Local Taxation Flashcards
Define NAV
Net annual value is the rental value that is paid year on year, from a hypothetical tenant to a hypothetical landlord, assuming that the tenant is responsible for all repairs
What is the UBR for 2022/23?
49.8p RV > £51k
51.1p RV £51k - £95k
52.4p RV > £95k
What is fresh start relief and what is the criteria?
12 months rate relief which is offered for properties with a RV under £95k that have been vacant for more than 6 months or have had a change of use
When is the next revaluation in Scotland?
01/04/2023
What is the tone date for the next revaluation?
01/04/2022
What is tone of the roll?
Tone of the roll was established in the Local Government Scotland Act 1966. It requires that when you are make any new or altered entry to the roll, you must value them as though they had been available in their present state at the revaluaiton.
What are the decap rates?
2.9% (schools, churches, hospitals) and 4.6% (all other). You would find them in the Valuation for Rating (Decapitalisation Rates) (Scotland) 2016
What legislation governs plant & machinery?
Valuation for Rating, Plant and Machinery, Scotland Regs 2000
Explain what tests you would consider when determining the unit of valuation?
Unum quid - should it be valued as on unit? You would use the functional and geographical tests. You would also take into account if it is capable of being separately let and the actual terms of the letting.
Who has a right of appeal?
Anyone who takes an interest within a property (6 months right of appeal)
Within 6 months of date on valuation notice
If you think there is an error
When can the assessor change the roll?
error, material change, new entry or deletion
What regulations give the assessor the power to alter the roll?
Local Government Scotland Act 1975
How would you value two office floors in a multi storey office block that weren’t contiguous?
Previously would have been valued as one entry in the valuation roll. Following the Woolway v. Mazars case this has changed and separate entries would now be made.
What lands and heritages aren’t included in the Valuation Roll?
houses, agricultural properties, churches, public parks, sewers, public roads, atm in rural locations, off shore electricity generators
What are the 5 classifications of error?
Measurement, survey, classification, arithmetical, clerical
Where do you get costs from for a contractors valuation
SAA Cost Guide, BCI Cost Guide, Actual costs from developer
Would you use unit costs or actual costs?
Unit costs
What are the empty rates liabilities for offices and industrial?
Office - 50% for 3 months, then 10% thereafter
Ind - 100% for 6 months, then 10% therafter.
In what circumstances do you get 100% relief?
listed building,
RV < £1,700,
by law it cannot be occupied,
is under a compulsory purchase order
When could an appeal be referred to the Lands Tribunal?
When evidence heard or facts of the case is complex or highly technical.
When the law applied is uncertain
When the decision is likely to be used in future cases
What is rating
A form of taxation on the occupation of non-domestic property.
What is the definition of rateable value
Paragraph 2(1) of Schedule 6 to the Local Government Finance Act 1988:
The rateable value of a non-domestic hereditament none of which consists of domestic property and none of which is exempt from local non domestic rating] shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year on these three assumptions—.
a) the first assumption is that the tenancy begins on the day by reference to which the determination is to be made;
b) the second assumption is that immediately before the tenancy begins the hereditament is in a state of reasonable repair, but excluding from this assumption any repairs which a reasonable landlord would consider uneconomic;
c) the third assumption is that the tenant undertakes to pay all usual tenant’s rates and taxes and to bear the cost of the repairs and insurance and the other expenses (if any) necessary to maintain the hereditament in a state to command the rent mentioned above.
What is the Material day and Antecedent Valuation Date?
The Material Day is the day on which the physical state of the premises and locality is considered
The Antecedent Valuation Date is the date on which the hereditament is valued from. Economic climate and demand must be considered from this date
What are the matters which are assumed at the Material Day and where are they defined?
Schedule 6 para 2(7):
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
cc) the quantity of refuse or waste material which is brought onto and permanently
deposited on the hereditament,
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 matters which are considered at the Antecedent Valuation Date?
A
Inflationary trends
Changes in distribution of money between sectors and regions
Interest rates
Peoples attitudes
State of the market
What is a hereditament
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
How do you determine rateable occupation? What is the case law?
John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344
Actual occupation
Beneficial Occupation
Exclusive occupation
Not too transient
What is actual occupation (ABET)
The physical presence of the occupier on the premises. This can be through storage of items
What is exclusive occupation (ABET)
Ability to have paramount control over the property that is let out
What is beneficial occupation (ABET)
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
What is meant by transience (ABET)
Property has some level of permanence to its location and is not movable. Intensity of use does also account for transience
How do you determine if two non-domestic hereditaments can be merged?
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.
What is the purpose of transitional relief?
To taper large changes in a properties rateable value caused by a revaluation
What properties are exempt from rating and where can this be found?
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
Name the 4 classes of rateable P&M
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
What is a material change in circumstance
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.
How would you value a composite hereditament
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
When is a property domestic
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
What tests would be conducted when trying to identify a single hereditament?
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
What is zoning?
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.
How would you analyse a rental figure using zoning?
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%.
How would you adjust for a premium
Capitalise rental value for the term, then add on the premium to this capital value, then decapitalise over the period of the term
How would you adjust for a rent free period
Capitalise payable period up until review and then discount this sum by the YP for the total term of the lease.
How would you adjust for stepped rents
Capitalise each rent up until review then decapitalise this over the period until review
Why are premiums and reverse premiums given and how is this relflected in the rent?
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
Why are some rents capitalised to review and others into perpetuity?
Rents may be capitalised into perpetuity where a long rent free period is given or incentive that could skew the capital value
What is an expert witness?
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.
What is an advocate?
Person who acts in the best interests of their client and advocates their case fairly and professionally.
What are the 5 steps of contractors test method?
Estimated replacement cost
Adjusted replacement cost (functional, technical and economic)
Add site value
Apply decap rate
Stand back and look
Are there any RICS guidance on contractors test?
RICS guidance on contractors basis of valuation for rating purposes 2nd ed Aug 2017
What is Lotus Delta v Culverwell Case?
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.
What is Woolway v Mazars 2015
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.
Can you describe Woolway vs Mazars in more depth
- 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
What is PICO?
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.
What is tone of the list case law
Generally accepted level of value
Obrien v Harwood 2003 - 15 settlements which established the tone.
What do you know about iceland v berry 2018
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.
