Services of Payment Notices

March 8th, 2017 by James Goudie QC in Council Tax and Rates

In Serpes v City of London, Judgment on 2 March 2017, the Court held that demand notices for non-domestic rates, reminder notices, and summonses, were all served properly at the appellant’s last known address, in accordance with Section 233 of the Local Government Act 1972.  It was immaterial that she did not in fact receive them.  There had been no procedural impropriety or unfairness.  The Council was not obliged to make inquiries to discover her location.  If she wished to be served at another address it was for her to inform the Council accordingly.  Liability for the rates had not necessarily passed to someone else.


Rateable Value

March 7th, 2017 by James Goudie QC in Council Tax and Rates

Section 56 of the Local Government Finance Act 1988 (“LGFA 1988”) incorporates Schedule 6 to LGFA 1988. Schedule 6 sets out the statutory basis on which the rateable value of a non-domestic hereditament is determined.  It sets out statutory assumptions for determining rateable value. What is required is an assessment of “the rent at which it is estimated the hereditament might reasonably be expected to be let from year to year”. The hereditament means the hereditament, as a whole, not part or most of it.  So emphasized in Hobbs v Gidman (VO) , (2017) UKUT 63 (LC).


Rateable Value

March 2nd, 2017 by James Goudie QC in Council Tax and Rates

Does a commercial building which is in the course of redevelopment have to be valued for the purposes of rating as if it were still a useable office. Paragraph 2(1) of Schedule 6 (“Non-domestic rating: valuation”) to the Local Government Finance Act 1988, as amended by the Rating (Valuation) Act 1999, provides that the rateable value of a property is an amount equal to the rent at which it is estimated it might be expected to be let from year to year, subject to the assumption, in para 2(1)(b), that, immediately before the tenancy begins, the property is in a state of reasonable repair, but excluding from that assumption any repairs which a reasonable landlord would consider uneconomic. The issue of general public importance to the law of rating and valuation in Newbigin (Valuation Officer) v SJ & J Monk (2017) UKSC 14 was whether a property should be rated in accordance with the para 2(1)(b) assumptions or in accordance with its physical condition on the relevant date for determining rateable value on an application to alter the rating list.  On that date the property was stripped to a shell in the course of renovation works.  The Supreme Court held, allowing an appeal from the Court of Appeal, that the property had been stripped out beyond reasonable repair and should be rated as a “building undergoing reconstruction” and the rateable value reduced to the nominal amount of £1 from £102,000, not on the assumption that it was in reasonable repair as “offices and premises”. Read more »


Non-payment of Council Tax

January 23rd, 2017 by James Goudie QC in Council Tax and Rates

In R (Woolcock) v Bridgend MC (2017) EWHC 34 (Admin) Lewis J quashed a suspended committal order, pursuant to Regulation 47 of the Council Tax (Administration and Enforcement) Regulations 1992, because no proper means assessment had been carried out and the suspension period was manifestly excessive.  Lewis J said:-

“27.   The general principles governing the making of an order under regulation 47 of the Regulations are relatively well established in the case law.  For present purposes, the material principles are these.  First, the power to commit is intended to be used to extract payment of the debt not to punish the debtor.  Secondly, it is clear from the terms of the regulation that the magistrates’ court must conduct a means inquiry in the presence of the debtor and must consider whether the failure to pay is the result of wilful default or culpable neglect.  Thirdly, an order may be made if, but only if, the debtor is guilty of culpable neglect or wilful default. The means inquiry will need to consider the period or periods in respect of which liability is due in order to determine, amongst other things, whether non-payment is the result of culpable neglect.  Further, the means inquiry will need to consider the present position of the debtor to enable the magistrates’ court to determine whether the debtor is in a position to pay the debt and the magistrates’ court will need to consider what enforcement options are available to it to secure payment of the debt: …

  1. In the present case, in my judgment, there has not been a proper and adequate inquiry into the Claimant’s means. First, such an inquiry will need to consider income and expenditure to determine what the reasonable disposal income of the debtor was in relation to the periods in question. …
  2. Secondly, in my judgment, the magistrates did not carry out an adequate assessment of means for the purpose of determining whether to commit for non-payment, or to remit part or all of the debt. … They needed to determine whether or not the Claimant could make such payments or whether part or all of the debt should be remitted …
  3. Thirdly, the period of suspension for payment of the debt should not be an unreasonable or disproportionate period. If the period for repayment is unduly long, a suspended committal may be unlawful. Thus, the courts have indicated that periods of suspension in excess of 3 years are likely to be excessively long and so unlawful: …”

“38.    … The magistrates’ court failed to carry out a proper and adequate means inquiry as required by regulation 47 of the Regulations and were not in a position to determine if non-payment was the result of culpable neglect nor whether the orders were appropriate mechanisms for enforcing the debt. Further, the period of suspension was manifestly excessive and disproportionate. …”


Local Government Finance Bill

January 16th, 2017 by James Goudie QC in Council Tax and Rates

This Bill, introduced in the House of Commons on 13 January 2017 (Bill 122), and which applies in England only, follows the Government’s announcement, in October 2015, that, by the end of the present Parliament, local government would retain 100% of locally raised taxes. The changed system is also designed to strengthen incentives for local authorities to grow their business rate income.

The Bill is made up of four parts:-

Part 1: Local Government Finance Settlement

Local retention of non-domestic rates – provides a framework to allow local government to retain 100% of non-domestic rates.

Local government finance settlement – replaces the yearly local government finance settlement with a multi-year settlement.

Council tax referendum principles – replaces the yearly council tax referendum principles with multi-year principles Read more »


Liability for council tax

December 7th, 2016 by James Goudie QC in Council Tax and Rates

Leeds City Council v Broadley [2016] EWCA Civ 1213 concerns liability to pay Council tax to the City Council in respect of dwellings let on assured shorthold tenancies. The issue is whether Mr Broadley or his tenant is “the owner” of the dwellings within the meaning of Section 6 of the Local Government Finance Act 1992 (“the 1992 Act”) when that dwelling had no resident for the period in dispute.  Liability turns upon the true construction and effect of the common form of tenancy agreement made between Mr Broadley and his individual tenants and upon how the 1992 Act applies to the agreement as so construed. The form of agreement is of a type that has long been in common currency. The crucial question is whether the tenant in these cases at the relevant times had “a material interest”, i.e. “a leasehold interest which was granted for a term of six months or more”.

The Court of Appeal construed the agreements as single grants for a fixed term of 6 or 12 months followed by a periodic tenancy thereafter. The Court of Appeal concluded that the agreements granted “a term of six months or more” constituting a “material interest”. McCombe LJ said (para 19):-

It is pursuant to that grant that the tenant holds throughout the tenancy, whether during the fixed term or thereafter, Accordingly, in my judgment, the Tribunal and the judge were correct in finding that the tenant’s liability continued while those tenancies subsisted as periodic tenancies and even if the tenant had gone out of occupation.”


Business Rates

May 19th, 2016 by James Goudie QC in Council Tax and Rates

The measures in the Queen’s Speech 2016 include in England a local Growth and Jobs Bill, to allow councils to retain 100% of the business rates they collect, and to allow the elected mayors of combined authorities to levy business rate supplements in order to fund infrastructure projects.


Council Tax

March 22nd, 2016 by James Goudie QC in Council Tax and Rates

Coll (Listing Officer) v Mooney [2016] EWHC 485 (Admin) is a statutory appeal by the Appellant Listing Officer against the decision of the Valuation Tribunal for England (“VTE”) in which it ordered the Listing Officer to alter the valuation list to show one entry for a property, instead of two.  The property was built as one dwelling, on three floors. However, at some point, the property was converted into two dwellings.  It was listed as two separate units of property (hereditaments) when the valuation list for council tax was drawn up in 1993.

In 2014, the Respondent and her husband (Mr and Mrs Mooney) purchased the entirety of the property, with the intention of converting it back into a single dwelling. They obtained planning permission and listed building consent for a change of use from two dwellings to a single dwelling, together with alterations and extensions. However, there were severe restrictions on the changes they could make to the building because of its status as a listed building.

Upon completion of the works, the ground floor comprised a kitchen, a sitting area, dining room, two bedrooms and a shower room, and a hall leading to the main external entrance to the house. The first floor comprised a drawing room, study, bedroom and bathroom with dressing area.

Mrs Mooney applied to the Valuation Office Agency Listing Officer to alter the valuation list to remove the two entries and to replace them with one entry for the entire property, to reflect the fact that the property had been restored to one dwelling.  In a decision dated 4 December 2014, later reviewed on 9 March 2015, the Listing Officer removed the two entries and replaced them with two new entries. One entry was in band D, comprising the ground and first floors. The other entry was for the lower ground floor only in band A. The reason for the decision was that, in the view of the Listing Officer, the lower ground floor was a self-contained unit. Mrs Mooney appealed to the VTE, which held an oral hearing on 24 July 2015. In its written decision, dated 21 August 2015, it found that the lower ground floor was not a separate unit of accommodation, and allowed the appeal.

The Listing Officer appealed to the High Court on a question of law under the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009. Lang J dismissed the appeal.

The starting point is that, as a general rule, an hereditament is a unit of property which is self-contained and within the same curtilage, and occupied by the same person. The Listing Officer considered that following the adaptations there is now a single hereditament.  A single domestic hereditament is treated as a single dwelling, unless it is treated as two or more dwellings pursuant to Section 3(5) of the Local Government Finance Act 1992 and the Council Tax (Chargeable Dwellings) Order 1992 (“the Chargeable Dwellings Order”), Articles 2 and 3.

Lang J said, at paragraph 35, that the VTE was entitled, and indeed required, to consider the physical characteristics of the whole house, not just the lower ground floor. She referred, at paragraph 37, to the potential relevance of shared facilities in the remainder of the building.  She concluded as follows:-

“38. … I consider that the VTE was entitled to take into account the fact that the lower ground floor held the communal laundry facilities for the whole house.”

“40. Although the manner in which the building is being used by particular occupiers is clearly not the legislative test, … evidence of actual use may properly be considered. …”

“41. Thus, in my view, it was not impermissible for the VTE to have regard to the evidence that the house was in use as a single household, whose sole kitchen facilities were on the ground floor and sole laundry facilities on the lower ground floor. The key question was whether the panel went on to apply the correct legislative test, namely, had the building been “constructed or adapted for use as separate living accommodation”. This focuses on the use for which the building has been physically constructed or adapted, not the way in which the occupants were actually using it. …

42. I do not accept the Listing Officer’s submission that the VTE erred in law in taking into account the evidence that there were major restrictions on changes to the construction and layout of the building because it was a Grade II listed building. In my view, this was a potentially relevant part of the evidential background which the panel was entitled to take into account when examining the physical characteristics of the building and asking itself the question whether the building had been “constructed or adapted for use as separate living accommodation”.

43. In my judgment, on a fair reading of the decision, the members of the panel did correctly direct themselves in law. They set out the legislative provisions fully, correctly summarised the legal principles and referred to the case law. …

44. In my judgment, the VTE was entitled to conclude, on the evidence before it, that the way in which the building had been adapted for use, by installing laundry facilities for the whole house in the utility room, and kitchen facilities for the whole house on the ground floor, meant that the utility room was not available for separate and exclusive use as a kitchen, as part of a separate self-contained unit on the lower ground floor. This was a multi-factorial exercise of fact-finding and judgment by a specialist tribunal with which this court should be slow to interfere. …”

“46.   I am entirely satisfied that the VTE did not misdirect itself in law and, on the evidence, its conclusion was a reasonable one. In the circumstances, I do not consider it would be appropriate to set aside or remit the decision merely because the evidence and factual findings were not fully recorded in the decision.”


Council tax liability order

March 17th, 2016 by James Goudie QC in Council Tax and Rates

In Williams v East Northamptonshire District Council [2016] EWHC 470 (Admin) the Court held that the authority’s application, under the Council Tax (Administration and Enforcement) Regulations 1992, S.I.1992/613, for a council tax liability order was not invalidated by its additional inclusion of a claim for an amount of costs. The application contained what it needed to. There was no prohibition against including additional information that was not required at that stage. The application clearly differentiated between the two.  The costs would be claimable in the event that a liability order was made.  There was nothing misleading, no abuse of process, and no usurping of the authority of the Magistrates’ Court with respect to costs.  Indeed the amount of costs that would be claimed, and could in due course be contested, was precisely the sort of information which ought to be made available.


Unpaid council tax, court costs and lawful expenditure

February 29th, 2016 by Peter Oldham QC in Council Tax and Rates, Judicial Control, Liability and Litigation

On Thursday 25th February, the Divisional Court gave judgment in the case of Rev Paul Nicolson v Grant Thornton.  This was Rev Nicolson’s appeal under the Audit Commission Act 1998 against the refusal of LB Haringey’s auditor to make a declaration of an unlawful item of account or issue a public interest report.

Rev Nicolson is an anti-poverty campaigner. He refused to pay council tax, and when he was taken to the magistrates’ court he lost and was ordered to pay costs of £125. The council’s right to claim costs was given by the Council Tax (Administration and Enforcement) Regulations 1992. Haringey had a standard costs claim of £125 in such cases.  In a prior judicial review claim,  R ota  Nicolson v Tottenham Magistrates [2015] PTSR 1045, it had been held that the magistrates’ order had been unlawful as, at the hearing of the summons, there had been insufficient information for the magistrates to say whether £125 was a reasonable estimation of the costs incurred.

However, when Rev Nicolson also, and separately, objected to the auditors, they decided that the local authority had had sufficient information on which to decide that £125 was a proper charge.  The sum included aggregated costs, both direct and indirect, divided by the number of council tax summonses which Haringey had to deal with per year.   Accordingly the auditors decided that the item of account was lawful.  Rev Nicolson appealed.  The Divisional Court dismissed the appeal.  It declined to say that the auditors’ decision was unlawful, since they had considered the relevant factors,  and had given cogent reasons explaining their view.

Peter Oldham QC