LOCAL TAX Flashcards
What do you mean by “independently” dealt with 2017 Rating Appeals in England and Wales?
My responsibility includes reviewing evidence, inspecting the properties, and negotiating a settlement within the statutory deadline.
How do you sense check valuations?
Compare with market evidence, review methodology, seek assurance.
Rating in Wales v England. What are the differences?
Local Government Finance Act 1988.
ENG: CCA.
WALES: PROPOSAL, NEGOTIATION, APPEALS.
What VSF did you consider for the retail unit in Harrow.
Location, Size, Public Layout, Shape.
Talk me through Lotus & Delta.
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.
What is Tone? Can the tone of the list ever be established?
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.
How do you value A/C for retail?
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.
Is there case law for office fit out?
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.
Tell me about Monk v Newbigin
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
Tell me about Jackson v Canary Wharf.
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.
What about if part was being redeveloped?
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).
Tell me about Weddings v Robert’s.
At what date was the property rendered incapable of beneficial occupation as a result of works?
What is the prior “economic” question.
(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?
What are the steps to the economic test?
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.
When would you consider repair to be uneconomic?
Princess Street.
The question of whether repairs would be economic is a comparison of likely future rental income flow against the cost of repairs.
When should the hereditament be deleted?
- 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.
What is the scheme of works?
When the property comes:
- significantly improved.
- different unit of assessment.
- different mode of category.
where there is no scheme of works, consider repair.
When is a property not in beneficial occupation?
Consider what is require for beneficial occupation.
E.g. stripped out lighting, electrics, plumbing.
What if there is a scheme of works to a substantial part?
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.
What if there is a scheme of works to a minor part?
Refer the ratepayer to BA for s44A - £0 values the part not used for a period of time.
What is a completion notice?
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.
What are the changes to Completion Notices?
Rating Act 2023.
BAs can now legally serve completion notices on stripped back properties where no structural alterations had taken place.
What is improvement relief?
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.
What case law refers to ABET?
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)
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.”
What is the Lotus and Delta case?
Retail shop in Leicester, considered the 6 proportions for rental evidence.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
What legislation did you refer to for your MCC?
LGFA 1988 Schedule 6 paragraph (2) sub-paragraph (7)
The Non Domestic Rating Regs 2009
How long does the ratepayer have to submit an MCC Challenge after the Check decision?
16 months
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.
What is a material day?
It is the day on which we consider the physical matters effecting the hereditament.
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.
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Provide a step by step approach on how you dealt with your deletion case.
- Defined hereditament.
- Considered factors at MD.
- Schedule of works? No.
- Economic test (Benjamin v) - reasonable repair and should remain in the rating list.
If there was a schedule of works, MONK case- deletion.
Provide a step by step approach on how you dealt with your split.
- Defined the hereditament
- Confirmed physical facts at MD.
- 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).
- I advised a senior colleague that a split was warranted and issued a VON.
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
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.
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).
What was the date of the MCC and MD?
Date of MCC: December 2020.
MD: December 2021.
What is BEAMS team?
Build Environment and Mineral Surveyors
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.
What did the Gilbert v Hickbottom case establish?
*Geographical test
*Functional test
