Mr David Sherratt and Mrs Elizabeth Sherratt v Commissioners for Her Majesty's Revenue and Customs

Facts

Mr David Sherratt and Mrs Elizabeth Sherratt built a farmhouse at Brickyard Farm, Pincet Lane, North Kilworth, Lutterworth, adjacent to farm buildings, under an outline planning permission dated 5 December 2006 for the erection of an agricultural dwelling. They claimed a refund of £13,082.81 of VAT under the DIY builders scheme in section 35 of the Value Added Tax Act 1994, and the Commissioners for Her Majesty's Revenue and Customs refused it. The planning permission and the approval of reserved matters each contained an occupancy condition limiting the dwelling to a person employed in agriculture as defined in section 336(1) of the Town and Country Planning Act 1990, and a further condition that the development should always remain ancillary to the existing agricultural use of the site and should not be sold, leased or otherwise disposed of separately from the remainder of the premises. The dwelling was a substantial five-bedroom house standing in its own grounds, the only other structures on the site being open-sided steel sheds, steel containers, a generator building and a mobile home. The Sherratts said no planning restriction prevented the sale of the property; HMRC said the conditions prohibited both separate use and separate disposal. The facts and the quantum of the claim were not in dispute, and the appeal came before the First-tier Tribunal (Tax Chamber) at Birmingham.