LOCAL TAX Flashcards
1
Q
What do you mean by “independently” dealt with 2017 Rating Appeals in England and Wales?
A
My responsibility includes reviewing evidence, inspecting the properties, and negotiating a settlement within the statutory deadline.
2
Q
How do you sense check valuations?
A
Compare with market evidence, review methodology, seek assurance.
3
Q
Rating in Wales v England. What are the differences?
A
Local Government Finance Act 1988.
ENG: CCA.
WALES: PROPOSAL, NEGOTIATION, APPEALS.
4
Q
What VSF did you consider for the retail unit in Harrow.
A
Location, Size, Public Layout, Shape.
5
Q
Talk me through Lotus & Delta.
A
6 steps.
1. Subject rent.
2. Weighting of subject rent.
3. Comparable evidence.
4. Assessment evidence.
5. Value formed on actual rent and degree of comparability evidence
6. Where no comparable evidence, other assessments can be considered but would be hard to ignore the subject rent.
6
Q
What is Tone? Can the tone of the list ever be established?
A
Futures London v Stratford & O’brien Harwood.
3 stages.
1. Start of the list.
2. Assessments begin to be challenged, agreements.
3. List is considered settled and pattern established.
7
Q
How do you value A/C for retail?
A
Dorothy Perkins Retail Ltd v Casey
Berry v Iceland Foods Ltd
£7/m2 for shops & £4/m2 for warehouses is rule of thumb to be used in a sense of anything better.
£7/m2 is based on a cost analysis of cassette installations.
8
Q
Is there case law for office fit out?
A
Bunyan v Acenden 2023
Office fitout case - office headquarters in Maidenhead, LL and tenant both spent to fit-out.
determined that a tenants fit out is rateable, establishing that Amortising the costs is an appropriate way to determine additional value to the Cat A (unfitted) rent, IF there’s no rental evidence of fitted premises.
9
Q
Tell me about Monk v Newbigin
A
Determined building in the course of redevelopment could not be assumed to be in a reasonable state of repair and valued as offices. Instead, it had to be valued as a building undergoing reconstruction and valued at a nominal amount.
Also, held to remove property from list on grounds of disrepair, following questions arise:
- Is the hereditament in reasonable repair? No
- If not, can works to put into repair be considered repair? Yes
- Would a reasonable landlord consider repairs economic? No
10
Q
Tell me about Jackson v Canary Wharf.
A
Office in CW.
“Does Monk apply when a hereditament has been stripped back and there is no planned world to re-fit?”
The absence of a detailed programme of works does not mean monk does not apply.
11
Q
What about if part was being redeveloped?
A
Aviva v Bunyan.
Consideration can be given to taking part of the hereditament out of assessment if that part is incapable of beneficial occupation (however this action would be outside the scope of the proposal to delete the whole assessment and would need time be undertaken by a VO notice).
12
Q
Tell me about Weddings v Robert’s.
A
At what date was the property rendered incapable of beneficial occupation as a result of works?
13
Q
What is the prior “economic” question.
A
(i) whether the ‘damage’ that has occurred is indicative of a scheme of reconstruction (which includes significant refurbishm ent/refitting in addition to complete demolition and
new building), and, if so,
(ii) has that damage rendered the hereditament incapable of beneficial occupation?
14
Q
What are the steps to the economic test?
A
Princess Street.
- Identify the hereditament.
- Value the hereditament in its current state at AVD.
- Value the hereditament in an assumed state of reasonable repair at AVD.
- Cost up works at AVD.
- Determine how many years a hypothetical landlord would be willing to spread the reasonable repair cost over before he gets return on investment.
Anticipated costs more than rent = uneconomic.
15
Q
When would you consider repair to be uneconomic?
A
Princess Street.
The question of whether repairs would be economic is a comparison of likely future rental income flow against the cost of repairs.
16
Q
When should the hereditament be deleted?
A
- Newbigin and Monk –
Answers to 3 prior questions
2) 1) The hereditament was not in reasonable repair
2) The work undertaken could be classified as repair
3) But the extent of the works considered uneconomic. Therefore, the affected parts should be deleted.
From the date the property first became incapable of beneficial occupation.
17
Q
What is the scheme of works?
A
When the property comes:
- significantly improved.
- different unit of assessment.
- different mode of category.
where there is no scheme of works, consider repair.
18
Q
When is a property not in beneficial occupation?
A
Consider what is require for beneficial occupation.
E.g. stripped out lighting, electrics, plumbing.
19
Q
What if there is a scheme of works to a substantial part?
A
May consider reconstruction of the assessment to remove that part that is no longer a hereditament.
May consider giving the new hereditament not subject to works an allowance if disturbed by the part that is undergoing works as an external MCC.
20
Q
What if there is a scheme of works to a minor part?
A
Refer the ratepayer to BA for s44A - £0 values the part not used for a period of time.
21
Q
What is a completion notice?
A
A copy of the Completion Notice will be sent to the owner by the BA with a copy also sent to VOA who will determine the RV.
22
Q
What are the changes to Completion Notices?
A
Rating Act 2023.
BAs can now legally serve completion notices on stripped back properties where no structural alterations had taken place.
23
Q
What is improvement relief?
A
Encourages business’ to invest in their premises by offering 12 months relief from increased rates due to qualifying improvements.
To qualify:
- Improvements must increase the RV.
- The property must remain occupied.
Examples:
- adding insulation.
- building an extension.
- converting storage areas.
24
Q
What case law refers to ABET?
A
Actual – R v Assessment Committee of St Pancras (1877)
Beneficial – Newbigin v SJ & J Monk (2015)
Exclusive – Southern Railway and WHSmith v Westminster City Council (1936)
Transient – Wilkins (VO) v London County Council (1957)
25
What if the supported statement was a generic statement?
Not valid.
As specified in Regulation 6 [Reg 11 in Wales] a complete proposal includes the following, at sub-para (4)(f) and (g):
(f) evidence to support the grounds of the proposal; and
(g) a statement as to how the evidence supports the grounds of the proposal.”
26
What is the Lotus and Delta case?
Retail shop in Leicester, considered the 6 proportions for rental evidence.
27
Can you tell me what else would make a Challenge incomplete?
The mandatory requirements for a complete proposal in England are set out in Regulation 6(4) of the 2009 Appeal Regulations (SI 2009/2268) as amended.
- The name, address and contact details.
- Grounds of the proposal
- An alternative rating list entry including a valuation.
- An effective date.
- Supporting evidence.
- A statement on how the evidence supports the grounds of the proposal.
- The rent.
- Date the rent first became payable.
- Any rent free period.
28
What part of the Regs did you apply for your notice of refusal? (Reg 8). Did you have any discretion in this matter?
Non-Domestic Rating Regulations 2009.
S8 of the Regs specifies how to apply the notice of refusal, you typically do not have discretion in this matter, if the proposal is incomplete or does not comply with the requirements set out in Reg 8, you are obligated to refuse it.
29
How long did the IP have to resubmit their proposal? What if it were an external MCC proposal?
4 months from the Check submission date.
16 months for MCC cases.
Check submitted - 18 July 2022.
Check decision - 25 July 2022.
Challenge submitted - 25 August 2022.
Deadline - 2 months and 24 days.
30
What case law did you refer to when determining the correct unit of hereditament? What would you do if this was a serviced office and the 2 tenants occupied by way of licences?
I referred to the Woolway v Mazars case law. It defines a hereditament by:
* Definable position.
* Single occupation.
* Single use.
* Single geographical location.
If tenants occupy by licences, they generally don’t have enough control or exclusive use to be considered in rateable occupation.
31
Are separate entrances always required? Is there exclusivity if an entrance is shared?
Separate entrances are not always required. The key is whether each occupier has exclusive control over their space. Even with a shared entrance, the occupier can still be considered to have exclusive occupation if they control their part independently.
32
Can you tell me anything about the corporate veil?
The corporate veil is a legal concept that separates a company's identity from its shareholders, protecting them from personal liability for the company's debts. It can only be "pierced" in rare cases, such as fraud.
33
2 defined spaces but how did you conclude that both tenants were in rateable occupation?
Based on the John Laing & Son case, rateable occupation requires:
* Actual occupation: The tenants have separate leases and entrances, confirming they occupy their spaces.
* Beneficial occupation: The tenants use the space for their benefit, likely for business purposes.
* Exclusive occupation: Each tenant controls their space without interference.
* Non-transient occupation: Leases indicate a longer-term commitment, so it’s not too temporary.
34
How did you split the property? What vehicle did you use? A Valuation Office Notice or a Challenge? What are the implications of using different vehicles?
I used a Valuation Office Notice to split the property. This is a formal document issued by the VOA to alter the rating list, reflecting changes in the property's structure or use.
* VO Notice: The VOA initiates the change. It's straightforward but may require the ratepayer to appeal if they disagree.
* Challenge (CCA): The ratepayer initiates the change, giving them more control, but it's a more complex process.
35
Are you aware of any recent cases to do with rateable occupation, such as property guardians or ATMs? How about transience and storage containers?
Refer to the ABET case law, but also:
* Cardtronics UK Ltd v Sykes (2020): The UK Supreme Court ruled that ATMs within stores should not be separate hereditaments. The retailers had "paramount control" over the ATM spaces.
* Ludgate House Ltd v Southwark (2020): The court ruled that property guardians did not have rateable occupation because they lacked exclusive possession of the building.
* London County Council v Wilkins (1957): Temporary structures can be rateable if their occupation lasts long enough (e.g., over 18 months). However, occupations of less than 12 months might be considered too transient.
36
Could you tell me about the recommendations regarding the deletion for the office in Cardiff?
I recommended that the proposal was premature and did not meet the criteria to be deleted from the 2017 Rating List.
37
What legislation did you refer to for your MCC?
LGFA 1988 Schedule 6 paragraph (2) sub-paragraph (7)
The Non Domestic Rating Regs 2009
38
How long does the ratepayer have to submit an MCC Challenge after the Check decision?
16 months
39
What was the material day for this Challenge?
Non-Domestic Rating (Material Day for List Alteration) (Amendment) (England) Regs 2005 SI 658.
December 2021 and the Check submission date sets the material day for the MCC in line with the Material Day Regs.
40
What is a material day?
It is the day on which we consider the physical matters effecting the hereditament.
41
What are MCC matters?
LGFA 1988 Schedule 6 para (2) (7) states, the matters are—
(a) matters affecting the physical state or physical enjoyment of the hereditament,
(b) the mode or category of occupation of the hereditament,
(c) the quantity of minerals or other substances in or extracted from the hereditament,
External MCC’s
(d) matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless physically manifest there, and
(e) the use or occupation of other premises situated in the locality of the hereditament.
42
What are the physical matters you can consider on the material day?
The use or occupation of other premises situated in the locality of the hereditament.
43
Can you tell me about your advice for the MCC in Staines?
I advised that while the closure of the large department store was a valid Material Change of Circumstances (MCC), there was no evidence to suggest that it affected the value of the subject property, so I recommended not applying an end allowance.
44
Is an MCC valid if the MD is April 1st 2017?
Yes, if the material day is April 1, 2017, it is still an MCC Challenge, provided the MCC occurred after the list was compiled and the issue is ongoing.
45
How did you determine this was a valid MCC? Did you refer to any legislation? Would crime be considered an MCC?
I referred to the Local Government Finance Act 1988, Section 6, which covers Material Changes in Circumstances.
46
What do you mean by “immediate locality? How do you determine how far the locality can be stretched?
"Immediate locality" refers to the area around the subject property that could realistically affect its value or use. The extent of the locality depends on factors like the size of the area and the impact of the MCC on nearby properties.
47
Talk me through the timescales, duration and severity of this MCC?
Check submitted: December 2021
16 months to submit Challenge: January 2023
The large department store closed in December 2020, the ratepayers representative submitted a check in December 2021, a year after the closure.
Reoccupied in mid 2022.
Considered physical factors at MD and economic factors at AVD.
48
If we took the vacant large department store back to AVD, did the demand at AVD suggest it would soon be occupied? How did you determine this?
At the AVD, I determined there was a buoyant market which was evidenced by the high demand, rising rental levels and low vacancy rates.
I therefore concluded that the vacant store would be quickly re-let at the AVD and I advised this the closure would have no negative effect on the hypothetical rental bid of the subject property.
I considered GOAD plans, market data, rental evidence
49
Did you consider any rental evidence?
Subject property rent and rents on comparable properties in close proximity to the subject were considered. Evidence showed there were no reductions in rent agreed due to the closure of the large department store. I would consider subject rent based on the physical circumstances at the material day but at the economic circumstances at the AVD.
50
Tell me about the comparable evidence?
I considered the comparable evidence of the agent and gave a low weighting for the following reasons:
o Locality – Some of comps were from a different locality.
o Mode and category – Some of the comps were for offices and were in a different mode and category to the subject.
o 2010 List – Some of their evidence were from the 2010 list and were not comparable due the different economic circumstances at the 2008 AVD.
51
If the Challenge was submitted a long time after the start of the MCC, what material day would you be restricted to? Could you amend the list any other way other than via the Challenge?
If I had advised that an allowance would have been reasonable at an earlier Material Day, I would submit a request on the VOA gateway. This is because a VON is not restricted to the material day of the Check DN.
For a VO Notice/VO Report/VO Alteration to the list:
* Material Day – date circumstances first arose.
* Effective Date – Date of the Event.
o This is inline with Reg 14 of the Alteration Regs.
o For 2023 list, Reg 27 of the Alteration Regs.
By issuing a VON to give affect to an allowance at an earlier effective date:
* I adhered to my statutory duty to maintain an accurate rating list s.41(1) LGFA 1988.
* I ensured good Client Care with stakeholders i.e. agent and ratepayer.
* Honesty and integrity, professional conduct - Rule 1 RICS Rules of Conduct.
* Provided a high level of service – Rule 3 RICS Rules of Conduct.
52
Can you talk me through your advice for the tone Challenge for the shop in Harrow?
I reviewed the rent of the subject property and comparable evidence from the parade. Following Lotus & Delta v Culverwell, I adjusted and analysed rents, noticing the property was at a "break point" where neighbouring units had a lower tone. Based on this, I advised a tone reduction was appropriate and negotiated a revised Rateable Value with the agent.
53
What value significant factors did you consider? How would you value the retail unit if it had a very wide with compared to it’s depth?
I considered factors like location, size and layout, condition, and tenant profile.
If the unit had a wide frontage compared to depth, using the Zoning method, a larger proportion of space may fall into ZA, which typically commands the highest rent per SQM.
54
Can you talk me through your adjustment and weighting of the evidence? How would you adjust for a rent free period? Yield? Amortisation period? RICS guidance? Would you adjust for a 3 month rent free period at lease renewal?
There are no rules governing the order of adjustment other than that the adjustment for repairs should be made last (F W Woolworth, and Co Ltd v Peck 1967)
Rent free period- spread the rent free period over the lease term.
Repairs and insurance: 3.5% for repairs, 5% for insurance.
No guidance but our percentages are based on the analysis of actual evidence at the AVD provided by our BEAMS team.
Just note that, you would always use valuer judgement and if you believed that the costs could be different. For example external works on a Grade II Listed building might be 10%+. However, this is outside your scope of expertise and you would seek advice from a QS/ Building surveyor.
55
How would you treat post-AVD evidence? How much weight would you give to an assignment or sublet?
Specialeyes v Felgate.
Rent close to AVD carry greater weight.
o Evidence divided into 3 categories:
1. Rents set 2-3 years prior to AVD – little weight.
2. Rent immediately prior/close to AVD – best evidence.
3. Post AVD rents – admissible but indicate trend value due to changing circumstance.
56
Were there any settlements? Was tone of the list established this far into the 2017 list? If there was a VT decision on one of the comparable assessments, would you consider this good evidence of value?
Future London.
Yes, there had been a number of settlement agreements and agreements of RV reductions up to 10%.
If a Valuation Tribunal (VT) decision existed on one of the comparable assessments, it would be strong evidence of value and likely guide the decision.
57
How did you determine this break point? Could the subject rent just be a low outlier?
I determined the break point by comparing neighbouring properties and that the units to the left were higher and the unit to the left were lower.
While the subject rent could be a low outlier, I cross-checked with other evidence to ensure it wasn’t just an anomaly.
58
What Covid reliefs were there?
Retail, Leisure and Hospitality – 100% relief from April 2020 to June 2021, 66% relief for remainder of 2021.
No relief for offices, factories or warehouses.
59
Provide a step by step approach with how you dealt with the MCC case.
I identified the hereditament.
I confirmed the physical facts at MD.
I determined that it was a valid MCC as there had been a change in the locality at MD- closure of the department store.
I considered the VSF at AVD and determined that the market was vibrant- there was a lack of vacancy units, high rents, and high demand.
I established that at the AVD, the vacant unit would be quickly re-let. I also noted that at the time of the CHG the unit was already re-let.
I advised the agent that an allowance was not required and issued a decision notice.
60
Provide a step by step approach on how you dealt with your deletion case.
1. Defined hereditament.
2. Considered factors at MD.
3. Schedule of works? No.
4. Economic test (Benjamin v) - reasonable repair and should remain in the rating list.
If there was a schedule of works, MONK case- deletion.
61
Provide a step by step approach on how you dealt with your split.
1. Defined the hereditament
2. Confirmed physical facts at MD.
3. Considered the Mazars case and its definition of a single hereditament.
Reviewed plans (inspected?) and noted that there was a Single Geographical Unit (not interconnected) and a Single Rateable Occupier (own leases).
4. I advised a senior colleague that a split was warranted and issued a VON.
62
What is a break point?
A break point typically refers to the location or point within the parade where there usually a noticeable change e.g. in rental values
63
What was the property guardians case?
Ludgate House Ltd v Southwark (2020): The court ruled that property guardians did not have rateable occupation because they lacked exclusive possession of the building.
64
How did you determine that the MCC was valid?
There was a change in the locality at the MD. The store had closed (but was re-let shortly after).
65
What was the date of the MCC and MD?
Date of MCC: December 2020.
MD: December 2021.
66
What is BEAMS team?
Build Environment and Mineral Surveyors
67
Did the rent include a residential aspect? If so, how would you strip this out?
I would find out the market rent for the residential aspect through FOR information or by asking for a copy of the lease.
I would then deduct the annual residential rent.
68
What did the Gilbert v Hickbottom case establish?
*Geographical test
*Functional test
69
What did the Properties in Common Occupation Act 2018 introduce?
Allowed non-contiguous units to be 1 assessment providing they:
* Are occupied by the same person.
* Are contiguous by way of common wall - horizontally or vertically
* Not a wholly different purpose
70
What are relevant RICS guidance on Rating?
Taking instructions -
Rating consultancy 4th edition, March 2017
71
What are the ground for a CCA submission?
Non-Domestic Rating Regs 2009, Regulation 4.
- MCC
- Compiled list error
- Allowances
- Effective date
- Material date
72
What methods of valuation are used in rating?
Comparable
Receipts
Contractors
73
What is P&M?
Plant and Machinery Regulations 2000
4 classes
1: POWER
2: HEATING, COOLING, VENTILATION
3: MOVEMENT
4: STRUCTURE
(Please help me sit)
74
What’s most important for an MCC? Severity or duration?
Each case is on its own merits.
Greenwood (Men’s Wear) Ltd v Harrison 1985: no allowance was justified for the temporary presence (six weeks) of scaffolding outside of a shop.
75
What weight did the Lotus & Delta case put on their 6 steps?
The subject rent was over rented.
Placed weight on evidence to arrive at the tone.
76
When submitting a proposal, do freehold properties have to include their rent?
No, there is no rent for a freehold.
77
What case law relates to MCC?
Dinwiddy (VO) v Anderson (RA/14/1995) – vacant units have an effect on the rental value of other units in the locality.
Finnis v Priest – Tenant coming fresh to the scene, not concerned with circumstances that may have existed before the date of the letting.
78
Where are the exemptions in the LGFA 1988?
Schedule 5
79
Where is MCCs located in the LGFA 1988?
Schedule 6
80
What is the Debenhams Case law, applicable to your MCC case? What was the outcome? Does this affect your decision?
Standard Life Assurance v Lucy Dyer (VOA) (June 2024)
An allowance of 5% was granted following the closures of Debenhams stores.
81
Talk me through the valuation of the retail unit in Harrow. (CL L3)
LGFA 1988.
Lotus & Delta v Culverwell (VO) and Leicester City Council (1976):
I completed the valuation of a ground floor retail assessment in Harrow for rating purposes were a revised Rateable Value was agreed.
The agent submitted a Challenge and sought a reduction in the RV contending that the tone was excessive and out of line with the market rent and the rents on the parade (ED & MD: 17th April 2017).
The subject rent was a NL agreed close to the AVD, therefore I attached great weight to it.
I then gathered, adjusted and analysed a basket of comparable rents, NL and agreed close to the AVD.
I noted that the neighbouring units to the left of the subject were in better location than the ones on the right, which was reflected in their tone.
I also considered settlement evidence and noted that there had been reductions agreed up to 10% in the locality.
Considering the evidence, I advised a senior colleague that the subject was in a break point, and the evidence supported a revised rateable value in line with the passing rent, therefore an agreement was reached with the rating agent and the rating list was updated.
82
Tell me about the advice you provided for the Deletion in Cardiff? and what case law helped you reach your decision? (LT L3)
LGFA 1988.
Th Court of Appeal and Supreme Court in Newbigin (VO) v Monk (2017)
Jackson (VO) v Canary Wharf Ltd (Upper Tribunal) (2019)
Aviva v Bunyan.
I provided reasoned advice for a proposal to delete a 2017 Rating Assessment due to planned redevelopment works and agreed a withdrawal with the agent.
Initially, I considered the Material Day (2nd August 2021) and the physical factors at that day - the ratepayers representative provided planning documents and photographs of the building in their submission.
However, I was unable to confirm the extent of the redevelopment works from the information provided, therefore I arranged an inspection.
During the inspection, it became apparent that the proposal was premature and no works had began, the hereditament was in beneficial occupation.
The proposal was withdrawn, and the hereditament remained in the 2017 Rating List.
83
Talk me through your MCC in Staines? (LT L3)
LGFA 1988.
I provided reasoned advice for a 207 Challenge for an MCC consisting of a closure of a department store in the locality.
In support of their 10% allowance, the agent provided a selection of comparable settlements.
The subject rent in the starting point (Lotus & Delta) and no reduction was agreed when the department store was closed.
At the MD (Dec 21), I determined there was a vibrant market which was evidenced by the high demand, rising rental levels and low vacancy rates.
I therefore concluded ythat the vacant store would be quickly re-let at the AVD and I advised that the closure would have no negative effect on the hypothetical rental bid of the subject property.
I also considered the comparable evidence of the agent and gave low weighting due to them being in a different locality, some were a different mode and category and some were evidence from the 2010 list (2008 AVD).
I advised my senior Valuer that no allowance was warranted and issued a DN, this was not appealed.
Case Law (to consider):
Dinwiddy (VO) v Anderson (RA/14/1995) – vacant units have an effect on the rental value of other units in the locality.
Finnis v Priest – Tenant coming fresh to the scene, not concerned with circumstances that may have existed before the date of the letting.
84
How did you determine an Incomplete Submission? (LT L2).
The Non-Domestic Rating (Alterations of Lists and Appeals) (England) Regs, 2009 - Part 2:
The ratepayers representative had submitted a Challenge for a 2017 Rating List.
On receipt of the Challenge, I noted that the ratepayers representative did not provide evidence to support the ground of the proposal.
I concluded that the proposal did not meet the required content or evidence standards under Regulation 6.
I issued a notice of refusal to the ratepayers representative, in line with Regulation 8, on the grounds that it was an incomplete proposal.
85
What case law helped you decide to Split the retail unit in Abergavenny? (LT L2).
Woolway v Mazars
John Lang & Son v Kingswood (1949)
The ratepayers representative requested to split an office into two units.
They provided lease agreements for the two occupiers, along with plans that clearly distinguished between them.
I reviewed the plans and noted that the occupiers had two clearly definable separate units, each with their own entrance.
I established that the two occupiers were capable of separate occupation, had a single geographical unit and were a single definable position.
I provided reasoned advice to a senior colleague that a split was warranted and issued a Valuation Office Notice to the two occupiers.
86
Tell me about Wilkins (VO) v
London County Council (1957) (TRANSIENT)
Builders were under contract to build a school on Londonn Council Council land
Erected 4 temporary huts, 3 for 18 months and 1 for 21 months
Found to be rateable as it had sufficient permanence
87
Tell me about Southern Railway and WHSmith v Westminster City Council (1936) (EXCLUSIVE)
Lead case for exclusive occupation
Concerned WHSmith at Victoria station
Held that WHSmith are in exclusive occupation as they have exclusive occupation for the land in which the purpose it was created for (being a book shop).
Despite the southern railway having control over access arrangement this was no different to restrictive lease covenants in normal LL and tenant negotiations.
88
Tell me about the Monk Case (2017) (BENEFICIAL)
5J&J Monk own the freehold of the first floor of a three-storey Office building in Sunderland
* well known case on BENEFICIAL OCCUPATION
* They requested to reduce ratable value during reconstruction period.
* Issue was do we value at the 2012 condition where the unit was stripped out undergoing construction, or do we assumes a reasonable state of repair (para 2 schedule 6)?
* VO rejected, VT upheld this, Upper Tribal allowed SJJM appeal, Court of appeal reversed and allowed VO appeal, then Supreme Court reversed and allowed SJJM in line with Upper Tribunal.
* Hereditament incapable of beneficial occupation is not rateable
* Repair assumption is irrelevant
89
Tell me about R v Assessment
Committee of St Pancras (1877) (ACTUAL)
Leading case on actual occupation
Looked at the definition of the word occupier
Legal possession does not mean you occupy e.g., if you own a house but it is vacant you are not liable for rates as you are not occupying it.
A person who takes actual occupation either by the owner leaving or against his will (someone dying) they will be deemed to be the occupier (doesn't need to actually have title deed)
90
What happened in Dorothy Perkins Retail Ltd v Casey and Berry v Iceland Foods Ltd?
91
What actually happened in the Mazars case?
Consideration of the unit of assessment.
Two floors in an office building separated by common areas should be assessed as two separate hereditaments. Supreme court rules, units need to be contiguous with interconnecting parts unless functional test was satisfied.
History of Mazars
2010 Mazars applied to the VTE to merge floors 2 and 6 on separate leases, separated by common parts. This was agreed and formed one hereditament.
VO appealed to UT – which dismissed VO’s view they were two separate hereditaments. Which led to Supreme Court Ruling in 2015.
92
What is the Geographical and Functional Test?
Geography test – whether land and buildings constitute a single unit on a plan.
Functional test – where two spaces are geographically distinct, a functional test may enable them to be treated as one where the use of one is necessary to the effectual enjoyment of the other. This depends on objective judgement and using common sense. Could one part be separately let and therefore occupied without significant detriment to tother other part. In this case, there was no functional link between the two floors. Considered separate.
93
What are the checks in place to ensure a challenge is lawful?
- name and contact details of the appellant.
- connection to the party.
- relevant billing authority.
- identify property that challenge relates to.
- grounds of the proposer.
- revised RV proposed.
- supporting evidence statement.
- effective date.
94
What is the recent legislation which would have effected your split decision?
The Non-Domestic Rating (Property in Common Occupation) (Wales) Regulations 2022.
Reversed Mazars, assessments contiguous either vertically or horizontally can be considered as one assessment.
95
What is the case law that identifies a unit of assessment?
Woolway v Mazars
96
You made a challenge submission incomplete. How does this differ from a challenge being unlawful?
- needs to have a connection to the property.
- must be submitted within the statutory deadline.
97
What is the significance to the Lotus and Delta case law?
Established the weighting of evidence.
98
Is there any new legislation which amends the scope of MCC provisions?
Non-Domestic Rating Act 2023
Changes what constitutes as MCC and the right to make a proposal based on MCC for 2023 and subsequent lists.
Wales and England separate legislation.
Legislation tightens the scope for submitting an MCC – legislation, licencing regimes and guidance from public bodies should not be grounds for a change in RV between revaluations.
The Act gives effect to the changes by amending the paragraph 2(7) ‘relevant matters’ s6.
For example physical state and physical enjoyment are now separate matters.
The former paragraph d are also now separate matters. Into d) matters affecting the physical state of the locality in which the hereditament is situated and da) not affecting physical state of the locality are nonetheless manifest there.
99
Regarding the incomplete challenge submission would it have been possible for the proposer to provide further evidence relating to the grounds of proposal?
Yes, but only if the evidence was not available to the proposer when the proposal was made.
100
Do you know any recent case law which followed the PICO Act.
Cardtronics v sykes & Ludgate house
Provides extra context when considering rateability, in particular paramount control.
Cardtronics v Sykes [2020] Supreme Court
The Supreme Court considered whether the sites of Automatic Teller Machines (ATMs) in supermarkets and convenience stores were:
a) capable of being identified as separate assessments; and
b) in rateable occupation of the host store or the ATM operator.
The Supreme Court held that, although some of the sites of the ATM were capable of separate identification, the host stores had not sufficiently parted with possession and, when this was considered alongside control and “purpose” they concluded that the host remained in rateable occupation of the site of the ATM.
Therefore, the site of the ATM should be included within the host store assessment and not as a separate assessment.
Ludgate House Ltd v Rickets VO Court of Appeal decision [2020]
The office building found to be a single hereditament.
LHL has not given up possession of any part of Ludgate House: its agreement with VPS made that clear. Question was not one of ‘paramount occupation’ but ‘general control; which is the decisive factor in establishing who is in rateable occupation of the building.
Background.
Large office built in 1988 formerly the home of Express Newspapers
Ludgate House Ltd (“LHL”) acquired the freehold in 2010
Intention to redevelop demolish and redevelop with adjoining sites
VPS (UK) Ltd (“VPS”) arranged guardians to occupy the vacant office
First 4 guardians arrived 1 July 2015
By 17 August 2015, 46 individuals had taken up occupation
101
Under the PICO act can you tell me two specific criteria which would’ve allowed these to be merged?
- Contigeous
- Not used for wholly different purposes
102
What are the changes following the Non-Domestic Rating Act 2023?
- revaluations every 3 years
- transitional reliefs - self-financing has been removed, and the government has confirmed the scrapping of ‘downwards phasing caps.
- MCC - Changes in legislation, licensing regimes, and guidance from public bodies are no longer to be considered valid grounds when seeking a temporary reduction to a property’s RV. It is anticipated that the scope for ratepayers to appeal on MCC grounds is to be narrowed.
- Completion notices - councils will be able to serve a completion notice on refurbished buildings to be re-entered into the rating list regardless of any structural alterations having taken place
- improvement relief (March 2024) - encourages ratepayer to improve their properties
103
When is the next Revaluation?
2026, AVD 1st April 2024
104
What is the different timelines for a subjective and external MCC?
Subjective - 4 months to CGH. (Physical)
External - 16 months to CGH. (External)
105
What are the LGFA 1988 requirements for FORs?
Regulation 9 - FORs
Regulation 17 - VT.
106
What legislation lead to the PICO Act?
Introduced in response to the Supreme Court decision in Woolway v Mazars, the ruling determined that different floors of the same building, occupied by the same business without direct inter communication, should be tested as separate hereditaments.
- this increased the costs for businesses occupying non contiguous spaces.
The PICO Act revered part of this ruling, allowing contiguous properties occupied by the same person to be treated as one hereditament for business rate purposes, even if they do not have direct communication.
107
How do you identify a hereditament?
A unit of assessment that repeats to land or buildings liable for non domestic rates.
Identified using the 4 tenets of rateable occupation as set out in J Laing & Son v Kingswood.
108
What is the charitable rate relief?
Charitable rate relief gives you up to 80% off your business rates bill.
Your local council may also be able to top up the discount so that you do not have to pay business rates. This is called ‘discretionary relief’.
109
What if the MCC was for works opposite the subject?
110
What are the changes to MCC matters following the Non Domestic Rating Regulations 2023?
Tightening of MCC Provisions:
New legislation and public authority guidance are no longer considered valid grounds for MCC claims, which means businesses cannot appeal rateable values based on changes like new licensing laws or guidance from public bodies. This follows from changes made during the COVID-19 pandemic, which had already removed pandemic-related MCC appeals.
111
What is meant by tone?
112
With your deletion case, could the tax payer re-submit their challenge at a later date?
TBC
113
With your deletion case, could the tax payer re-submit their challenge at a later date?
TBC
114
Why do we use RSA?
All our records are stored on there
115
Why do we use RSA?
All our records are stored on there
116
What are the penalties for false information provided at check stage?
£200 for smaller proposer and £500 for everyone else
117
what are the changes to completion notices?
The Completion Notice procedure has been expanded to allow for a notice to be served on any assessments which were deleted from the rating list during refurbishment works, regardless of whether structural alterations have been made
118
What are the newly proposed rating reliefs?
LA will have the power to apply, at their discretion, a small business multiplier to large hereditaments
Rural rate relief will become mandatory for qualifying village shops
119
What are the changes in an Empty Rate Relief?
Following the Non-Domestic Rates 2023
Extension from 6 weeks to 3 months.
120
How are agents charged by ratepayers?
Percentage of saving achieved or a fixed fee
121
Is CCTV rateable?
>4 un-rateable
Need to confirm if they are not dummy
122
Are FORs reliable?
Not always reliable
Need to confirm the information by going on land registry
123
Would you place less weight to a challenge dealt with by a unrepresented ratepayer?
Less weight to an unrepresented ratepayer as they are unlikely to know the system they well
124
For the retail unit in harrow, what was the subject rent analysing at compared to the tone?
10% lower than tone
125
Why did you put most weight on the subject rent for the retail unit in harrow?
Subject rent wasn’t available on the compiled list
Rent was agreed close to AVD
126
Was the retail unit in harrow an outlier?
No, the basket of evidence supported the rent
127
Talk me through your comparables for the retail unit in harrow?
Located near the subject
Agreed close to AVD
Same mode & category
128
How would you establish the deletion date for the office in Cardiff?
Colour weddings
The moment the hereditament became incapable of beneficial occupation
129
For the MCC, why was the proposed adjustment unreasonable?
I imagined the hypothetical landlord and tenant on the material day on the economic situation at AVD
I was of the opinion that the parties would have not agreed a reduction in rent at the material day as it was clear that a new occupier was in talks, as at the time of me dealing with the CHG the unit was reoccupied.
130
Did you consider any rental evidence for the MCC?
Subject rent and rents in close proximity were considered
Evidence showed that there were no reductions in rent agreed during the closure of the department store
I would consider the subject rent based on the physical circumstances at the MD but the economic circumstances at the AVD
131
Tell me about the comparable evidence for the MCC?
Settlement evidence provided were different locality, mode and category and list year
All evidence was considered, but a low weighting was a attached
Agent agreed that the evidence was not comparable
132
What was the advice you provided for the MCC?
I agree that an MCC was in place at the MD but advised the rent a tenant might be reasonably expected to pay would not be less due to the closure of the department store
The department store was in negotiation with a new tenant as at the date I was dealing with the CGH, the store was re-occupied
Evidence provided was not comparable
I considered the proximity, duration and nature of the closure at the MD and decided no reduction was warranted
133
Explain the steps of the MCC.
1. is there a MCC - physical change from CL and MD
2. physical facts MD - vacant unit was occupied
3. VSF
4. Bring back to AVD
5. Subject rent
6. Which they haven’t appealed
134
What happened in the Porter v Gladman SIPPS case?
Office
A property is only ready for occupation if it has all the features for it to be occupied
If it doesn’t, then it’s not fit for beneficial occupation and does not constitute a hereditament which can be brought into the list
135
What are the pertinent dates of your MCC?
Closure & Effective Date: December 2019
Material Day: December 2020
MD = the date of check submission.
~ 12 months after the closure.
136
How would you adjust for rent free period? Is it the same for all unit sizes?
137
How did you adjust your comparable to reflect that it was a 7 year term not the average 5, 10, 15 term.
Hypothetical tenancy
Definition of Rateable Value
Reasonable assumption of “continuous” from year to year
138
Talk me through your tone example in Harrow. What do you mean it was located in a break?
Located in a parade of shops - units to the left were lower tone, units to the right were higher tone
Subject was located in the break with the higher tone. Agent argued that the hereditament should be valued with the lower tones.
Considered evidence - Lotus & Delta - subject agreed near AVD, FRI terms, minimal terms, 10 year lease.
139
Talk me through your tone example in Harrow. What do you mean it was located in a break?
Located in a parade of shops - units to the left were lower tone, units to the right were higher tone
Subject was located in the break with the higher tone. Agent argued that the hereditament should be valued with the lower tones.
Considered evidence - Lotus & Delta - subject agreed near AVD, FRI terms, minimal terms, 10 year lease.
140
You say you considered the timescale, duration and severity of the MCC. How so?
Timescale - was closed for 6-9 months.
Duration - similar to timescale.
Severity - placed most consideration to duration and the impact
- there was no other settlements within the shopping centre
- No rental reductions in relation to the closure
141
For your MCC, what economic factors did you consider at the AVD?
- shop was in existence
- no evidence that the rent had been effected
- Could still be a demand for the unit, prime location
- Didn’t prove that the department store left because the rent was too high
142
What does not too transient mean? You have a shop that is open once a month every year at the seaside, is it rateable?
Permanence of the Structure: If the shop is a permanent structure (even if it’s only open once a month), it may be considered rateable because the physical property exists continuously, and business rates are typically applied to buildings that are available for business use, regardless of how often they operate.
143
What are the two tests for religious building exemption?
1. The purpose test
2. The public benefit test
144
You adjusted and analysed, what does this mean? What’s the difference?
145
Do you need the passing rent for a deletion proposal to be complete?
146
What’s the difference between lease and license?
• Lease: Grants exclusive possession, is for a fixed term, creates a legal interest in land, and offers stronger legal protections.
• License: Grants permission to use the property without exclusive possession, is often short-term, creates no legal interest in land, and offers fewer protections.
147
Is the MD the date of check for all cases?
MD is 1st April for most other cases
MCC is date of check
Deletion is the date of event, where it became incapable of occupation
148
Tell me about a time you negotiated for taxation?
Retail unit in Harrow example
149
If there was a private bridge, would this be contiguous?
Yes, as it’s private. No, it if wasn’t private.
150
Is special value/special purchaser stated within the red book?
Yes under VPS4 Market Value
151
Can you name the two secondary legislations for 2017 list alterations
Details that validate changes & grounds of appeal - Non-Domestic Rating (alteration of lists and appeals) (England) Regulations 2009
Details for VT hearing - The Valuation Tribunal for England (Council Tax and Rating Appeals) (procedure) (amendment) Regulations 2017
The Non-Domestic Rates Act 2023
152
What are the different MCCs?
Local Government Finance Act 1988 (Schedule 6, Para 7)
a) Matters affecting the physical state or enjoyment.
b) Mode or Category of Occupation
c) Quantity of Minerals Extracted
a. Waste deposited.
d) Matters affecting locality, but not physically.
e) Matters affecting use or occupation of other premises in locality.
153
Can a ratepayer who previously occupied a property, make a challenge?
A previous occupier may make a challenge under MCC if they can demonstrate that the material change occurred while they were in occupation and affected them during their liability period. However, once they are no longer responsible for the property, it becomes more difficult to challenge, particularly if a new occupier has assumed liability.
154
What makes a submission lawful?
Interested party
Can’t be a duplicate
Within timeframe
155
What is tone?
At the beginning of the list, values are set by rental evidence, these are either challenged or not challenged, settled tone which means it’s acceptance of the value
156
What did the special eyes case law states?
Used during changing market
before- some weight, avd- most weight, after- little to no weight
157
What relief is available for high street retail?
Retail, hospitality and leisure relief - 75% relief if your business is mainly being used as a:
shop
restaurant, café, bar or pub
cinema or music venue
hospitality or leisure business - for example, a gym, a spa or a hotel
158
What’s happening in the retail market?
Drive towards leisure
159
Under what regulations can a challenge be submitted?
non-domestic rating (alteration of lists and appeals) (england) regulations 2009
160
What are the grounds for challenging a rateable value?
Reg 4
1. Compiled list inaccuracies
2. MCC
3. Effective Date
4. Deletion
5. Address is incorrect
161
What is mode and category?
Fir Mill Case law - cotton factory should be valued as a factory not restricted to cotton mill.
"Rebus sic Stantibus" - Physical Limb and Use Limb
Should consider its physical state and use for the purpose of the valuation
162
What is beneficial occupation? What do you mean by this? Why is beneficial occupation important?
A third requirement of rateable occupation is that the occupation must be of some benefit or value to the rateable occupier.
Tthe test of rateability is not whether the property will produce profit, but whether it will serve a purpose that someone is willing to pay a rent for.
163
Are traditional investment methods implicit or explicit?
The ‘traditional’ approaches are typically referred to as being growth implicit, meaning that rental growth is built into the choice of yield and not explicitly modelled within the calculation.
164
how is air conditioning dealt with in rating assessments?
Office valuation schemes will often, but not always, reflect A/C.
For retail properties, there are agreed schemes in place, based on £7 sqm addition in shops, and £4 5q m in retail warehouses.
For industrial premises, A/C is commonly dealt with as a % addition, A/C usually being found in the ancillary offices.
165
If you hadn’t of been able to agree your challenge case what would happen? Is there relevant guidance? What does the consolidation practice statement outline?
- submitted DN
- ratepayer/agent can escalate to appeal
**Consolidation Practice Statement**
- outlines how cases should be presented, timelines,
- details the process for appealing a tribunal decision
- highlights the use of alternative methods for resolving disputes
166
What are the CCA timelines?
VO have 12 months to resolve a check (3 month aim) if not complete the IP has the right to move on to challenge.
• Challenge must be made within 4 months of check completion date (16 months for external MCC)
• Challenge must be resolved within 18 months or IP has the right to go direct to appeal stage.
• IP appeal to VTE within 4 months of decision notice
167
If the case had not been agreed what would have been the next steps the parties/VO could have taken?
Appeal to the valuation tribunal can cost £150-£300, then upper tribunal, court of appeal, Supreme Court
168
What is the MD of a split or deletion?
Date of event
169
Where does it detail the CCA process?
The non-domestic appeal regulations 2009
170
What does para 5 schedule 9 say?
A valuation officer may serve a notice on a person who is an owner or occupier of a hereditament requesting him to supply to the officer information which is specified in the notice
