Appeal in the cases noted in this Bulletin on 6 November 2019 have been dismissed : (2020);EWCA Civ 1017. Asplin LJ said at para 46 : “ … the authorities do not support the proposition that a transaction should not be regarded as genuine or a scheme should be considered to be contrary to the public interest on the grounds that their effects might be considered by some to be socially reprehensible.” At para 48 she said : “ Nor can it be relevant that each of the sequence of events is pre-determined…the pre-determined use of an SPV to which assets are transferred is a familiar feature in many corporate reconstruction schemes. Taking time in advance, to decide which steps to take, cannot of itself render the steps themselves contrary to the public interest.” At paragraphs 54-57 she said that once it is accepted that a step is genuine and not a sham, “ it cannot be undermined by the motive behind its creation.” The fact that the purpose for which a transaction has been entered into can be characterised as artificial in no way invalidates the transaction if it is not a sham. The fact that a device has been adopted in order to avoid legislative consequences cannot be taken into account in construing a document to find out what the true nature of the transaction is. One has first to find out what is the true nature of the transaction and then see whether and if so how the legislation operates upon that state of affairs. Floyd and Newey LJJ agreed.

ATMs installed inside and outside supermarkets and shops are not separate hereditament. They remain in the rateable occupation of the retailers, not of the parties which operate them. So has the Supreme Court held in Cardtronics v Sykes (2020) UKSC 21. It is analogous to the situation of a lodging house. There is a single hereditament in the rateable occupation of the landlord.

MHCLG has issued Guidance on relief to council tax payers in response to COVID-19 pursuant to Section 13A (1) (c) of LGFA 1992, funded by Government under Section 31 of LGA 2003.

ATOS v FYLDE BOROUGH COUNCIL (2020) EWHC 647 ( QB ) is concerned with the liability, or rather non-liability, of persons for non-domestic rates in circumstances where the person said to be liable does not occupy the entirety of the hereditament in the relevant rating list, and part is let to others. Saini J reviewed the statutory framework and case law at paras 23-68 and gave his main conclusion at paras 69-75 : essentially rateable occupation has to be exclusive occupation. The Judge approved Ryde on Rating : “ if the whole building is entered in the rating list as one hereditament, no one tenant is liable for the rate of the whole, because he is not the occupier of the whole, nor can he be compelled to pay the rate on the part he occupies…”

The 11 March 2020 Budget documents include Terms of Reference for a “fundamental” Review of the Business Rates System, setting out the Review’s objectives, scope and governance, with a view to the Review reporting in Autumn 2020.  An objective is to improve the current system, and to consider more fundamental changes in the medium-to-long term, including alternatives to business rates.  The scope will not consider the overall level of funding for local government.

In McGrath v Camden LBC (2020) EWHC 369 (Admin) a Divisional Court held that the Council’s omission to serve on ratepayers information specified by Schedule 4 to the Business Improvement Districts (England) Regulations 2004, S.I. 2004/2443, made under Section 49 of the Local Government Act 2003, at the same time as serving a demand notice for payment of a BID levy in Hampstead Village did not render the demand invalid. The statutory liability to pay the levy is not qualified by reference to any legislative requirement other than service of a demand notice.  Moreover, there is a distinction in Schedule 4 between what is required to be “contained in” a demand notice and what is required to be “supplied with” a demand notice.

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When should contiguous units of property occupied by the same occupier be entered on the non-domestic rating list as a single hereditament, pursuant to Section 64(3ZD) of the Local Government Finance Act 1988, as amended, and the Rating (Property in Common Occupation) etc Act 2018?

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In Derby Teaching Hospitals NHS Trust and 16 Others v Derby City Council and 44 Others (2019) EWHC 3436 (Ch) the 17 Claimant NHS Foundation Trusts accepted that they occupied Hospitals and other properties on which they were liable to pay non-domestic rates to their local rating authorities, but claimed that they were entitled to a discount because they were a charity or occupied the relevant property wholly or mainly for charitable purposes: Section 43(6) of the Local Government Finance Act 1988.  The claims failed.  Morgan J held that Foundation Trusts, under the consolidating National Health Service Act 2006, albeit public benefit corporations, are not charities within Sections 1-4 of the Charities Act 2011.

In cases brought by the Secretary of State [2019] EWHC 2890 (Ch) the High Court declined to wind up companies in the public interest that operated business rate avoidance or mitigation (but not evasion) schemes. The companies relied upon the exemption from business rate of companies that are being wound-up, compulsorily or (creditors or members) voluntarily. The respondent companies operated schemes to allow landlords of vacant commercial premises to avoid paying business rates. That was achieved by the landlords leasing the properties to a special purpose vehicle (SPV) incorporated by the respondents, with the effect that the SPV became the property owner for the purpose of business rates. Each lease had a fixed term of three years and provided that its purpose was to transfer liability for business rates to the SPV, that the landlord would pay a monthly fee, and that the landlord was able to determine the lease at any time on payment of a determination premium, which increased as time passed. Once the SPV held several leases, it would be placed in members voluntary liquidation. The respondents accepted that the determination premium provisions were entirely artificial and had been devised with a view to creating something of value to the SPV so that the liquidator would be required to maintain the members voluntary liquidation for the duration of the lease, so as not to lose the opportunity of receiving the determination premium. Read more »

The true test is whether the occupation is “of value”, contrasted with an hereditament that is sterile in any and everybody’s hands.  In Telereal Trillium v Hewitt (VO) (2019) UKSC 23 the Supreme Court endorses the distinction drawn in previous Land Tribunal cases between a property which is unoccupied merely because of a surplus between supply and demand in the market, and a property which has “reached the end of its economic life”. The Valuation Office Agency’s guidance on whether a property is obsolete lists several relevant considerations, including whether the property was occupied at the antecedent valuation date, and whether there are other similar properties in the locality that are occupied. This highlights the issues of fact which may become relevant in drawing the distinction in particular cases. Read more »