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



Liability orders for non-domestic rates

January 29th, 2016 by James Goudie QC in Council Tax and Rates

When is an hereditament “wholly or mainly used for charitable purposes”? In South Kesteven DC v Digital Pipeline Ltd [2016] EWHC 101 (Admin) a Divisional Court set out the following propositions: (1) The test is not whether the activity being conducted on the premises is wholly or mainly charitable; it is whether the premises are being used wholly or mainly for charitable activity.  (2) If, as a matter of fact, the premises are being used wholly or mainly for charitable purpose, it matters not that they could have been run more efficiently or that strictly part only of the premises need have been used; the test has to be applied to the facts as they are, not as they might have been. (3) When determining whether the charitable exemption from rates applies, it is immaterial that the purpose of an arrangement between landlord of business premises and charity tenant is to avoid or reduce the payment of rates.


Rateable Value

October 6th, 2015 by James Goudie QC in Council Tax and Rates

In Barber (Valuation Officer) v Cerep (2015) UKUT 521 (LC) it was held that in determining the rateable value of an hereditament it was necessary to consider three questions: (1) whether the hereditament is in such repair as makes it reasonably fit for occupation by a reasonably-minded tenant, having regard to the age, character and locality of the hereditament; (2) if not, whether the works required to put the hereditament into such a condition are works of “repair”; and (3) if not, whether those repairs can be carried out economically.


Non-domestic rating

September 18th, 2015 by James Goudie QC in Council Tax and Rates

Part 6 of the Enterprise Bill, introduced in the House of Lords on 17 September 2015, relates to non-domestic rating. Clauses 22 and 23 make amendments to the Local Government Finance Act 1988.


Business Rates

August 20th, 2015 by James Goudie QC in Council Tax and Rates

Any hereditament whose owner is a company which is subject to a Winding Up Order under the Insolvency Act 1986 or which is being wound up voluntarily under that Act is exempt from business rates. PAG Management Services was incorporated to manage and coordinate an artificial scheme whose sole reason for existence was to exploit this exemption. The scheme was struck down by Norris J in SOS for BIS v PAG Management Services Ltd (2015) EWHC 2404 (Ch), not because it was contrary to the public interest ( ratepayers can organise their affairs so as to avoid paying rates), but because it was a misuse of the insolvency legislation and commercially improper to use a company in liquidation as an asset shelter.


Business Rates

June 1st, 2015 by James Goudie QC in Council Tax and Rates

The main elements in the Enterprise Bill announced in the Queen’s Speech include reforming the Valuation Tribunal business rates appeals system and allowing for the VOA to share information with local authorities.


Council Tax Liability Orders

May 8th, 2015 by James Goudie QC in Council Tax and Rates

Andrews J began her Judgment in R (Nicholson) v Tottenham Magistrates and Haringey LBC [2015] EWHC 1252 (Admin) as follows:-

“1. This case raises issues of significant public interest to both council tax payers and local authorities relating to the costs sought by local authorities with regard to the enforcement of unpaid council tax.

2. Regulation 34(7) of the Council Tax (Administration and Enforcement) Regulations 1992 (SI 1992 No.613) (“the Regulations”) provides that when granting a liability order the court shall make an order reflecting the aggregate of the outstanding council tax and “a sum of an amount equal to the costs reasonably incurred by the applicant in obtaining the order.” In England there is no legislative cap on those costs; in Wales there is a proviso that the costs “including those of instituting the application under paragraph (2), are not to exceed the prescribed amount of £70.”

3. The issue at the heart of this claim is what is required, prior to making an order for the costs claimed, to satisfy the court that the requirements of the Regulation are met, i.e. that those costs have been reasonably incurred by the local authority in obtaining the liability order.”

“6.  The challenge to the legality of the order focuses on the absence of information that the Claimant says was necessary for the Magistrates to address their minds to the question whether the essential causal connection between the costs claimed and the obtaining of the order had been established by the Council, allied with the complaint that the Magistrates appear to have confused the reasonableness of the amount of the costs with the question whether that sum was reasonably incurred. “

Andrews J stated the position as follows:-

“33. The proceedings before the Magistrates were civil in nature, but the Civil Procedure Rules do not apply to them. Thus there is no provision for the assessment of costs, as there would be in normal civil litigation. By contrast with the Civil Procedure Rules, there are no provisions in the Regulations requiring the costs to be reasonable or proportionate, nor is there any requirement that any doubt be resolved in favour of the paying party. The Magistrates were bound to decide the matter of costs in accordance with the Regulations.

34. As a matter of straightforward construction of Regulation 34(7) that means that the Magistrates must be satisfied:

 (i) that the local authority has actually incurred those costs;

 (ii) that the costs in question were incurred in obtaining the liability order; and

 (iii) that it was reasonable for the local authority to incur them.”

“36. … there are no authorities that specifically address these Regulations, and this is an opportunity for the Court to afford some general guidance as to their interpretation and scope.

37. I doubt whether any assistance in this regard can be derived from authorities in relation to the CPR or the pre-CPR costs regimes, as the Regulations do not refer to “costs of the proceedings”. There is some limited assistance to be derived from the Regulations themselves as to what kinds of costs are included. Regulation 34(5) sets out the circumstances in which the application for a liability order shall not be proceeded with. The respondent must pay or tender to the local authority any unpaid council tax plus “a sum of an amount equal to the costs reasonably incurred by the authority in connection with the application up to the time of payment or tender.”

38. … I agree that as a matter of necessary implication, and for the policy reason referred to by counsel, costs incurred in obtaining the order must encompass costs incurred in connection with the application for a summons. Plainly the costs would encompass, but are not confined to, the fee for issuing the summons: the expression “in connection with the application” is wider than “the costs of making the application“. However, there still has to be a sufficient link between the incurring of those costs and the application for a summons.

39. … it is difficult to draw any analogy between council tax and the scope of costs awarded to prosecuting authorities in criminal cases, because in the latter scenario there is a discretion to award costs. Moreover, as in cases falling under the CPR, it is possible to have an assessment of the reasonableness and proportionality of the costs; and the nature of the criminal investigations is very different.”

“42. It seems to me that in principle the intention in the Regulations is to enable the local authority to recover the actual cost to it of utilising the enforcement process under Regulation 34, which is bound to include some administrative costs, as well as any legal fees and out of pocket expenses, always subject to the overarching proviso that the costs in question were reasonably incurred. However, bearing in mind the court’s inability to carry out any independent assessment of the reasonableness of the amount of those costs, the Regulations should be construed in such a way as to ensure that the costs recovered are only those which are genuinely attributable to the enforcement process.

43. Apart from the costs of the final notice, … it seems to me, both as a matter of language and purposive interpretation, that it would be difficult to justify including any other costs incurred prior to the decision being taken to enforce (which is a matter of discretion under Regulation 34(1)). In order for costs to be incurred in connection with the making of the application, a decision to make such an application must have been taken. It is only then that the process of enforcement gets underway. Indeed Regulation 34(5), which includes that phrase, is specifically addressing the scenario where a summons has been issued, and thus the decision to enforce has been taken.

44. That does not necessarily mean that the costs have to be incurred on or after the date on which the summons was issued – once the decision to enforce has been taken there may still need to be checks carried out to ensure that the summons is issued in the correct amount and against the right person. However, what the court is concerned with are the costs incurred by the applicant in obtaining the liability order (or in seeking to obtain one before the respondent capitulates). I note that in Wales the proviso specifically refers to the cap including “the costs of instituting the application” which is consistent with that reading of Regulation 34(5). On the face of it, therefore,  … the costs of taking the decision to exercise the discretion to enforce would appear to fall on the wrong side of the line.

45. I bear in mind the practicalities of the enforcement system; time in the Magistrates’ court is limited and given the large number of summonses issued, it would not be practical for the local authority to carry out and provide a detailed calculation of the actual costs incurred in each and every case (save possibly where the actual costs are well in excess of the norm, for example if the local authority has to instruct counsel to turn up and argue specific points of law raised by the taxpayer in defence).

46. In principle, therefore, provided that the right types of costs and expenses are taken into account, and provided that due consideration is given to the dangers of double-counting, or of artificial inflation of costs, it may be a legitimate approach for a local authority to calculate and aggregate the relevant costs it has incurred in the previous year, and divide that up by the previous (or anticipated) number of summonses over twelve months so as to provide an average figure which could be levied across the board in “standard” cases, but could be amplified in circumstances where there was justification for incurring additional legal and/or administrative costs. If that approach is adopted, however, it is essential that the Magistrates and their clerk are equipped with sufficient readily available information to enable the Magistrates to check for themselves without too much difficulty, and relatively swiftly, that a legitimate approach has been taken, and to furnish a respondent with that information on  request.”

“50. In principle there is no reason why a local authority should not decide to limit the costs it claims to the costs in connection with issuing the summons, although in practical terms that approach provides no incentive to the respondent to pay up after the summons is issued. What matters is that the costs that it does decide to claim are properly referable to the enforcement process.

51. If the necessary causal link is established to the satisfaction of the court then the next question is whether the costs claimed have been “reasonably” incurred. It may be that the method by which the costs are calculated demonstrates this without the need for further evidence; but there may be individual cases in which it would be open to the respondent to argue that the costs were not reasonably incurred, for example, if it was not reasonable for the local authority to take steps to enforce payment, or if the costs which were incurred were excessive – e.g. if the local authority sent a QC along to argue a simple point of law in the Magistrates’ Court.

52. Establishing that the costs were reasonably incurred is not the same thing as establishing that the costs were reasonable in amount. Of course, the latter may have a bearing on the former, since if the costs appear to be excessive, or disproportionate, there may be legitimate grounds for querying whether it was reasonable of the local authority to incur costs in that amount. However so far as proportionality is concerned, one has to bear in mind that in the present context where the recoverable sums are relatively small (though by no means insignificant to many of those who have to pay them) it is inherently likely that there will be a disparity between those sums and the costs of recovering them. On the other hand, the practice of processing applications in bulk could drive the average costs of obtaining liability orders down rather than up.

53. Given the absence of any independent assessment, the scope for abuse of the system is self-evident, and that makes it all the more important that due process is observed. Therefore, it is incumbent upon the Magistrates to reach a proper judicial determination of the amount of costs reasonably incurred by the applicant, in this case, the Council, in obtaining the liability order. In order to do so they need to have sufficient information as to how the figure was arrived at, and what “costs” it represents; and they need to have enough information on which they can be satisfied that the costs were incurred in obtaining the order and not, for example, in sending out council tax bills to all the taxpayers in the Borough.

54. It is a well-established public law principle that where a public authority has to make a decision, it must know (or be told) enough to ensure that nothing that it is necessary, because it is legally relevant, for it to know, is left out of account. That formula … applies with at least as much, if not greater, force in a context such as the present where the decision is not wholly a matter of discretion.”


Liability For Council Tax

April 22nd, 2015 by James Goudie QC in Council Tax and Rates

In Bramwell v Valuation Office Agency [2015] EWHC 824 (Admin) Elisabeth Laing J held that it was the tenant of a flat who, although not in actual occupation, had the right to occupy, who was liable for council tax, rather than the landlord, notwithstanding that the tenant was out of occupation of the flat because of the need for substantial repair.  The scheme of s6 of LGFA 1992 was ECHR compliant.