The Upper Tribunal (Lands Chamber) has this week handed down a judgment in the business rates appeal of Moore (Valuation Officer) v Great Bear Distribution Limited RA/52/2019. Mills & Reeve and Avison Young acted on behalf of the successful ratepayer.
Great Bear owned a large industrial premises in Nottingham which underwent significant works from June to October 2014. Great Bear applied for the premises to be deleted from the Rating List on the commencement date of the works as it was no longer capable of beneficial occupation. This is in contrast to other cases where ratepayers have elected to alter the rateable value to £0 during the course of significant works, the proposal in the Great Bear appeal being one for a deletion rather than a material change of circumstance.
The works were completed in October 2014. Although a rateable value was agreed for the premises after the works had been completed, the Valuation Officer did not re-enter the premises into the Rating List.
Following the closure of the 2010 Rating List, statutory restrictions were placed on the ability of both ratepayer and Valuation Office to alter the List. This dispute involved whether the VO now had the right to enter the premises into the List from October 2014 until April 2017 (the end date of the 2010 List).
The ratepayer said the VO did not have this power, as it had correctly applied for a deletion and the VO had failed to reinstate the premises in the List following the completion of the works, despite having ample opportunity to do so.
The VO argued that it had both the right to reinstate the premises even though the List was closed, under reg 38(7) Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009, and the right to impose a new value on the ‘new’ or redeveloped property, under reg 38(10).
Reg 38 gives the Valuation Tribunal (and the Upper Tribunal, which can make any order available to the Valuation Tribunal) an ability to alter the List where circumstances giving rise to an alteration have ceased to exist, together with ancillary powers.
Mills & Reeve appeared for Great Bear at the Valuation Tribunal and secured a successful outcome. However, the VO appealed this decision. At a rateable value of either £825,000 (pre-works) or £745,000 (post-works), the sums involved were significant. There are also several cases currently active involving the interpretation of reg 38, so the decision may prove of assistance to others.
The Tribunal dismissed the VO’s appeal and held that, although the ratepayer’s proposal had been for a deletion rather than a material change of circumstances, the Tribunal would have the right to reinstate the property following the completion of the works.
The Tribunal stated that it saw “no reason to be precious when considering the use of a practical administrative tool like the rating list”.
It struggled to see the practical difference between a ratepayer applying for a deletion or a temporary alteration whilst a property was undergoing redevelopment. In both cases, the Tribunal considered that the circumstances giving rise to the ratepayer’s proposal (i.e. the works) lasted for a temporary period and therefore it was within the Tribunal’s powers to allow an alteration to that List.
It also considered that this was a fair outcome in maintaining an accurate List.
However, the Tribunal was with the ratepayer in its assertion that the property could not be brought back into the List at a different rateable value (£745,000 v £825,000). There was no proposal to alter the value of the property and the Valuation Officer had had ample time between October 2014 and the closure of the 2010 List to make the necessary change to the List – despite the statutory restrictions, the VO had had until March 2016 to make an alteration to the 2010 List.
The Tribunal therefore declined to reinstate the property at a different rateable value as at October 2014 and, based on the nature of the proposal and the extent of the Tribunal’s powers, dismissed the VO’s appeal.
The ratepayer will now benefit from the property having a rateable value of £0 from June 2014 until April 2017, when the 2017 List became live. Whilst this is perhaps an unforeseen windfall for the ratepayer, the VO could have taken steps to protect itself against this outcome and statutory restrictions to deal with the closure of Lists are going to produce winners and losers.
The Tribunal gave robust guidance on how it intends to deal with the two principal issues and this decision falls in line with its previous ruling in Avison Young v Jackson. However, with Avison Young now heading to the Court of Appeal this may not be the end of the matter.
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