Matt - Local taxation/assessment - Level 2

Question 1

Tell me about your deletion case for the office block in Bristol?

Answer 1

I received several Check cases in relation to an office block in Bristol that were seeking to be deleted from the Rating List whilst they were undergoing refurbishment.

Question 2

What are the 2 leading cases with regards to repair or refurbishment?

Answer 2

Newbigin v Monk

Jackson v Canary Wharf

Question 3

Tell me about the Newbigin v Monk case.

Answer 3

This was a case that went to the Supreme Court to determine whether an office should be deleted from the Rating List as it was undergoing refurbishment.

The Supreme Court ruled that the premises were incapable of beneficial occupation and therefore it wasn’t a hereditament. The repair assumption therefore did not apply.

Question 4

Why did you not consider the repair assumption for this case?

Answer 4

As per Newbigin v Monk, the repair assumption is disregarded in this scenario as the premises are incapable of beneficial occupation and therefore it isn’t a hereditament.

If it was a hereditament, then the repair assumption would apply.

Question 5

What is the repair assumption?

Answer 5

It is one of the key assumptions of the rating hypothesis that assumes a hereditament is in a reasonable state of repair. If the property isn’t in a reasonable state of repair, it assumed to be put in to a state of reasonable repair by the landlord on the assumption that the works are not uneconomic.

Question 6

What made you decide to delete the assessments from the Rating List?

Answer 6

Upon reviewing the evidence provided, including a schedule of works and photographs, the hereditaments were clearly incapable of beneficial occupation.

Question 7

Tell me about the Jackson v Canary Wharf case?

Answer 7

This was an Upper Tribunal case which debated whether Canary Wharf offices that were undergoing refurbishment and vacant could be assessed at a nominal value.

The Valuation Officer argued that due to no programme or schedule of works, the property was therefore not a building under construction and therefore in an assumed reasonable state of repair as per the repair assumption.

The UT dismissed the appeal and said the VO’s appeal contradicted the ruling of Monk.

Question 8

What are the key differences between Newbigin v Monk and Jackson v Canary Wharf?

Answer 8

Both cases concerned offices and whether they should have a nominal value as a result of refurbishment.

Newbigin v Monk came first and focused on the reality principle.

Jackson v Canary Wharf came after and followed the principles of Monk, but the VO argued that despite a property being incapable of beneficial occupation, the nominal assessment shouldn’t be automatic unless proven with a schedule of works.

Question 9

What is the date when the physical factors of a property are taken in to account?

Answer 9

Material Day

Question 10

Where can the listed factors which must be taken at the material day be found?

Answer 10

Local Government Finance Act 1988, Schedule 6, Paragraph 2(7)

Question 11

Broadly speaking, what are the listed factors?

Answer 11

These are physical factors concerning the physical state of the hereditament and the physical state of its locality.

Question 12

What are the mentioned matters that can be found within Schedule 6, Paragraph 2(7)?

Answer 12

a) Matters affecting the physical state of the hereditament

aa) Matters affecting the 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 or permanently deposited on the hereditament

d) Matters affecting the physical state of the locality in which the hereditament is situated

da) Matters which, though not affecting the physical state of the locality, are nonetheless physically manifest there

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

Question 13

What is a Material Change in Circumstances?

Answer 13

This is a change to a property or its surroundings which may affect its Rateable Value

Question 14

What can you tell me about any updates to Material Change of Circumstances?

Answer 14

The Non-Domestic Rating Act 2023 has tightened the scope of proposals for MCCs and also made slight amendments to the mentioned matters.

Question 15

How have the mentioned matters changed since the introduction of the Non-Domestic Rating Act 2023?

Answer 15

Paragraphs a) and d) have now been separated in to 2 independent matters

1. a) matters affecting the physical state of the hereditament and aa) matters affecting the physical enjoyment of the hereditament
2. d) matters affecting the physical state of the locality in which the hereditament is situated, and da) matters which, though not affecting the physical state of the locality in which the hereditament is situated, are nonetheless physically manifest there.

Question 16

What are the 2 leading cases on MCCs?

Answer 16

1. Merlin Entertainment v Cox (VO) [2018]
2. Wigan Athletic FC v Cox (VO) [2019]

Question 17

What happened in the Merlin Entertainments v Cox case?

Answer 17

This was an Upper Tribunal case to determine whether a crash of the Smiler ride constituted a Material Change in Circumstances.

It was dismissed at both VTE and UTLC as the Appellant argued that the crash reduced visitor numbers to the park and therefore constituted an MCC, where as the VO contended that this wasn’t an MCC as per legislation.

The UTLC found that visitor numbers do not affect the physical state of the hereditament and are not physically manifest there, and as this was the crux of the appellants appeal it failed. There was also contradictory evidence such as other park attendance increases in the East Midlands and nationally.

Question 18

What happened in the Wigan Athletic FC v Cox case?

Answer 18

In this case, the Appellant contended that relegation from the Premier League and then subsequent relegation to League One amounted to an MCC due to a physical change to the hereditament and a change in the mode or category of use.

The appellant argued that relegation was physically manifest there such as a reduction in attendance numbers and closure of a ticket office, and a change in the mode or category of use was dependent on what league you were in.

The respondent argued that relegation was not a material/physical change but rather an economic one which fell outside the legislation and therefore wasn’t an MCC.

The UTLC dismissed the appeal and ruled that relegation didn’t amount to an MCC, and despite the financial hardship it could have on a club, this can only be addressed at a revaluation.

Question 19

What MCC allowance did the agent seek within your case for the MCC retail shop?

Answer 19

40%

Question 20

What MCC allowance did you give on conclusion of the Challenge?

Answer 20

7.5%

Question 21

What is an MCC allowance?

Answer 21

This would represent a reduction in the yearly hypothetical tenancy. The allowance would represent the whole year.

Question 22

What did you consider when deciding upon what MCC allowance to grant?

Answer 22

1. Duration and severity of the disability
2. Reduction in rent - which must be for the MCC alone and not volatility of the market
3. Reduction in trade - which must be down to the MCC alone also
4. Settlement evidence - Having regard to the settlement evidence of similar retail properties in the locality for similar works.

Question 23

If the trade had dropped by 40%, would you be giving a 40% allowance for the MCC?

Answer 23

No, the allowance has to reflect a reduction in the annual rental bid. The trade could also be down to other factors such as economic ones.

Question 24

Can economic factors be considered when determining the MCC allowance?

Answer 24

No, the economic factors can only be considered at the AVD.

With MCCs we are focused on the material day.

Question 25

You’ve mentioned mode or category, what is the leading case?

Answer 25

1. Scottish and Newcastle v Williams (City Duck)
2. Fir Mill v Royston

Question 26

How does mode or category affect valuations?

Answer 26

1. It affects the type of valuation method used
2. It affects the number of hereditaments/assessments and ultimately the value

Question 27

What was the material day for your MCC Challenge?

Answer 27

The date when the Check was submitted

Question 28

What was the material day for your deletion case?

Answer 28

The date of the event, which in this case was the day the property was deleted from the List.

Question 29

What was your 7.5% MCC allowance based on?

Answer 29

For my retail shop in Birmingham, it was based on settlement evidence.

There was no evidence of a reduction in rent or trade, therefore I determined an allowance from settlement evidence based on the duration and severity of the works at the material day.