Appellant - P G Developments Thirty Party - Red Developments Limited v Her Majesty's Revenue & Customs

Facts

PJG Developments Ltd, a company whose business is acquiring and refurbishing properties, appealed against a decision contained in a letter from the Customs of 26 April 2004 to the effect that it had been rightly charged VAT of £91,350 on its purchase of the Fox and Goose Public House in Richmond. The building had originally been built as two semi-detached houses, the ground floor and basement of which were converted in the first half of the twentieth century into the bar and public area of a public house, with the basement used as the cellar. Red Developments (London) Ltd, a property development and investment company, acquired the Property from the brewers in December 2001, the public house activity having been closed down at or by the time of that purchase and the licence allowed to lapse. Red instructed architects, applied for planning permission on 22 October 2001 for reinstatement of the two original houses, and obtained conditional permission on 31 January 2002. It had also elected to waive exemption, the election being acknowledged by the Commissioners on 29 January 2002. Red marketed the Property through estate agents as "a delightful residential opportunity", contracts were exchanged on 1 August 2002 at £580,000 plus VAT, and Red charged output VAT on 90% of the price. Red was joined as a third party.