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APC Valuation Pathway > Local Taxation > Flashcards

Local Taxation Flashcards

1
Q

What is the definition of Rateable Value?

A

Estimate of the amount a hereditament might reasonably be expected to let from year to year based on three assumptions:
1 - reasonable repair
2 - tenant bears costs of rates, taxes, repair and insurance
3 - tenancy begins on day of determination

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2
Q

Where is the definition of RV found?

A

LGFA 1988 Schedule 6 paragraph 2

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3
Q

What is the leading case of rateability?

A

John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area (1949)

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4
Q

What are the ingredients of rateability

A

(ABET)
Actual occupation
Beneficial occupation
Exclusive use
not too Transient a period

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5
Q

What is the leading case regarding defining a hereditament?

A

Woolway v Mazars (2015)

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6
Q

What tests were set out by Woolway v Mazars?

A

Occupational test
Geographic test
Functional test

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7
Q

What property was concerned in Woolway v Mazars and what happened in the case?

A

Tower Bridge House, eight storey office block in London. Appellant occupied 2nd and 6th floors originally assessed as separate hereditaments but it was found as they intercommunicated they could be assessed as one.

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8
Q

What came after Woolway v Mazars?

A

(PICO)
Property in Common Occupation 2018 - enforced that hereditaments needed to be contiguous to be treated as a single hereditament

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9
Q

What is the functional test?

A

Where two parts of a property as geographically distinct, the test can enable them to be treated as one if the use of one is necessary to the use of the other. For example golf club separated by a road.

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10
Q

What is the geographic test?

A

Mainly superseded by PICO, but it is whether the hereditament can be defined as a single unit on a plan.

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11
Q

What is the leading case on repair?

A

Monk v Newbigin (2017)

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12
Q

What property was concerned in Monk v Newbigin and what happened in the case?

A

Office building in Sunderland - works involved stripping the unit back to a shell prior to creating new suits. Appellant argued this rendered the property was incapable of beneficial occupation.
Determined that the works to put it back into a state of reasonable repair were economic and dismissed the appeal.
Case then appealed further times until decision in Supreme Court which determined that as the building was undergoing significant building works it will not be liable to rates whilst undergoing the works.

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13
Q

What happened in Jackson v Canary Wharf (2019)?

A

Follow on from Monk v Newbigin where an office was undergoing its usual scheme of redevelopment in between tenants. The landlord contested this rendered the building incapable of beneficial occupation.
VO argued as no scheme and valued them as properties in repair.
This was dismissed and it was found properties incapable of beneficial occupation cannot be in the rating list.

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14
Q

What is a hereditament?

A

A property which is, or may become, liable to a rate.

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15
Q

What is AVD?

A

Antecedent Valuation Date
Date which all non-physical factors are considered
Currently 1st April 2021

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16
Q

What is rebus sic stantibus?

A

“things standing thus”
as it stands - two limbs physical and use
physical - as it stands
use - shop as a shop (Fir Mill Test)

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17
Q

What is a material day?

A

Date where all physical factors are considered

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18
Q

What is the material day for MCCs?

A

Day of proposal

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19
Q

What is the material day for recons?

A

Day of event

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20
Q

What is the secondary legislation for rating list alterations?

A

Non-domestic rating (alteration of lists and appeals) (england)(amendment) Regulations 2017

The valuation tribunal for England (council tax and rating appeals) (procedure) (amendment) Regulations 2017

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21
Q

What are the three stages of CCA?

A

Check - factual
Challenge - challenge against valuation
Appeal

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22
Q

What are the timelines relating to CCA?

A

Check - 12 months
Challenge within 4 months of Check decision and 18 months to be resolved
Appeal within 4 months of Challenge decision

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23
Q

What is the RV multiplier?

A

Standard - 54.6p
Small business - 49.9p

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24
Q

Why was CCA introduced?

A

Make the rating appeal system more efficient

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25
Q

Tell me about empty property rate relief?

A

Standard - 3 months
Industrials - 6 months
properties with RV of under £2,900 - until reoccupied
Charities and sports clubs but only if next use will be the same

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26
Q

Why do we have an AVD?

A

To give the VO time to produce and update the list

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27
Q

What is an FRI lease?

A

Full repairing and insuring lease - liability on tenant

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28
Q

What is an IRI lease?

A

Internal repair and insurance is liable to tenant.

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29
Q

What property types are exempt from rating?

A

Agricultural land and buildings
Properties used for disabled people
places of religious worship
Parks
Fisheries

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30
Q

How does small business rate relief work?

A

SBRR applies to properties under £15,000.
From £12,001 to £15,000 it is on a scale
at or under £12,000 no rates are payable.
If multiple properties are owned relief can be claimed if the total RV of these properties is less than £20,000

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31
Q

What is Transitional relief?

A

Scheme to gradually phase in changes to rating bills due to revaluation.

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32
Q

What does contiguous mean?

A

Sharing a common border. touching.

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33
Q

How does contiguity work for empty property?

A

Where a property is vacated on same day it will remain as one.
Where it is vacated on separate days it will be individual assessments.

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34
Q

What items of plant and machinery are rateable?

A

Any which is significant to the functioning of the business.

35
Q

What is the central rating list?

A

Rating list containing assessments electricity, gas and water networks
pipelines
railways
telecommunication networks

36
Q

How is property in the central list valued and paid?

A

Single totalled RV for all the property occupied by the ratepayer
Paid directly to Ministry of Housing, Communities and Local Government.

37
Q

Where is the central list located?

A

Can be viewed on public domain gov.uk website.

38
Q

Can you name 3 ratepayers on the central list?

A

Network rail
London underground
British telecommunications

39
Q

What sets out what plant can be rated and valued?

A

Plant and machinery regulations 2000

40
Q

What Plant and machinery classes are there?

A

Class 1 - power
Class 2 - services
Class 3 - infrastructure
Class 4 - Structures

41
Q

Tell me more about class 1?

A

Plant which is used exclusively in connection with the generation, storage, primary transformation or main transmission of power in or on the hereditament.

42
Q

Tell me more about class 2?

A

Plant which is used in connection with services as part of manufacturing operations. Services means heating, cooling, ventilating, lighting etc

43
Q

Tell me more about class 3?

A

Items are to be rateable that are used for the transport of people, goods and for communication. Such as railway tracks, goods lifts.

44
Q

Tell me more about class 4?

A

Plant as a building or structure such as walkways, stairways or foundations

45
Q

Would you always rate and value an electrical distribution board?

A

No as found in most hereditaments and commonly included in rent

46
Q

What to the plant and machinery regs say about air con?

A

Not specifically named in Class 2 but all elements are

47
Q

How is air con dealt with in rating assessments?

A

Office valuations will often reflect it
Retail properties have agreed schemes £7psm for standard shops
Industrials it is dealt with as an % addition

48
Q

Case law relating to the four tenants of rateable occupation?

A

Actual - R v Assessment Committee of St Pancras (1877)
Beneficial - R v London School Board [1886] 17 QBD 738
Exclusive - Westminster City Council v Southern Rly Co Ltd [1936] 2 All ER 322)
not too Transient
London County Council v Wilkins (VO) (1957) AC 362

49
Q

Tell me about R v Assessment Committee of St Pancras (1877)?

A

Legal possession does not equal occupation. Anyone who takes actual occupation will be deemed to be the occupier.

50
Q

Tell me about R v London School Board [1886] 17 QBD 738?

A

Just because there is no profit does not mean there is no value.

51
Q

Tell me about Westminster City Council v Southern Rly Co Ltd [1936] 2 All ER 322)?

A

Southern railway had control over WH Smiths.
Held that is was still exclusive and that southern railway did not interfere with enjoyment of them.

52
Q

Tell me about London County Council v Wilkins (VO) (1957) AC 362?

A

Temporary builders huts for construction of a school had been in place for 18 and 21 months/
Found to be rateable as it was not too transient of a period.

53
Q

How long to be not too transient?

A

12 months or more

54
Q

Is the initial response a legal requirement?

A

No, Adopted to best resolve challenge cases. Giving them opportunity to respond.

55
Q

Recent case law on Plant and machinery?

A

Iceland v Berry (2019)
Air handling system used in Icelands stores falls within description of manufacturing operation or trade processes and must not be rated.

56
Q

What rental adjustments do you make?

A

Rent free
stepped rent
premium
reverse premium
break option
repair liability
insuring liability
contributions

57
Q

When tone changes are made, what do you do for surrounding properties?

A

Where applicable, consequential changes to be in line with the Challenge property.

58
Q

What is the role of an expert witness?

A

Duty to the tribunal - must give independent and unbiased evidence
Surveyors acting as Expert Witnesses (4th Edition) 2014 (amended August 2020)

59
Q

What is the role of an advocate?

A

Duty to your client but must act properly and fairly in line with Surveyors Acting as Advocates (2nd edition professional statement, 3rd edition guidance note) 2017

60
Q

What is a completion notice?

A

Notice served when construction of a property is complete.

In accordance with section 46a LGFA

To prevent the party avoiding the payment of rates by not completing construction of a building.

61
Q

How do you value using the time value of money when analysing a rent-free period?

A

0 rent free period shown as the first line
Rental income on second line, YP is deferred by length of rent free using growth rate of 7%
PV is deferred by length of time of rent free
(YP x PV of £1) x Rent = total rental income
Divided by YP @ growth rate = yearly rent

62
Q

What is a return frontage?

A

Retail unit occupies a corner position it may have glazing on part of the side elevation

63
Q

How do you value return frontages?

A

Dependent on the quality of the return frontage (does it add to the prominence of the shop?) Add percentage on top on ground floor value.

Can zone from both frontages, zoning ceases when it is less in value than the value attributed when zoning from the primary frontage.

64
Q

How do you value Plant and Machinery?

A

Where reflected in base price direct comparison. where it is not use cost based method

65
Q

Why do you not use IPMS in rating?

A

Agency very supportive as it aims to have clear international standard.

The requirement is not mandatory where client requires a different basis and clearly, with valuation officers statutory duty making them effectively the client, their decision will be the basis of measurement for the 2023 revaluation remains the RICS Code of Measuring Practice 6th edition together with the VOA code.

66
Q

Why do you adjust rents for rating purposes?

A

To adjust rental evidence to conform with the definition of rateable value.

67
Q

What order do you carry out rental adjustments for rating?

A

There are no set 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 (VO) 1967 LT RA 365). However, to be consistent the following order has been adopted:

(i) VAT
(ii) Rent free periods/stepped rents.
(iii) Premiums paid by and to the tenant.
(iv) Tenant’s improvements
(v) Value of any surrendered lease
(vi) Overage or other lease terms
(vii) Domestic accommodation
(viii) Business rates and other payments
(ix) Repairing/insuring liabilities

68
Q

How are rent free periods treated when adjusting rents?

A

They are incentives for tenants, this does not include periods granted to enable the tenant to fit out the premises.
Therefore, we exclude the normal fitout period for the property concerned (3months) Only account for time after this period.

69
Q

What is effective date?

A

Date the assessment became live such as when it was constructed or changes have taken place. Usually the first day of that rating list if no changes have taken place.

70
Q

Talk me through Lotus & Delta v Culverwell

A

This was an appeal on a shoe shop which set out 6 principles of how evidence should be considering for rating:

1- actual rent is the starting point
2 - how much weight to attach to the subject rent?
3 - Rental evidence on similar properties
4 - Valuations of similar properties
5 - Review all the evidence
6 - If no rents or comparables, more difficult to reject the rent

71
Q

Why did you adjust rent frees?

A

To adjust the rent to conform to the definition of RV - year to year letting.

These are used as an incentive to bring in tenants or for them to fit out the property.

Standard practice is to allow 3 months for fitout any more and we adjust for them

72
Q

Why did you adjust for landlord repairs?

A

As the definition of RV says that the tenant should bear all costs of repairs and insurance.

73
Q

How did you weigh the evidence for the shop in Birmingham?

A

Followed the steps set out in Lotus & Delta.

Placed more weight on open market transactions more similar to the subject, closest to the valuation date and also those with the least adjustments made.

74
Q

What advice did you give to the panel on the case on the industrial in Stoke?

A

I advised that the comparable evidence I had provided was closer in type to the subject being standalone buildings.

The evidence the agent presented were not similar and therefore not reflective of the subjects value.

75
Q

What advice did you provide with the shop in Stourbridge?

A

I advised the agent that the shop was currently valued at the same rate as the shops which completely fronted onto the food court. As this shop only partially benefitted from this I advised that another shop in the same circumstances the other side of the food court was the best comparable property.

76
Q

Why was the frontage important for the shop in Stourbridge?

A

The shop partially fronted onto a food court where users of the shopping centre would congregate providing higher footfall for these shops. As this shop did not have this there would be lower footfall and therefore lower value.

77
Q

What is the legislation that covers CCA?

A

The Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 (SI 2009/ 2268) (‘Appeal Regulations’) as amended by (SI 2017 / 155)

78
Q

What are the key changes with NDR reform?

A

Held within NDR act 2023

  1. 3 yearly revals
  2. Duty for ratepayers to provide property information
  3. Increased transparency for ratepayers
  4. New rating exemption for renewable plant and machinery
  5. New relief to support investment in property improvements
79
Q

What is an MCC?

A

Physical changes to the property or locality that affects its value.

Non-physical changes are dealt with in revaluations

80
Q

What are the mentioned matters?

A

The matters upon which an MCC can be made:

a) physical state of the hereditament

aa) physical enjoyment of the hereditament

b) The mode or category of occupation

c) the quantity of minerals extracted

cc) the quantity of waste material deposited onto the hereditament

d) physical state of the locality

da) matters not affecting the physical state of the locality but are physically manifest there

e) use or occupation of other premises situated in the locality

81
Q

Case law for MCCs?

A

Merlin Entertainments Group v Cox:

The reduction in attendance numbers at a theme park caused by an event within
the site is not a “material change of circumstances” within the meaning of Schedule 6 to the 1988 Act, as it neither affects the physical state of the
hereditament nor is physically manifest
in the locality (and “locality” cannot include the hereditament itself). There is, therefore, no justification for a reduction in the rateable value.

82
Q

Key case for PFS?

A

Petrofina (GB) v Dalby 1967 - valuation methodology valuing them on rental basis but with regard to the FMT of the property. Also considered that branded fuel did not have impact on value.

83
Q

How are PFS valued for rating?

A

FMT of the property is multiplied by figure drawn from rental analysis to arrive at Rateable Value.

84
Q

Main case for rebus sic stantibus?

A

Williams (VO) v Scottish and Newcastle Retail Ltd and Allied Domecq Retailing Ltd. Emphasized valuing the property on its existing state and use.

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