C. & E. Commissioners v. Faith Construction Ltd., [1989] BTC 5121 (C.A.)

In response to the proposed repeal effective 1 June 1984 of the zero rating of building alteration services, four building companies with existing contracts for building alterations arranged with their customers for payment by the customers before that date subject (in one case) to the condition that the building company would immediately lend back an equivalent sum, to be repaid as the work was done or subject (in the other case) to that money being paid into an account of the building company for release only as the work was done.

Although the use of the money was fettered, the payments discharged the liability of the customers under the building contracts. Accordingly, the building companies had "receive[d] a payment" before 1 June 1984.

In response to the proposed repeal effective 1 June 1984 of the zero rating of building alteration services, four building companies with existing contracts for building alterations arranged with their customers for payment by the customers before that date subject (in one case) to the condition that the building company would immediately lend back an equivalent sum, to be repaid as the work was done or subject (in the other case) to that money being paid into an account of the building company for release only as the work was done.

Although the use of the money was fettered, the payments discharged the liability of the customers under the building contracts. Accordingly, the building companies had "receive[d] a payment" before 1 June 1984.