Local Taxation Flashcards

Question

What are the matters which are considered at the Antecedent Valuation Date?

Answer 1

A Inflationary trends Changes in distribution of money between sectors and regions Interest rates Peoples attitudes State of the market

Answer 2

S64 LGFA a hereditament means property which is or may become liable to a rate, being a unit of such property which is, or would fall to be, shown as a separate item in the valuation list. Hereditament also encompasses a right over land

Answer 3

John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344 Actual occupation Beneficial Occupation Exclusive occupation Not too transient

Answer 4

The physical presence of the occupier on the premises. This can be through storage of items

Answer 5

Ability to have paramount control over the property that is let out

Answer 6

occupier is receiving some form of benefit from occupying the space. This does not have to be financial but can be to fulfil a purpose e.g. education

Answer 7

Property has some level of permanence to its location and is not movable. Intensity of use does also account for transience

Answer 8

The ‘ Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018’ One rating assessment will generally now be applied to neighbouring floors or units occupied by the same business, so long as: They are “contiguous”; and They are not used for wholly different purposes. Premises are contiguous with each other if they share at least part of a common boundary (e.g. a wall or fence), or if they are on consecutive floors and at least part of the floor of one unit lies directly above at least part of the ceiling of the other unit. Premises might still be contiguous even where there is a space between them that is owned or occupied by another person, for example the ceiling void between two floors.

Answer 9

To taper large changes in a properties rateable value caused by a revaluation

Answer 10

Schedule 5 to the Local Government Finance Act 1988: Agricultural premises Fish Farms Places of religious worship etc. Certain property of Trinity House Sewers Property of drainage authorities Public Parks Property used for the disabled Air-raid protection works Swinging moorings Property used for road user charging schemes Property in enterprise zones Visiting forces etc

Answer 11

1) Power generation e.g. cables, conductors and wind turbines 2) Services to a property e.g. heating, cooling and supplying water 3) Rateable infrastructure e.g. including lifts and railway tracks 4) Process plant such as fixed cranes, masts and tanks

Answer 12

Defined in schedule 6 para 2 (7) of the LGFA Matters affecting the physical state or physical enjoyment of the hereditament, The mode or category of occupation of the hereditament, 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 (smoking ban) The use or occupation of other premises situated in the locality of the hereditament.

Answer 13

The domestic and non-domestic split is based on a notional usage basis whereby the pattern of other shops is considered in order to determine what the hypothetical occupation of domestic and non-domestic space is

Answer 14

S66(1) of the LGFA 1988 defines a domestic dwelling as a) Wholly used for the purpose of living accomodation b) Yard, garden, outhouse or other appurtenance belonging to or enjoyed with the property c) It is a private garage with a floor area of 25m2 or less used wholly for the accomodation of private motor vehicles d) Is a private storage premises used wholly or mainly for the storage of articles of domestic use

Answer 15

1) Within one or more billing authorities a. If straddling 2 authorities the portion of land with the higher rateable value will receive the revenue 2) A single rateable occupier a. Must be one rateable occupier if there were two then there would be 2 hereditaments 3) Capable of separate occupation a. Must be shown that the property is capable of being separately let 4) Single geographical unit a. Must be within the same curtilage i.e. could you cast a ring fence around the land 5) Single purpose a. Cannot be used for 2 vastly different purposes, can one function without the other? 6) Single definable position a. Must be a fixed position and not a moveable one for example an ice cream van

Answer 16

This is a method of analysis typically used to reflect the higher value in which the shop front commands. This is due to the fact that the majority of purchases and customer footfall passes through this space.

Answer 17

A premises is split into distinctive zones typically 3 zones and a remainder each measuring 9.14m (30ft) in depth. Zone depth can change depending on locality in order to reflect the market. For example in London zone depths are 9.1m. A rent is analysed by dividing it by the ITZA (in terms of zone A) which is calculated by measuring out each zone whilst dividing each zone back by a half. This will give an ITZA which is divided by the rent to give a zone A. Remainder or ancillary zones are typically measured to 25% or 10%.

Answer 18

Capitalise rental value for the term, then add on the premium to this capital value, then decapitalise over the period of the term

Answer 19

Capitalise payable period up until review and then discount this sum by the YP for the total term of the lease.

Answer 20

Capitalise each rent up until review then decapitalise this over the period until review

Answer 21

A premium is given by the tenant in order to secure occupation of a site. It is typically reflected through a lower passing rent. Reverse premium is given by the landlord in order to incentivise a tenant to occupy the premises. It is reflected by the landlord increasing the passing rent in order to recoupe the initial sum

Answer 22

Rents may be capitalised into perpetuity where a long rent free period is given or incentive that could skew the capital value

Answer 23

Person who gives expert evidence orally or written to assist the tribunal. He provides objective and unbiased opinions to the tribunal on matters within their expertise.

Answer 24

Person who acts in the best interests of their client and advocates their case fairly and professionally.

Answer 25

Estimated replacement cost Adjusted replacement cost (functional, technical and economic) Add site value Apply decap rate Stand back and look

Answer 26

RICS guidance on contractors basis of valuation for rating purposes 2nd ed Aug 2017

Answer 27

Case regarding procedure for considering evidence. Shoe shop in Leicester. 6 Propositions for considering evidence. Subject rent is starting point. More weight attached to rents that reflect statutory definition. Rents on similar properties. Assessments of other comparable properties. Make an opinion from available evidence. if no rent available on subject, review of other assessments helpful but difficult to reject actual rent.

Answer 28

Re-looks at the unit of assessment. Established that contiguity is not enough. Must have intercommunication. Firm occupied two different floors. No intercommunication. They were not functionally essential to one another. Could be separately let. Functional test - if two parcels of land are distinct, they could be assessed as one if they are necessary for effectual enjoyment.

Answer 29

- Whether the 2nd and 6th floor within the same office block should be assessed as one or 2 hereditaments - Prior to this case it was considered that unless those parts occupied by the rate payer were contiguous, they would form separate hereditaments unless they were shown to be functionally essential (with access via common parts) - Court held this was not the case and the 2 floors should be rated separately. - The VO then embarked on a to split relevant assessments of adjoining properties if the only programme access between them was via a common part i.e. lift or staircase

Answer 30

The rating (Property in common occupation) and council tax (empty dwellings) act 2018. Reverse part of Mazars to allow properties which are contigous but not intercommunicating. Allowed a small window for appeals to be put in.

Answer 31

Generally accepted level of value Obrien v Harwood 2003 - 15 settlements which established the tone.

Answer 32

SC case. Iceland is a well known supermarket selling frozen goods. Question to the court was whether the Air handling system is part of the manufacturing or trade processes. If they are then they are to be ignored. Usuallly it is rateable as it provides services to the hereditament but is it excluded in this case by the regulations 2000 themselves which state it is ignored for manufacturing or trade processes. Decision was that the AHS is used to keep goods in frozen manner. It is part of trade process.

Answer 33

Rating Consultancy Code of Practice, 4th edition 2017

Answer 34

* Rateable items of plant and machinery not already reflected in the rental rates should be dealt with in terms of the Valuation for Rating (Plant & Machinery) (Scotland) Regulations 2000 as amended and valued with reference to the Rating Cost Guide.

Answer 35

Yes, if there has been a mistake in the valuation such as the area being wrong after part of the building had been demolished. Or if a new tenant has taking occupation of the building. Or if the property has been valued as an office but it is a shop and only has PP for a shop.

Answer 36

* reformed and extended with the Finance Minister confirming that 100,000 properties will continue to pay no rates. * Under the scheme 100% relief will be available for properties with a rateable value of up to £12,000 and the upper rateable value for individual properties to qualify for SBBS relief will be extended from £18,000 to £20,000. * The Scottish Government are tapering the SBBS relief for properties between £12,001 and £20,000: relief will taper from 100% to 25% for properties with rateable values between £12,001 to £15,000; and from 25% to 0% for properties with rateable values between £15,001 to £20,000.

Answer 37

* Under the Empty Property Relief Scheme, commercial properties i.e. shops and offices only pay 50 per cent business rates for the first three months from when the property becomes empty, 90 per cent of the rates is payable for any remaining vacant period. * Empty industrial properties enjoy 100 per cent relief for the first six months and then revert to the 90 per cent payable in line with other commercial asset classes. * Empty property relief is applied through application to your local billing authority. A property must have been occupied for six months or more before becoming empty to qualify for empty property relief. If the property was occupied for a period less than 6 months before an empty property relief application is made, then only 10% relief will be applied.

Answer 38

Commissioned by the Scottish government in 2017, the Barclay Review (chaired by Kenneth Barclay) was introduced to reform the business rates system in Scotland in order to better support business growth. One of the recommendations to come out of the report was to remove charitable rates relief from independent schools in Scotland. One of the main issues raised by Barclay was the frequency of revaluations and the failure of the current system to keep values in line with market conditions. The recommendation was to introduce three-yearly revaluations from 1st April 2023, which the Scottish Government has agreed to. The valuation date, which was previously two years before a Revaluation came into force, will now be based on rental and cost levels one year prior to the start of a revaluation (April 2022). Again, this reinforces the link between the market and the valuation rolls. The Scottish Government will publish the new legislation to implement these changes later this year.

Answer 39

The Non-Domestic Rates (Scotland) Act 2020 is a law that reforms the system of non-domestic rates in Scotland1. It was passed by the Scottish Parliament on 4 February 2020 and became an Act on 11 March 20201. The Act creates a two-stage appeal system for owners, tenants or occupiers who disagree with the valuation of their property2. It also introduces other changes to the rates system, such as reducing the revaluation cycle from five to three years and increasing the relief for certain properties

Answer 40

was a significant piece of legislation in Scotland as it established the basis for a uniform valuation of landed property, which had previously been rated based on varying and often unclear criteria. This Act was critical in establishing an equitable and consistent system for property taxation. It laid the groundwork for the creation of the Valuation Roll, which was a public document that listed every property, its owner, occupier, and its rateable value. The Act was a response to the need for a fairer system of local taxation, and its provisions have been updated and expanded in various pieces of legislation since, but it remains the foundation of property valuation in Scotland

Answer 41

In the context of Property and Real Estate, "unum quid" is a Latin term that is often used to refer to a single entity or asset One rating assessment will generally now be applied to neighbouring floors or units occupied by the same business, so long as: 1. They are “contiguous”; and 2. They are not used for wholly different purposes.

Answer 42

Being contiguous is helpful but not determinative. The main criteria are the Geographical test and the Functional Test. Geographical is the primary test.

Answer 43

The geographical test is one of the criteria used to determine whether a property or a part of a property is a separate unit or hereditament for the purpose of paying business rates. The geographical test looks at whether the property or the part of the property is physically separate from other parts of the same building or complex. For example, if a business occupies two floors in an office block that are not connected by an internal staircase or lift, then the geographical test would suggest that they are separate hereditaments and should be assessed for business rates separately. However, if the floors are connected by an internal staircase or lift, then they may be considered as one hereditament and assessed for business rates together.

Answer 44

A consideration in deciding whether subjects which are physically disconnected should nevertheless be treated as umum quid. Maybe whether the association between the alleged accessory and principal is necessary for the use of the subjects, however, this criterionshould not be pressed too far. The case of Burns Stewart Distillers Limited V’s Lanarkshire Assessors 2001 – The Lands Tribunal for Scotland held - that the 2 subjects should not be treated as unum quid as the 2 subjects were separated by a common public road and neither of the subjects were reliant upon each other in order to operate and function, even although they were occupied by the same occupier. The Supreme Court in Woolway v Mazars 3 also applied the functionality test and the enjoyment test, which look at whether the property or the part of the property is used for the same purpose and whether it can be enjoyed as a single unit

Answer 45

This case dealt with the question of the correct way to value a distillery for non-domestic rating purposes. The distillery in question was a whisky production plant which was purpose built with special features that were particular to the process of Scotch whisky production such as maturation warehouses. The argument was whether the distillery should be valued on a rentals basis, which is common for commercial properties, or whether the unique features of the distillery should mean it should be valued on a different basis such as a contractor’s basis (cost-based method). The Lands Valuation Appeal Court ruled in favour of the Assessor's preferential method valuing the distillery on a contractor’s basis rather than a rentals basis. This is due to the specialist nature of the asset and the lack of rental evidence available.

Answer 46

Lotus and Delta VS culverwell - Subject property, similar comparable rental evidence- (adjusted to rating hypothesis) – other rating assesments. Once tone has been established agreed challenges should take the place of other rental information. Rents after the AVD should be given less weight.

Answer 47

1. Where the subject hereditament is actually let, that rent should be the starting point 2. Attach more weight the closer the rent is to the rating hypothesis in terms of time, subject matter and conditions 3. Rents of similar properties should be used to confirm or otherwise the actual rent 4. Assessments of other comparable properties are relevant * Agreed/Withdrawn/Dismissed/Invalid In the light of all the evidence an opinion can then be formed of the value of the appeal hereditament and the weight to be attached to the different types of evidence.

Answer 48

The Lands Valuation (Scotland) Act, 1854 established a uniform valuation of landed property throughout Scotland, establishing an assessor in each of Scotland’s 35 counties and 83 royal and parliamentary burghs

Answer 49

the rate multiplier  Small business bonus scheme – to be reformed and extended to remove circa 100,000 properties from the rates system  Fresh start relief threshold increased from £95k to £100k  100% relief for p&m that is associated with renewable energy generation and storage

Answer 50

 Draft assessments published by assessors on 30/11/2022  Final assessments will be published late march 2023  Revaluation cycle now 3 years - 2023 / 2026 etc  Valuation date 01/04/2022 - 1 year prior  Ratepayers can correct factual errors / agree valuation approach with assessor between draft and final assessments (30/11/2022 – 01/04/2023)  Ratepayers have 4 months from 01/04/2023 – 31/07-8/2023, to lodge a proposal with the assessor  Any party reaching an Agreement between draft and final assessments (30/11/2022 – 01/04/2023) will forfeit their right to lodge a proposal  separate proposal required for each property  Once a proposal is submitted, no amendments can be made  Assessor may refuse the proposal if believed to incomplete, however must advise what information is missing  If not refused, Assessor has 56 days from the date the proposal is made, to acknowledge the proposal  Assessor must provide at least 70 days notice of the proposal determination date (pdd) and provide their grounds of appeal at the same time, appellant has 14 days to respond  Assessor must provide, within 56 days of the pdd, the final decision on the ratepayers proposal  If refused, proposal converted to an appeal and heard before a new first tier tribunal (ftt), ratepayer/agent has 28 days to refer the proposal to the FTT  ftt will decide upon ratepayers/agents submission at proposal stage and assessors comments  ftt will take over role of vac from 01/04/2023  Upper Tribunal (UT) will take over the role of the LTS  No later than 14 days prior to the FTT hearing date, appellant or assessor may request appeal be referred to the Ut  Final decision from the ftt and ut can be appealed to the lands valuation appeal court

Answer 51

. These factors are also guided by Schedule 5 of the Local Government Finance Act 1988. 1. The Reality Principle: This examines whether the item forms part of the overall hereditament (the property that is being rated). If it does, then it may be classified as rateable . 2. The Premises Test: If the machinery is part of the premises, for example, it is built into the structure and cannot be removed without causing damage, this can be classified as rateable 3. The Use Test: Essentially, this involves determining if the item is used for beneficial occupation of the property, if it is, then it could be considered rateable Further guidance can be obtained from the RICS (Royal Institute of Chartered Surveyors) or from the Valuation Office Agency (VOA). The VOA also publishes a Rating Manual, which gives further details on how the law is applied in practice. It is also important to note that there have been many disputes over the years about what is considered to be rateable plant and machinery and it may be necessary to seek professional advice or expertise to help interpret these rules

Answer 52

R and E method – Preferred method where rental evidence is sparse and the rent is dictated by the anticipate profit of the business carried out at the hereditament. Used for properties such as a pub or hotel Gross Profit-Working Expenses = Divisible Balance (split between the LL (Rent/RV) and Tenant (Profit)

Answer 53

Total Income – Costs of sales – Gross Profit Gross Profit -(Gross receipts less the costs of sales eg STOCK and any costs involved with achieving sale. eg cost of beer and food for pub) Calculated from 3 years of accounts leading up to the AVD- LESS Working Expenses – Additional expenses incurred generating the gross receipts. Includes an allowance for the renewal of tenant’s assets. (As long as these assets are rateable) Includes-(Salaries, Wages, Contracts for Equipment, Cleaning, Repairs etc) To determine what’s rateable, turn the building upside down is and shake- if it falls out it probably isn’t rateable Exclude the skill of the operator – assume there is an average person. – Subjective GIVES Divisible Balance/ net profit (EBITDA Earnings before Interest, Taxes, Depreciation and Amortisation on balance sheet) - This is the amount that is to be shared between the Tenant (reward for running the business) and the Landlord as Rent/RV. Looking at the net profit – stand back and think how much would you pay for the property. Usually 40-50%. The split percentages are argued over by the rateable values.

Answer 54

Fair Maintaible Trade % = Rental Value A percentage of the fair maintainable trade (Gross Receipts- income to the business) is adopted to determine the RV. Gross receipts is all money incoming to the business through trade at the property– eg at the London eye – all tickets and souvenirs. The percentage ranges can vary between 1.5% and above 20% dependant on the property type and how much profit they are making on the stock, taking into account is advantages or disadvantages. Essentially % of the total income could be spent on rent. Eg Older property, you would be willing to pay less for it. Eg dog tracks are around 6.5% of gross receipts, RHS gardens are around 3.5%.

Answer 55

 Revaluation notices issued in march 2017  Assessments based on valuation date of 1 April 2015  Appeals required to be lodged by 30 September 2017  Vac secretaries / assessors schedule appeal citations  Reval cycle = 5 years, assessor approx 3 years to dispose appeals  Grounds / comps due 35 and 21 days prior to hearing date  If no agreement reached, case presented before vac  Appeal withdrawn at anytime without repercussions  Technical / complex appeals could be referred to lts

Answer 56

 The valuation roll and valuation notice (Scotland) order 2022  The valuation (proposal procedure) (Scotland) regulations 2022  The valuation timetable (Scotland) order 2022  The first-tier tribunal for Scotland local taxation chamber (rules of procedure) regulations 2022  The upper tribunal for Scotland (local taxation rules of procedure) regulations 2022 The Non-Domestic Rates (Scotland) Act 2020

Answer 57

The Valuation Roll and Valuation Notice (Scotland) Order 2022 is a statutory instrument that was made by the Scottish Ministers on 14 September 2022 and came into force on 1 October 2022. It is an order that prescribes a new timetable for certain things that need to be done in connection with the making up of a valuation roll at the time of revaluation, and the making of a proposal for alteration of an entry in a valuation roll, the lodging of complaints with the Local Taxation Chamber of the First-tier Tribunal for Scotland. The order sets out the dates by which the assessors (the officials who are responsible for preparing and maintaining the valuation roll) must send valuation notices to the proprietors, tenants and occupiers of non-domestic properties, informing them of their new rateable values and how to appeal them if they disagree. The order also sets out the dates by which the assessors must make the draft valuation roll available for public inspection, and by which the proprietors, tenants and occupiers of non-domestic properties must make proposals for altering the entries in the draft valuation roll or lodge complaints with the tribunal. The order aims to ensure that there is enough time for the parties involved to review and challenge the new rateable values before they take effect on 1 April 2023. The order also aims to align the Scottish timetable with the rest of the UK, as similar orders have been made in England and Wales .

Answer 58

The regulations specify what information must be included in a proposal, how it must be submitted to the assessor (the official who is responsible for valuing the properties), and how the assessor must respond to the proposal. The regulations also provide for the use of electronic communication, the withdrawal of proposals, the postponement and extension of deadlines, and the appeal process. The regulations will come into force on 1 April 2023 and will apply to proposals made from 1 January 2023 onwards

Answer 59

The first-tier tribunal for Scotland local taxation chamber (rules of procedure) regulations 2022 are a set of rules that govern the proceedings before the First-tier Tribunal for Scotland Local Taxation Chamber, which is a part of the Scottish Tribunals. The regulations were made by the Scottish Ministers on 8th December 2022 and came into force on 1st April 20231. The regulations apply to cases involving non-domestic rates, council tax reduction and valuation for rating appeals. The regulations set out the general rules for all proceedings, such as the overriding objective, case management powers, evidence and submissions, decision and review, and expenses. The regulations also specify the procedure for each type of appeal, such as the time limit for lodging an appeal, the form and content of the notice of appeal, the role of the assessor or local authority, and the grounds for appeal. The regulations aim to ensure that the First-tier Tribunal deals with cases fairly, justly, efficiently and proportionately1.

Answer 60

a set of regulations that govern the practice and procedure of the Upper Tribunal for Scotland in relation to appeals or complaints under the Valuation Acts1. The Valuation Acts are a group of statutes that deal with the valuation of land and buildings for the purposes of non-domestic rates, council tax, and other local taxation matters. The regulations were made by the Scottish Ministers on 8th December 2022 and came into force on 1st April 20231. They provide for the rules of procedure that apply in the Upper Tribunal for Scotland Local Taxation Chamber, which is a chamber of the Upper Tribunal for Scotland established by the Tribunals (Scotland) Act 201413. The Upper Tribunal for Scotland is a superior court of record that hears appeals from the First-tier Tribunal for Scotland and other tribunals dealing with devolved matters3. The regulations also disapply the Upper Tribunal for Scotland Rules 2016, which are the general rules of procedure for the Upper Tribunal for Scotland, in relation to local taxation cases1. Instead, they apply the rules set out in schedule 1 of the regulations, which are specific to local taxation cases and cover matters such as case management, evidence, witnesses, hearings, decisions, reviews, and expenses1. The regulations also provide for the fees that are payable in relation to local taxation cases in schedule 2 of the regulations1. The fees vary depending on the type and value of the appeal or complaint, and whether it is lodged electronically or not1. The regulations also specify the form of appeal referral that must be used to refer a case from the First-tier Tribunal to the Upper Tribunal in schedule 3 of the regulations1. The regulations are part of a wider reform of the tribunals system in Scotland, which aims to create a more coherent, accessible, and efficient system of justice for users3. The reform also involves the transfer of functions from various tribunals and panels to the First-tier Tribunal for Scotland Local Taxation Chamber, which is the first instance tribunal that deals with local taxation cases before they can be appealed to the Upper Tribunal34 .

Answer 61

These reforms are based on the recommendations of the Barclay Review, which was an independent review of the non-domestic rates system commissioned by the Scottish Government in 2016 The reform aims to make the system more transparent, efficient and fair for ratepayers and local authorities. Here is a summary of the main changes: The revaluation of non-domestic properties will take place every three years instead of five, starting from 2023. This means that the rateable values of properties will be updated more frequently to reflect changes in the market. The revaluation in 2023 will be based on the property values as of 1 April 20221. The assessors, who are responsible for valuing non-domestic properties, will publish a draft valuation roll before the revaluation. This will give ratepayers an opportunity to check the accuracy of their property values and provide feedback to the assessors before the final valuation roll is published2. The valuation notices, which inform ratepayers of their rateable values and rates liability, will contain additional information such as the valuation method, the property description, the floor area and the rental evidence used by the assessors. This will help ratepayers to understand how their property values are calculated and to compare them with similar properties2. The appeals system, which allows ratepayers to challenge their property values if they think they are incorrect, will be reformed into a two-stage process. The first stage is a proposal stage, where ratepayers submit a detailed proposal to the assessor explaining why they think their property value is wrong and providing supporting evidence. The second stage is an appeal stage, where ratepayers can appeal to the Scottish Tribunals if they are not satisfied with the assessor’s decision on their proposal2. The proposal stage will have a shorter time limit than the current appeal system, and ratepayers will have to pay a fee to lodge an appeal T he Valuation Appeal Committees, which are local panels that hear and decide appeals, will be abolished and replaced by the Scottish Tribunals, which are independent judicial bodies that deal with various types of disputes. The Scottish Tribunals will have more expertise and resources to handle complex valuation cases and ensure consistency and fairness in decision-making2.

Answer 62

The new 2-tier appeal system appears to be much more demanding on the ratepayer: * 1st stage (called a proposal) - can only be lodged after the Revaluation comes into force and must be submitted to the assessor by summer 2023 (the final date yet to be confirmed by the Scottish Government but likely to be within four months of the Revaluation coming into force, i.e., 31st July 2023). The proposal must include the following: o Full comprehensive grounds of appeal outlining why you believe the assessor's proposed Rateable Value is incorrect o All evidence and statements detailing how the evidence supports the grounds of appeal and your proposed Rateable Value o An indication of how the entry should be altered, including an alternative value and the effective date of the alteration o A Letter of authority from the ratepayer for each proposal to be lodged if employing an agent o The draft Regulations suggest no further evidence will be allowed after the initial evidence is submitted. * Upon receipt of a proposal, the assessor has the option to amend value in agreement with the proposal or in line with any subsequent agreement reached or state no amendment is merited. * 2nd stage (appeal) – if no agreement is reached at the proposal stage, an appeal can be lodged against the assessor's decision, at which time the proposal then converts to an appeal. Although this has yet to be confirmed through legislation, it is planned that no further discussions or evidence will be allowed by either party prior to the appeal being heard before the new Scottish Tribunal system is being set up and brought into force from 1st April 2023.

Answer 63

Proposal stage: If you disagree with the valuation of your property, you have to submit a proposal to the assessor within four months of receiving your valuation notice. You have to provide factual information about your property and evidence to support your challenge, including an alternative valuation and rental evidence. The assessor will review your proposal and either accept it or reject it. If they reject it, they will issue a decision notice explaining why. Appeal stage: If you are not satisfied with the assessor’s decision, you can appeal to the Local Taxation Chamber of the Scottish Tribunals. You have to submit your appeal within four months of receiving the decision notice. You will have the opportunity to present your case to an independent tribunal, who will make a final decision. The tribunal can also award expenses to either party if they think the other party has acted unreasonably or wasted their time.

Answer 64

The UBR stands for Uniform Business Rate, which is a tax rate applied to the rateable value of non-domestic properties in Scotland. The UBR is also known as the Poundage Rate, and it is set by the Scottish Government every year. The UBR determines how much business rates you have to pay for your property1. The UBR for 2023/24 has been frozen at the same level as 2022/23, which means that the basic UBR for properties with a rateable value below £51,000 will remain at 49.8p. Properties with a rateable value of between £51,001 and £100,000 will have a UBR of 51.1p and those above £100,000 will pay based on a UBR of 52.4p2. The threshold for the large multiplier has increased from £95,000 this year, reducing the number of properties which are liable for the Higher Property Rate2.

Answer 65

calculated by multiplying the rateable value of a property by a tax rate known as ‘poundage’. The rateable value is set by independent assessors and reflects the annual rent that the property could be let for. The poundage is set annually by the Scottish Government and can vary depending on the size and type of the property. The current poundage for 2023 to 2024 is 49.8p1.

Answer 66

The rateable value of a non-domestic property in Scotland is determined by the Scottish Assessors, who are independent officials appointed by the local councils. The rateable value is a legally defined valuation of a property, broadly based on an analysis of annual rental values. The assessors use different methods to calculate the rateable value, depending on the type and use of the property. For example, they might use information such as rent, floor space, turnover, or location. The assessors will usually ask property owners, tenants or occupiers for this information, and they are required by law to provide it. The rateable value of a property may change when there is a revaluation or a material change to the property or its surroundings1234.

Answer 67

Rateable value is an amount equal to the rent it is estimated that the hereditament would be let at on a tenancy from year to year assuming: * The day on which the tenancy begins is the day at which the determination is to be made * The property is in a good state of repair excluding any repairs that a reasonable landlord would deem uneconomic to undertake * The tenant is responsible for bill and taxes and all repair and insurance costs as well as any other expenses required to maintain the hereditament

Answer 68

Yes. It is set every year by DCLG and takes account of inflation.

Answer 69

The AVD, or Antecedent Valuation Date, is the date on which the rateable value of a property is assessed for the purpose of business rates. The AVD of the new Rating List, which will come into effect on 1 April 2023, is 1 April 2022. This means that the rateable value of a property will reflect its rental value as of 1 April 2021, regardless of any changes that may occur after that date.

Answer 70

To ensure that there is uniformity so that all hereditaments are assessed at the same date. The leading case on this is K Shoes where values on Regent Street and Oxford Street were assessed 3 years apart and because of inflation one was paying much more than the other and it was ruled there needed to be uniformity.

Answer 71

The owner has the option to occupy this space or to apply for a section 44a notice. However, these are only valid for a short time and so in the meantime he should take steps to alter the property so it is capable of separate occupation if he does not have the desire to occupy it himself so that he can let it out to someone else.

Answer 72

This is a notice which apportions RV to the occupied part of the premises only.

Answer 73

The occupier has to apply to their BA in writing stating the amount of the property which is not in use and their details. The BA then applies to the VO for this certificate. The VO values the property and decides on the apportionment. There is no appeal against a S.44 notice and they are only valid for a short period of time, normally 3 months for non-industrial and 6 months for an industrial but will end at the end of the financial year regardless of how long it has been in place.

Answer 74

I would gather all of the facts on the case and then decide whether the two properties were functionally essential to one another, i.e. could one operate without the other. The leading case on this is Gilbert v Hickenbottom where the bakery and the engineers offices were found to be functionally essential to one another as one could not survive without the other – if there was no bakery there would be no engineers and if there were no engineers and there was a mechanical fault the bakery could not function.

Answer 75

Gilbert v Hickenbottom is a case that deals with the question of how to determine whether two or more premises in the same occupation constitute one or more hereditaments for rating purposes. A hereditament is a unit of property that is subject to rates, which are taxes levied on the occupiers of land and buildings. The case involved a large industrial bakery that consisted of several buildings in two blocks separated by a street. The valuation officer assessed the buildings as separate hereditaments, while the occupier argued that they formed a single hereditament. The Lands Tribunal agreed with the occupier and held that the buildings were so essential in use to one another that they should be regarded as one whole. The valuation officer appealed to the Court of Appeal, which dismissed the appeal and affirmed the decision of the Lands Tribunal1. The Court of Appeal laid down some general principles and considerations for determining whether premises in one occupation fall to be entered in the valuation list as one or more hereditaments. These include: Whether the premises are in more than one rating area. If so, they must be divided into at least the same number of hereditaments as the rating areas in which they are situated. Whether two or more parts of the premises are capable of being separately let. If not, then the premises must be entered as a single hereditament. Whether the premises form a single geographical unit. Whether though forming a single geographical unit the premises by their structure and layout consist of two or more separate parts. Whether the occupier finds it necessary or convenient to use the premises as a whole for one purpose, or whether he uses different parts of the premises for different purposes1. The Court of Appeal also recognised that there may be exceptional cases where geographically separate spaces may be regarded as a single hereditament if they are so essential in use to one another, such as a park, agricultural land, or a golf course bisected by a road1.

Answer 76

This is calculated at stage 2 of the contractor’s method. This depends on the type of obsolescence and whether the replacement building cost or the substituted building cost is used. If the substituted building cost is used, this usually already reflects the functional obsolescence of the property as the building which is costed is an appropriate size/layout for modern day standards. Physical obsolescence is calculated using the scales published by the VO. These give a % deduction to be made to reflect the age of the property. These come from analysis of information collected by the VO/ a series of discussions with firms of agents before the Rating List comes into force.

Answer 77

The location factor is based on analysis of actual build costs. It reflects the difference in build costs throughout the country.

Answer 78

Land values should be taken from comparable evidence in the locality based on the same mode and category of use. Land values are the main element which provide different valuations across the country and these are where the biggest variations lie.

Answer 79

Where there is no land evidence for comparable land sales in the same mode and category of use as the property to be valued, land sold in another mode or category of use can be considered provided adjustments are made to reflect the differences. Alternatively, if agreed by both parties, a percentage of the build costs can be used to arrive at the land value. This is often reached by analysing other valuations where the build cost and the land value are known and deriving an agreed percentage from there.

Answer 80

The decap rate is based on the rate it would cost to borrow money. Health/educational properties are generally government funded and therefore they can achieve lower borrowing rates than the rest of the market.

Answer 81

Small hotels such as B&Bs are usually valued using the comparable method at a price per bed space. Larger, chain operated Hotels are valued using the shortened receipts and expenditure method of valuation. This shortened method is based on a generally accepted % to apply to certain types of hotel following the analysis of rental evidence against FMT. The shortened method prescribes a % of the FMT to be taken to arrive at the RV. This removes any discussion regarding the split of the divisible balance.

Answer 82

It depends on the length of the rent free period. If the rent free period was what you would normally expect to allow for fit out of that class of property at the valuation date you would disregard it. E.g. for the 2010 Rating list you would expect fit out periods of 3 months for retail property. When adjusting for a rent free period you would calculate the value to the rent receivable to the next rent review date where the rent is likely to change using the YP and PV tables. You would then amortise this over the period to the first review, e.g. five years diving it by the YP to reach an annual rental figure.

Answer 83

It depends on the length of the rent free period. If the rent free period was what you would normally expect to allow for fit out of that class of property at the valuation date you would disregard it. E.g. for the 2010 Rating list you would expect fit out periods of 3 months for retail property. When adjusting for a rent free period you would calculate the value to the rent receivable to the next rent review date where the rent is likely to change using the YP and PV tables. You would then amortise this over the period to the first review, e.g. five years diving it by the YP to reach an annual rental figure.

Answer 84

No. The tone gets more established. The more agreements and the more rental evidence that comes to light, the more established the tone will be and therefore the more weight that can be attached to it.

Answer 85

You would give an end allowance for unique features of a property which would affect the hypothetical tenants rental bid which are not accounted for in the price psm applied. E.g. if there was an area of masking you might apply an end allowance. However, if all of the rental evidence analysed had the same amount of masking, and this analysis was then applied to reach the RV, the effect of the masking would already be accounted for and an end allowance would not be warranted.

Answer 86

5% for external repairs is the generally accepted amount for rating valuations. This has been developed over years of rating appeals where analysis of expenditure on external repairs has generally indicated 5% is the average. Certain types of property may have higher external repair bills (e.g. listed buildings) and in these instances it would be acceptable to deviate from this generally accepted figure.

Answer 87

A compressor would be valued using the contractor’s method of valuation. 5% is used as the decap rate. Compressors are rateable under the Plant and Machinery Regs.

Answer 88

Properties are generally valued using rental evidence from similarly aged properties therefore an age allowance is generally not required. However, if an age allowance was appropriate the % to be applied would be derived from analysis of rental evidence.

Answer 89

Power Service Movement Named Structures

Answer 90

Using the contractor’s method of valuation. Some items of P and M such as air conditioning are valued on a per sq m basis.

Answer 91

This deals with the conduct of the surveyors through the rating appeals procedure. Details that the clients must be fully aware of the service the agent is going to provide to them and what the fee covers. It details the terms of engagement that should be agreed with the client before commencing with the instruction. It also states that as contingency fee arrangements can affect someone's impartiality, these should be avoided at all times.

Answer 92

You first have to decide what amount of the rent free period is an incentive over and above the normal fit out period of a property. Then you need to amortise the actual amount received over the period e.g. amortise 4.5 years worth of rent over a 5 year period to give the rental amount for the whole 5 years. It will be less than the headline rent.

Answer 93

You would find the equivalent for each period or 'step' and amortise over the period.

Answer 94

I would consider the cost of repairing the property in comparison to the RV and I would have reference to the Princes Street Case. This case made it clear that the market the property is in is the biggest factor in whether or not the property is economic to repair. if the property is in a poor state of repair but there was a good demand for this type of property locally, the landlord would be expected to be willing to spend a higher amount of money on the property than if there were a number of similar properties in good condition which were vacant. This would suggest there wasnt a strong demand for the property and in this case the likelihood is that the landlord would not be rewarded by spending lots of money on the property by achieving a worthwhile letting. In this case the repair cost of 5 times the RV was deemed to be economic as the property had the prospect of achieving a ten year letting with a five year break clause.

Answer 95

Is a case which gives guidance on how rents on subject and comparable properties are to be treated. It lays out 6 'rules' for assessing rents. 1. Subject rent is the starting point 2. The more this conforms to the definition of RV the more weight should be attached to it 3. Rents of similar properties are to be looked at 4. Assessments of other comparable properties are relevant 5. An opinion of value can be formed 6. Where no rents available a review of other assessments may be helpful

Answer 96

Woolway v Mazars relates to offices occupied by Mazars on the 2nd and 6th floor of an office building. This case was whether this formed one or two separate assessments.

Answer 97

This went to the Supreme Court in 2015 who decided that contiguous units need to be interconnected and easily accessed by one another. As the two floors could be let separately they were functionally independent. No exceptional factors with regard to enjoyment were present.

Answer 98

Geography- Must not be accessed through common parts, interconnectivity is required. Functionality- Do they have functional reliance on one another? Is one necessary for the enjoyment of the other? If not they are separate assessments.

Answer 99

This was based around works being undertaken to an office building in Sunderland. The works involved stripping the unit back to a shell prior to creating three office suites. The ratepayer argued the building should be removed from the rating list. The VO argued the works to put the property back into repair were economic and therefore it should remain in the rating list. This went to the Supreme Court who agreed with the ratepayer. The Court decided that the premises should be valued by having regard to the actual physical condition at the valuation date.

Answer 100

The Court put forward a 3 stage approach. - Consider whether the premises were actually capable of occupation in the state they existed on the assessment date - If the premises were capable of occupation, consideration should be given to the mode or category of the occupation - If any parts of the development are complete and capable of occupation the statutory assumption should be applied.

Answer 101

Iceland v Berry 2015.Whether the air conditioning is rateable as it is a trade process and therefore exempt. The Court of Appeal has dismissed Iceland’s appeal. The court determined that keeping food in a frozen state for sale was not a trade process and the exemption from rateability did not apply.

Answer 102

This case went to the Upper Tribunal and is regarding a number of historic sites occupied by York Museums and Gallery Trust. One of the areas in dispute was whether the contractor’s method or the receipts and expenditure method used be used. The Tribunal considered that the contractor’s method was not appropriate and it should be valued on the R&E method. Such properties are unprofitable to operate and expensive to construct.

Answer 103

Laing v Kingswood committee.

Answer 104

You must physically occupy or show occupation by actions. Southend on Sea v White- Seaside shop occupied in the summer months and not in the winter. Tenants were held to be rateable for the whole year as there was a definite intention to return and they had been in occupation in the past.

Answer 105

If someone is in apparent occupation but can’t derive any benefit, beneficial occupation doesn’t exist. Lambeth Overseers v London City Council- Council purchased a park under a special act and maintained it for recreational purposes. Council was a trustee for the public, who benefitted from occupying the park but couldn’t held to be the rateable occupier

Answer 106

A rateable occupier should have the right to carry out the purpose of their occupation without anybody else on the premises doing the same thing. Vitesse Networks- Telecommunications network. Fibre pairs wound together with other fibres used by the landlord in a cable in a trench. However because the ratepayer had exclusive use of their fibre pairs, no one else could send signals through their fibres, they were held to be the rateable occupier.

Answer 107

Casual occupations are not rateable because they lack the necessary degree of permanence. It is not only the length of occupation but also the character and nature. Generally, must exceed 12 months. There are some cases where a period of occupation has been considered rateable, but this is where the use has been so extensive. R v St Pancras Committee-Two advertising hoardings on buildings in sites that clearly would only be temporary. Not rateable.

Answer 108

An air compressor. The cost guide stated that its ERC was £10,000. The compressor was manufactured in 1998. The cost guide lists its cost at the AVD. I adjusted this by 4% based on the guidance contained in the cost guide to reflect the age of the compressor. The ARC was therefore £9,600 which was then decapitalised at 5% to give an annual equivalent of £480.

Answer 109

- Repairing and insuring liabilities- FRI - Service charges - Premium paid - Improvements not included in the rent passing - Date of rent

Answer 110

Premiums are decapitalised and added to the rent passing. The period of amortisation could be to the first review or renewal.

Answer 111

There are 3 views to this: - Incentive paid made to tenant for taking the lease should be rentalised over the whole length of the lease - Rent is normally subject to OMV, the incentive should be amortised to 1st review - A period between 1 and 2.

Answer 112

The ability of the property to provide the tenant with an income from his occupation that will compensate him sufficiently for operating the concern, and, in addition, provide him with a surplus which he would be prepared to pay for the right to occupy the hereditament, i.e. rent. Having found this rent, this will be the RV.

Answer 113

Gross receipts less cost of purchases = gross profit Gross profit less working expenses = divisible balance Divisible balance represents the amount to be shared between the tenant (tenant’s share) and the landlord (rent or rateable value).

Answer 114

The contractor’s basis works on the principle that, in theory, the tenant in the rating world could build their own property rather than rent the actual property and this will inform their rental bid. Therefore they will not pay more in rent than the annualised cost of buying land and building a similar property nearby.

Answer 115

The main features of the Act are: It establishes valuation areas and authorities, and appoints assessors and staff to carry out the valuation of lands and heritages (properties) in Scotland. It creates a Scottish Valuation Advisory Council to advise the Secretary of State on matters relating to valuation1. It sets out the methods and principles for determining the gross annual value, net annual value and rateable value of different types of properties, such as dwellings, shops, offices, factories, farms, fishings, etc1. It specifies the subjects to be excluded from the valuation roll, such as churches, schools, hospitals, roads, etc1. It prescribes the duties of assessors, such as preparing and publishing draft and final valuation rolls, giving notices to owners and occupiers, making alterations and amendments, etc1. It provides for appeals against valuation by owners or occupiers to valuation appeal committees or the Lands Valuation Appeal Court1. It transfers the liability for owners’ rates to occupiers and reduces the rents accordingly1. It grants exemptions or reductions of rates to certain properties or organisations, such as charities, gas boards, lighthouses, etc1. It makes provisions for contributions in aid of rates by police authorities and Commissioners of Northern Lighthouses1.

Answer 116

Step 1: Obtain the gross receipts or turnover of the property from the accounts or other sources. Step 2: Deduct the working expenses from the gross receipts to obtain the gross profit. Working expenses are the costs that are directly related to the operation of the property, such as wages, stock, utilities, etc. Step 3: Deduct the non-rateable outgoings from the gross profit to obtain the divisible balance. Non-rateable outgoings are the costs that are not related to the occupation of the property, such as directors’ remuneration, head office expenses, income tax, etc. Step 4: Divide the divisible balance between the landlord and the tenant according to an agreed or assumed percentage. The landlord’s share represents the rental value of the property. Step 5: Make any necessary adjustments to reflect the physical characteristics, location, and market conditions of the property.