Rating List

February 13th, 2020 by James Goudie QC in Council Tax and Rates

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?

Read more »


Non-Domestic Rates

December 13th, 2019 by James Goudie QC in Council Tax and Rates

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.


Business rate avoidance schemes

November 6th, 2019 by James Goudie QC in Council Tax and Rates

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 »


Rateable Occupation

May 16th, 2019 by James Goudie QC in Council Tax and Rates

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 »


Avoidance Schemes

March 8th, 2019 by James Goudie QC in Council Tax and Rates

In Rossendale BC v Hurstwood Properties and Wigan Council v Property Alliance Group (2019) EWCA Civ 364 actions by local authorities seeking to recover National Non-Domestic Rates from property developers in respect of unoccupied hereditaments were struck out where the developers had set up schemes to avoid the payments involving transferring leases of the properties to special purpose vehicle companies.  The Ramsey principle of purposive interpretation of the statutory scheme did not apply and there was no reason to pierce the corporate veil.

These appeals concerned two schemes. Both schemes involved the grant of leases of properties to SPVS without assets or liabilities which, as part of the scheme in question, were then placed in voluntary liquidation or were allowed to be struck off the register of companies as dormant companies and thus dissolved. Read more »


Whether Rates Proposal Invalidated by Omission

January 9th, 2019 by James Goudie QC in Council Tax and Rates

In Alam v Valuation Officer (2018) UKUT 266 (LC) Mr Alam is the proprietor of the restaurant.  He took a lease of a Property. His agents submitted a proposal to reduce the rateable value of the Property.  In their proposal they stated correctly that Mr Alam was the occupier of the Property but also stated that the Property was “owner/occupied”.  The proposal was completed in that way because of a misunderstanding between Mr Alam and his agents.  As a result, the agents did not include any information in response to the question “if not owner/occupied, is a rent or licence fee paid?” and, in particular, did not state the rent payable, the date it had first become payable and the date of the next rent review. All of this was information required by Regulation 6(3) of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 (“the 2009 Regulations”).  The issue in Mr Alam’s appeal to the Upper Tribunal (Lands Chamber) concerned the consequence of the mis-statement of the capacity in which Mr Alam occupied the Property and the omission of any information about the rent payable.  The Valuation Tribunal for England (“VTE”) found that the proposal was invalid, explaining: Read more »


Material change in circumstances

December 20th, 2018 by James Goudie QC in Council Tax and Rates

In Merlin Entertainments Group Ltd v VO (2018) UKUT 406 (LC) the Upper Tribunal was concerned with whether there had been a material change of circumstances under paragraph 2(7)(d) of Schedule 6 to the Local Government Finance Act 1988.  It was held that there had not been such a change. The change (a fall in visitor numbers at Alton Towers following a fatal crash) was not a matter which was “physically manifest” in the locality of the hereditament on the relevant day.

Paragraph 2(7) enacts the physical state and user limbs of the reality principle, in relation to both the hereditament and its locality. Regulation 2(7) sets out the factors to which the reality principle applies. They include, (d), matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are nonetheless “physically manifest” there. One of the issues which arose was whether a purely economic matter can fall within paragraph 2(7)(d). Read more »


Liability for Non-Domestic Rates

December 18th, 2018 by James Goudie QC in Council Tax and Rates

Liability for non-domestic rates depends on a property being entered as a hereditament in the rating list. Section 46A of and Schedule 4A to the Local Government Finance Act 1988 (“the 1988 Act”) create a completion notice procedure, by which a new building that has not yet been occupied may be brought into the rating list. Where a completion notice has been validly served the building to which it relates is deemed to have been completed on the date specified in the notice. It is then shown in the rating list as a separate hereditament, valued as if it were complete, and its owner or occupier becomes liable to an assessment for non-domestic rates.

Read more »


Recovering unpaid tax

July 5th, 2018 by James Goudie QC in Council Tax and Rates

Powys County Council v Hurst (2018) EWHC 1684 (Admin) was an appeal by way of case stated to a Divisional Court (Hickinbottom and Singh LJJ) against the decision of a District Judge (“DJ”) that the Council was required to consider proceeding under the Attachment of Earnings Act 1971 (“the 1971 Act”) as an alternative method of recovering unpaid council tax before applying to commit the Respondent to prison for non-payment of that tax. The DJ reached his decision on the basis that it was open to the Council to seek an attachment of earnings order in the County Court in respect of the Respondent’s pension. The main issue in the appeal was whether that course was open to a billing authority such as the Council as a matter of law. The Divisional Court held that it was not and allowed the appeal. Read more »


Rates Retention

March 5th, 2018 by James Goudie QC in Council Tax and Rates

The Non-Domestic Rating (Designated Areas) Regulations 2018, SI 2018/213, coming into force on 1 April 2018, form part of the scheme for local retention of non-domestic rates (“the rates retention scheme”). Their purpose is, to designate areas in relation to which a proportion of the non-domestic rating income raised is to be retained in its entirety by the local authority in all or part of whose area a designated area falls. The scheme was introduced on 1 April 2013 to give local government a direct share of local non-domestic rating income and thereby an incentive to promote local growth. These Regulations provide that when calculating how much rates income in a local authority area is to be shared between local government and central government, it will disregard the growth in rating income in designated areas. This will then allow the growth in those designated areas to be retained 100% by the billing authority. These Regulations designate further areas in which the 100% disregard will apply and provide rules for calculating the amount to be disregarded.