Matt - Local taxation/assessment - Level 3

Question 1

You mention that you disagreed with how the agent analysed their rental evidence. Why was this?

Answer 1

They had analysed to the first rent review at five years despite there being a 2-year rent free period granted.

It was a 12 year lease and this incentive meant that the rent should have been analysed over the full term.

Question 2

How did you treat the rent free period and did you consider a break clause?

Answer 2

I treated it as incentive given that it was for 2 years, and analysed over the full duration of the term so 12 years.

I did consider whether there was a break clause as this affects the rental analysis. There wasn’t a break clause in this instance.

Question 3

You mention that the rent required substantial adjustment - what do you mean by this?

Answer 3

The rent would have required a lot of adjustment in order to meet the definition of Rateable Value as per Schedule 6, Paragraph 2 of the Local Government Finance Act 1988.

The rent free period, the repair liabilities and being agreed 3 years post AVD.

Question 4

What was your analysis of the subject rent?

Answer 4

Analysing the rent over the full 12 year term and accounting for the rent free period, led to a unit rate of £260/sqm.

Question 5

What were the settlements in relation to the subject property?

Answer 5

I referred to similar location and specification office buildings to the subject that had been settled within the 2017 List.

This was in line with the additional steps of Lotus & Delta to refer to the rents of similar properties.

Question 6

What settlement evidence was there?

Answer 6

A similar office hereditament had their tone amended to £240/sqm, and because of the similarity of the subject to this comparable, I proposed to amend the unit rate to £240/sqm.

Question 7

Why did you attach more weight to the settlement evidence over the rent of the subject property?

Answer 7

As per the 6 steps of Lotus & Delta, the subject property rent is a starting point and more weight should be attached to it if agreed on terms close to that as per the definition of RV.

In this case, the rent on the subject property was agreed 3 years post AVD and on terms not closely aligned to the definition of RV and therefore I attached little to no weight to it, with more weight therefore on settlement evidence.

Question 8

What advice did you give as a result of your valuation of your office in Bristol?

Answer 8

I advised senior colleagues as to my opinion of value and why the unit rate should be reduced from £260/sqm to £240/sqm to which they agreed, and I also advised the agent within negotiations and my decision notice as to my opinion of value and why £240/sqm was reasonable to adopt.

Question 9

You mention that you’re represented the Valuation Officer at Valuation Tribunal. In what roles did you appear?

Answer 9

Advocate and Expert Witness

Question 10

What is an advocate?

Answer 10

A role that a Surveyor can take at VT where they advocate that their case is superior to the other side.

Their overriding duty is to their client.

Question 11

What is an expert witness?

Question 12

Is there any RICS guidance in relation to being an advocate and expert witness?

Question 13

How would you identify a hereditament?

Answer 13

1. ABET - Is it a hereditament
2. PICO - How many hereditaments
3. Case Law e.g. Cardtronics and who’s in paramount control

Question 14

Tell me about ABET.

Answer 14

This refers to the 4 tenets of rateability as detailed within the case law of John Laing & Son v Kingswood Assessment Committee (1949)

1. Actual occupation
2. Beneficial occupation
3. Exclusive occupation
4. Not too transient

Question 15

Tell me about PICO.

Answer 15

This refers to the Property in Common Occupation Act 2018 which introduced a new subsection to the General Rate Act 1987 that gave extra provisions on how to identify the hereditament.

Question 16

What did PICO introduce that changed the way the hereditament is identified?

Answer 16

The contiguity condition, which is where properties which are contiguous or touch can be classed as one hereditament

Question 17

Why was the PICO legislation introduced?

Answer 17

To overturn the Supreme Court ruling of Woolway v Mazars in 2015

Question 18

Tell me about the Supreme Court ruling of Woolway v Mazars (2015).

Answer 18

This was a case that the Supreme Court decided that if hereditaments were not interconnected, even if they touch each other, they had to be classed as separate hereditaments.

This led to many hereditaments being split and was a big task for the VOA to process.

Question 19

Is PICO applicable in Wales?

Answer 19

It is now with the 2023 List, beforehand it was still subject to Woolway v Mazars.

Question 20

Why did you advise the Valuation Tribunal that there were two hereditaments?

Answer 20

Due to a public highway being present between the two hereditaments, I advised the panel that this meant the two hereditaments were not contiguous.

Question 21

What made the two hereditaments not contiguous and therefore unable to be merged?

Answer 21

Because the Ratepayer was not in exclusive occupation of the public highway, it therefore meant they weren’t in rateable occupation and therefore it wasn’t contiguous and couldn’t be merged.

Question 22

So if two properties that aren’t touching each other, are they to be separately assessed?

Answer 22

It depends on the facts of each case. In some rare circumstances, some properties like a golf course may be assessed as one assessment due to functional essentiality.

Question 23

So if my two properties touch each other and are interconnected, can they be classed as one hereditament?

Answer 23

Yes

Question 24

So if my two properties touch each other and are NOT interconnected, can they be classed as one hereditament?

Answer 24

Yes, because they are contiguous. Were PICO not enacted however, then they would have to be separate assessments.

Question 25

If the public highway had been owned and not occupied by the ratepayer, would this have changed the outcome?

Answer 25

No. Non-Domestic Rating is a tax on occupation and not ownership. This was the crux of the argument as the ratepayer contended it was contiguous as they owned it, despite my explanations and that the right of way meant they weren’t contiguous.

Question 26

What advice did you give as a result of your VT stables case in Somerset?

Answer 26

I advised the ratepayer and the VT as to why the assessments were not contiguous and had to remain separate in the Rating List, referring to established case law and legislation to justify this.

The VT ultimately found in my favour with the appeal being dismissed and the assessments remaining separate in the List.