Local Taxation Flashcards
What is Rateable value?
Rates payable on properties which are neither domestic or exempt, based on estimated rental values and on three assumptions: it is let on open market on AVD, in reasonable state of repair, full FRI.
Where can you find the definition of RV and what is the leading case?
Schedule 6 to LGFA 1988 as amended by the Rating (Valuation) Act 1999.
Lead case - Westminster City Council v Southern Railway Co, The Railway Assessment Authority and WHSmith and Son 1936.
What are the four essential ingredients needed for Rateable occupation?
ABET - Actual, Beneficial, Exclusive and not too Transient.
Established in Laing (J) £ Son v Kingswood.
Can you explain ‘not too transient’?
Has some sort of permanency.
Explain paramount.
“Occupation of part is occupation of the whole”. The person in ‘paramount’ occupation has control over the use of the property.
What is the definition of hereditament?
Term used for a single unit of property which will have a separate entry to the list. For a single hereditament to exist it must be capable of definition, single occupier, single use, single geographical location.
What was the leading case to define hereditament?
Gilbert v Hickinbottom 1956
Premises on opposite sides of highway - Bakery and repair depot - Whether one or two hereditaments - functionally essential
Has anything changed since then?
Woolway v Mazzars superseded the lead case.
What new legislation was introduced in 2018 regarding hereditaments?
Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018 - allows certain contiguous properties to be treated as one single hereditament for non-domestic rates purposes.
Where can you find exemptions?
LGFA Schedule 5 1988.
What are some exemptions?
Agricultural land and buildings, Fish farms, Places of worship, Certain property of Trinity House, Sewers and accessories, Property of the drainage authority, Parks, Property used for disabled, Air raid protection works, Swinging moors, Visiting forces, Property in enterprise zone.
Name one case law relating to exemptions.
Duxbury v Bell 1992.
Is a mink farm rateable? Why?
In Duxbury v Bell (1992), buildings used for the keeping and breeding of mink were not exempt from rating because they were not agricultural buildings.
Would ancillary administrative premises be exempt in the place of worship?
Yes. They are exempt when used in connection with a place of public religious worship.
Would a bowls pitch in the park be exempt?
No.
What reliefs do you know and what do they offer?
Rural shops, Stud farms, Charitable relief, Small Business relief, The Empty property rate.
What is the current National small business relief multiplier?
49.9 for small business and National - 54. 6. Subject to change.
What is AVD and why do we need it?
Antecedent Valuation Date needed to make it fair for all businesses, so it is valued at the same date.
What is the lead case regarding AVD?
K Shoe Shops Ltd v Hardy (VO) and Westminster City Council.
ratepayers of shop premises at Regent Street in Westminster
What is the current AVD?
01-APR-2021.
What is the next AVD?
01-APR-2024.
Can we accept post AVD rents?
Yes, as per Specialeys v Felgate 1994 case law.
What is Rebus sic stantibus?
“Taking the things as it is”. Schedule 6 to the LGFA 1988 refers to it.
Name both limbs and lead case law: Physical (Scottish new castle) and Mode and category or use limb (Fir Mill Ltd v Royton UDC and Jones).
What is MCC?
The concept introduced by Schedule 6 part 2 of LGFA 1988. Material day is the point in time when the physical state of the property and its locality is taken into account.
What are the ingredients to establish MCC?
Matters affecting the physical state or enjoyment of the hereditament, mode or category of occupation, quantity of minerals or substances, quantity of refuse or waste, matters affecting the locality, use or occupation of other premises.
Why would you give a temporary reduction in value in an MCC case?
There are four tests to establish this.
What are the main regulations for 2017 Rate Appeals?
The Non-Domestic Rating (Alteration of List and Appeals)(England)(Amendment) Regulations 2017 and The Valuation Tribunal for England(Council Tax and Rating Appeals)(Procedure)(Amendment) Regulations 2017.
Why was the Check, Challenge Appeal introduced?
To manage the flow of cases through the system in a structured and transparent way.
Explain each stage of Check, Challenge Appeal.
Check stage, Challenge stage, Appeal stage.
Can we reject a Challenge? Why?
Yes, if it is unlawful or information is missing.
How many grounds can be appealed in Challenge?
There are 12 grounds to appeal the challenge.
Do customers pay for appeals?
Yes. £150 for a small proposer and £300 for a large firm.
Does Wales have the same system?
No, Wales had IPP’s until April 2023. CCA was introduced from 2023 list.
Talk me through Monk & Newbigin case, what did it establish?
Where a rated property is incapable of beneficial use due to significant building works, it should be deleted from assessment or reduced to nominal value.
What is David Jackson (VO) v Canary Wharf Ltd 2019 case about?
Landlord deemed incapable of beneficial occupation therefore not a hereditament, not to be in rating list.
What is the main case law we use to weigh comparable evidence?
Lotus and Delta.
What are the six propositions regarding comparable evidence?
The rent of subject property should be taken as starting point, the more closely to AVD the more weight it gives, rents of similar properties are relevant, assessments of other comparable properties are also relevant, opinion can then be formed to value, if no other rents available, a review of comparable assessments may be helpful.
What is RICS mandatory guidance on comparable valuation method?
GN: Comparable evidence in Real Estate Valuation 1ST edition 2019.
What is tone of the list?
Essentially it is price per m2.
Leading case O’Brien v Harwood - there are three stages leading to the establishment of the tone of the list.
What is the purpose of revaluation?
To maintain fairness in the rating system. Revaluations will be every 3 years.
What is Section 44A of LGFA?
Enables the Local Authority to grant relief on business premises that are partly occupied for a short time only.
What do ITMS, TA & TSA mean?
Total area (TS), Total Significant Area (TSA), Total Area, In Terms of Main Space (ITMS).
What is Total Size Area (TSA)?
Similar to total area but excluding elements that are unlikely to be included in the rent, e.g., a supported first floor. TSA is used as the entry point for a size-based valuation scheme.
When should TSA be used?
TSA should be used when selecting and discussing comparable evidence to ensure we are comparing like with like.
What does Total Area, In Terms of Main Space (ITMS) refer to?
For retail, it is often referred to as total area in terms of Zone A. Adjustments are made to reflect subjective valuation considerations.
Is ITMS a true measurement of size?
No, ITMS is not a true measurement of size; it’s a construct used to help analyze rents and value property.
What is Transitional Relief?
A system introduced in 1990 to protect businesses from large changes in rate liability between revaluations.
What is the main difference between the 2017 and 2023 Transitional Relief lists?
In the 2023 list, we do not issue downwards Transitional Relief; it is upwards only, whereas in the 2017 list, it was both upwards and downwards.
What is the definition of Domestic property?
Property is domestic if it is used wholly for living accommodation, includes a yard or garden, a private garage of 25m2 or less, or private storage for domestic use.
What are examples of Domestic/Non-Domestic borderline properties?
Examples include composite properties, short stay, holiday accommodation, time shares, and caravans.
What is the significance of the end of the day provision?
A hereditament is relevant, non-domestic, composite, unoccupied or partly occupied if it is so immediately before the day ends.
What change occurred regarding domestic property from 1 April 2023?
Self-catering accommodation will be domestic unless it is available for letting commercially for 140 days or more and has been let for at least 70 days.
What is obsolescence?
Obsolescence refers to a lack of demand or reduced demand for a property.
Where does the decapitalisation rate come from?
It is set out by the Government, currently at 4.4% or 2.6% depending on the type of property.
What are the methods of valuation used in rating?
Receipts and expenditure, contractors method, and comparable method.
What are the steps in the contractors’ method of valuation?
- Estimate replacement cost of modern building. 2. Adjust for age and obsolescence. 3. Add land value from comparable evidence. 4. Apply statutory decapitalisation rate. 5. Compare £/m2 with other classes.
What did the Cardtronics v Sykes 2020 case establish?
The Supreme Court ruled that ATMs are capable of being separate hereditaments but are in rateable occupation of the host due to general control.
What is the Ascot House case about?
It concerns the valuation of a refurbished office building and the tenant’s fit-out expenditure in relation to rental value.
What is a chattel?
Movable personal property that is not permanently affixed to the land.
What is the main legislation for Plant and Machinery?
Valuation for rating (Plant and Machinery)(England) Regulations 2000.
How many classes is Plant & Machinery divided into?
Four classes: Power, Services, Movement, and Named Structures.
How is air conditioning assessed in valuations?
Assessments consider if air conditioning is reflected in rents, analyze its effect, and identify comparable rental evidence. A back-stop approach is provided at £4.00/m2 or £7.00/m2.
What is the definition of Rateable Value?
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
Where is the definition of RV found?
LGFA 1988 Schedule 6 paragraph 2
What is the leading case of rateability?
John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area (1949)
Temporary structures erected, and used, by contractors on site of aerodrome under construction - contractors were in rateable occupation of the structures
What are the ingredients of rateability?
(ABET)
Actual occupation
Beneficial occupation
Exclusive use
not too Transient a period
What is the leading case regarding defining a hereditament?
Woolway v Mazars (2015)
What tests were set out by Woolway v Mazars?
Occupational test
Geographic test
Functional test
What property was concerned in Woolway v Mazars and what happened in the case?
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.
What came after Woolway v Mazars?
(PICO)
Property in Common Occupation 2018 - enforced that hereditaments needed to be contiguous to be treated as a single hereditament
What is the functional test?
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.
What is the geographic test?
Mainly superseded by PICO, but it is whether the hereditament can be defined as a single unit on a plan.
What is the leading case on repair?
Monk v Newbigin (2017)
What property was concerned in Monk v Newbigin and what happened in the case?
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.
What happened in Jackson v Canary Wharf (2019)?
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.
What is a hereditament?
A property which is, or may become, liable to a rate.
What is AVD?
Antecedent Valuation Date
Date which all non-physical factors are considered
Currently 1st April 2021
What is rebus sic stantibus?
“things standing thus”
as it stands - two limbs physical and use
physical - as it stands
use - shop as a shop (Fir Mill Test)
What is a material day?
Date where all physical factors are considered
What is the material day for MCCs?
Day of check
What is the material day for recons?
Day of event
What is the secondary legislation for rating list alterations?
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
What are the three stages of CCA?
Check - factual
Challenge - challenge against valuation
Appeal
What are the timelines relating to CCA?
Check - 12 months
Challenge within 4 months of Check decision and 18 months to be resolved
Appeal within 4 months of Challenge decision
What is the RV multiplier?
Standard - 54.6p
Small business - 49.9p
Why was CCA introduced?
Make the rating appeal system more efficient
Tell me about empty property rate relief?
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
Why do we have an AVD?
To give the VO time to produce and update the list
What is an FRI lease?
Full repairing and insuring lease - liability on tenant
What is an IRI lease?
Internal repair and insurance is liable to tenant.
What property types are exempt from rating?
Agricultural land and buildings
Properties used for disabled people
places of religious worship
Parks
Fisheries
How does small business rate relief work?
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
What is Transitional relief?
Scheme to gradually phase in changes to rating bills due to revaluation.
What does contiguous mean?
Sharing a common border. touching.
How does contiguity work for empty property?
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.
What items of plant and machinery are rateable?
Any which is significant to the functioning of the business.
What is the central rating list?
Rating list containing assessments electricity, gas and water networks
pipelines
railways
telecommunication networks
How is property in the central list valued and paid?
Single totalled RV for all the property occupied by the ratepayer
Paid directly to Ministry of Housing, Communities and Local Government.
Where is the central list located?
Can be viewed on public domain gov.uk website.
Can you name 3 ratepayers on the central list?
Network rail
London underground
British telecommunications
What sets out what plant can be rated and valued?
Plant and machinery regulations 2000
What Plant and machinery classes are there?
Class 1 - power
Class 2 - services
Class 3 - infrastructure
Class 4 - Structures
Tell me more about class 1?
Plant which is used exclusively in connection with the generation, storage, primary transformation or main transmission of power in or on the hereditament.
Tell me more about class 2?
Plant which is used in connection with services as part of manufacturing operations. Services means heating, cooling, ventilating, lighting etc
Tell me more about class 3?
Items are to be rateable that are used for the transport of people, goods and for communication. Such as railway tracks, goods lifts.
Tell me more about class 4?
Plant as a building or structure such as walkways, stairways or foundations
Would you always rate and value an electrical distribution board?
No as found in most hereditaments and commonly included in rent
What to the plant and machinery regs say about air con?
Not specifically named in Class 2 but all elements are
How is air con dealt with in rating assessments?
Office valuations will often reflect it
Retail properties have agreed schemes £7psm for standard shops
Industrials it is dealt with as an % addition
Case law relating to the four tenants of rateable occupation?
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
Tell me about R v Assessment Committee of St Pancras (1877)?
Legal possession does not equal occupation. Anyone who takes actual occupation will be deemed to be the occupier.
Tell me about R v London School Board [1886] 17 QBD 738?
Just because there is no profit does not mean there is no value.
Tell me about Westminster City Council v Southern Rly Co Ltd [1936] 2 All ER 322?
Southern railway had control over WH Smiths. Held that it was still exclusive and that southern railway did not interfere with enjoyment of them.
Tell me about London County Council v Wilkins (VO) (1957) AC 362?
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.
How long to be not too transient?
12 months or more.
Is the initial response a legal requirement?
No, adopted to best resolve challenge cases. Giving them opportunity to respond.
Recent case law on Plant and machinery?
Iceland v Berry (2019) - Air handling system used in Iceland’s stores falls within description of manufacturing operation or trade processes and must not be rated.
What rental adjustments do you make?
Rent free, stepped rent, premium, reverse premium, break option, repair liability, insuring liability, contributions.
When tone changes are made, what do you do for surrounding properties?
Where applicable, consequential changes to be in line with the Challenge property.
What is the role of an expert witness?
Duty to the tribunal - must give independent and unbiased evidence.
What is the role of an advocate?
Duty to your client but must act properly and fairly.
What is a completion notice?
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.
How do you value using the time value of money when analysing a rent-free period?
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.
What is a return frontage?
Retail unit occupies a corner position it may have glazing on part of the side elevation.
How do you value return frontages?
Dependent on the quality of the return frontage. Add percentage on top of ground floor value.
How do you value Plant and Machinery?
Where reflected in base price direct comparison. Where it is not, use cost based method.
Why do you not use IPMS in rating?
Agency very supportive as it aims to have clear international standard.
Why do you adjust rents for rating purposes?
To adjust rental evidence to conform with the definition of rateable value.
What order do you carry out rental adjustments for rating?
There are no set rules governing the order of adjustment other than that the adjustment for repairs should be made last.
How are rent free periods treated when adjusting rents?
They are incentives for tenants, excluding periods granted to enable the tenant to fit out the premises.
What is effective date?
Date the assessment became live such as when it was constructed or changes have taken place.
Talk me through Lotus & Delta v Culverwell.
This was an appeal on a shoe shop which set out 6 principles of how evidence should be considered for rating.
Why did you adjust rent frees?
To adjust the rent to conform to the definition of RV - year to year letting.
Why did you adjust for landlord repairs?
As the definition of RV says that the tenant should bear all costs of repairs and insurance.
How did you weigh the evidence for the shop in Birmingham?
Followed the steps set out in Lotus & Delta.
What advice did you give to the panel on the case on the industrial in Stoke?
I advised that the comparable evidence I had provided was closer in type to the subject being standalone buildings.
What advice did you provide with the shop in Stourbridge?
I advised the agent that the shop was currently valued at the same rate as the shops which completely fronted onto the food court.
What is the legislation that covers CCA?
The Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 (SI 2009/ 2268) as amended by (SI 2017 / 155).
What are the key changes with NDR reform?
Held within NDR act 2023 - 3 yearly revals, duty for ratepayers to provide property information.
What is an MCC?
Physical changes to the property or locality that affects its value.
What are the mentioned matters?
The matters upon which an MCC can be made.
Case law for MCCs?
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’.
Main case for rebus sic stantibus?
Williams (VO) v Scottish and Newcastle Retail Ltd and Allied Domecq Retailing Ltd. Emphasized valuing the property on its existing state and use.
Is zoning always measured to a 6.1m depth.
No.
Oxford Street - 9.1m
Islington - 4.6m
Any recent statutory legislation?
NDR Act 2023
What are the main updates?
Improvement rate relief - lasts 12 months following the completion of qualifying improvement works
Rating lists are now at 3 yearly intervals
Transitional relief will now be upwards only
Ratepayers can request information relating to their assessment
Duty to notify - Certain ‘notifiable information’ will need to be provided to the VOA within 60 days. In addition, ratepayers will need to complete an online annual return within 60 days after 30th April confirming ‘no change’ or specifying any changes not notified.
There are fines for non-notification, and false information is treated as a criminal offence. An appeals process is available.
MCC changes - the new law precludes with immediate effect certain ‘matters’ from being treated as a ‘Material Change in Circumstances’ between rating revaluations. These include:
Matters affecting the ‘physical enjoyment’ of the hereditament, and
Matters ‘physically manifest within the locality’ as a result of:
Legislation
Advice or guidance from any public authority
Provisions under legislation
Anything done with a view to complying with any of the above.
Material change of circumstances appeals (ie building works) have been restricted as the new Act removes the option to appeal for a rates reduction as a result of any negative impacts on the use or enjoyment of a property as a result of Government or local authority imposed restrictions.
What is the hypothetical tenant?
What is a small proposer?
Turnover less than £2 million
