caravans
East
Bank 34 SK75/1668/87/2895
Windsurf
Bank 48 SK93/0189/75/8
Windsurf
Bank 10 S02/1640/75
Windsurf
Bank (old touring area) 12 SK93/0189/75/8
Main
Bank 56 SK93/0189/75/8
The
Island 26 SK92/1328/75/52
Island
Bank 30 SK93/1200/75/47
Lagoon
Bank 37 SK92/1328/75/52
Centre
Bank 27 SK92/1328/75/52
Centre
Bank / Lagoon Bank 47 S02/1032/75
South
Bank 52 S00/0407/75
Lake View 6 S02/1640/75
TOTAL 385
