A & V Building Solution Ltd v J & B Hopk

A & V Building Solution Ltd v J & B Hopkins Ltd

Citation: [2024] EWHC 2516 (TCC)

Background Facts

Dispute concerned final account valuation and various claims under a subcontract on a construction project.
Earlier judgments (six prior decisions between 2023 and 2024) resolved most liability and valuation issues.
In the fifth judgment, A & V was awarded £101,543.17 for measured works, variations, and loss of profit after deducting amounts paid.
The sixth judgment resolved adjudicators' fees and interest.
This judgment addressed final outstanding matters: potential correction of calculation errors, VAT treatment, Construction Industry Scheme (CIS) deductions, final interest amounts, and adjustments before final costs orders.

Correction of calculation:
- A & V argued an error in the deduction for prior payments (claimed it should be £344,255.75, not £364,909.64).
- The court refused to correct this, finding the sum had been agreed and finalised in earlier judgments.

VAT treatment:
- Parties agreed VAT needed addressing. The judge accepted J&BH’s evidence that only 5.66% of works attracted standard-rated VAT (due to student accommodation zero-rating).
- VAT awarded on that portion: £1,069.22, with liberty for A & V to apply within six months if HMRC disagrees.

CIS deductions:
- J&BH argued it was legally obliged to deduct 20% under CIS rules (following HMRC notification changing A & V's tax status in March 2024).
- The judge noted this was a point for execution stage (whether to stay judgment or impose terms) rather than altering the final awarded amount at this stage.

Interest:
- Confirmed interest amounts on each head of claim, including interest on adjudicator fees, rejecting late objections from J&BH.
- Minor discrepancies were resolved, final interest sums adopted.

Final sums:
- Confirmed amounts due to A & V, subject to future costs orders and any CIS stay application.

Costs and further orders:
- Ordered parties to submit costs submissions before final determination of net sums payable and timing of payments.

Finality of earlier judgments:
- Parties cannot reopen or correct sums already agreed and finalised in prior judgments unless exceptional grounds exist.

Treatment of VAT in construction disputes:
- VAT obligations depend on project specifics (e.g., zero-rated student housing works).
- Courts can provide liberty to vary VAT treatment later if HMRC disagrees.

CIS deduction obligations:
- Contractors may be required to deduct CIS tax before paying subcontractors; enforcement and deductions are statutory obligations separate from contractual net sums.
- The proper stage for considering such deductions is at execution, not in calculating judgment amounts.

Interest on adjudication fees:
- Confirmed entitlement to interest on full fee sums (including VAT), provided points were properly raised earlier.

Procedural discipline:
- Points not raised at draft judgment or earlier hearings are generally deemed waived and cannot be reopened at final stages.