UPPER TRIBUNAL (LANDS CHAMBER)

UT Neutral citation number: [2013] UKUT 413 (LC)

UTLC Case Number: RA/63/2012

 

 

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

 

RATING – alteration of rating list by valuation officer – effective date of alteration – whether any discretion for valuation tribunal to designate fair and reasonable date - Non-Domestic Rating (Alteration of Lists and Appeals) (Wales) Regulations 2005- appeal allowed

 

 

 

IN THE MATTER OF AN APPEAL AGAINST A DECISION

OF THE VALUATION TRIBUNAL FOR WALES

 

 

BETWEEN RICHARD ROBERTS (VALUATION OFFICER) Appellant

and

WEST COAST MARINE (PWLLHELI) LTD Respondent

 

 

 

Re: Units 1-3

Yr Hafan

Pwllheli

LL53 5YW

 

 

Before: Martin Rodger QC, Deputy President

 

Sitting at: 45 Bedford Square, London WC1B 3AS

on 21 August 2013

 

 

Cain Ormondroyd, instructed by the Solicitor to HM Revenue and Customs for the Appellant

No appearance for the Respondent

 

 

The following cases are referred to in this decision:

National Car Parks Ltd v Baird (Valuation Officer) [2004] EWCA Civ 967; [2004] RA 245

Gilbert v S Hickinbottom & Sons Ltd [1956] 2 QB 40

 

 

DECISION

Introduction

1.           This short appeal concerns the date from which an alteration made to correct an inaccuracy in the rating list has effect by virtue of regulation 14 of the Non-Domestic Rating (Alteration of Lists and Appeals) (Wales) Regulations 2005. 

2.           The appeal is brought by the Valuation Officer (“the VO”) against a decision of the Valuation Tribunal for Wales (“the VTW”) made on 25 October 2012 in relation to a proposal by West Coast Marine (Pwllheli) Ltd (“West Coast”), to alter the 2010 rating list in respect of premises which it occupied at Units 1-3, Marina Workshops, Pwllheli, Gwynedd (“the Premises”).  The VTW decided, contrary to West Coast’s contention, that the 2010 rating list had been correctly altered by the VO to record the Premises as a single hereditament, rather than as three separate hereditaments as had previously been shown in the list.  The VTW also decided that the alteration should take effect from 20 September 2011, the date on which the VO had first given West Coast notice of the alteration, rather than from 31 January 2011, the effective date recorded in the list by the VO when making the alteration.

3.           The VO’s appeal is against the second aspect of the VTW’s decision only, namely the effective date of the alteration.  The VO was represented before me by Mr Cain Ormondroyd of Counsel.

4.           West Coast, which had appeared before the VTW by one of its directors, Mr Derrick Dale, has elected not to participate in the appeal, which is therefore unopposed. 

The relevant statutory provisions

5.           Section 41 of the Local Government Finance Act 1988 (“the 1988 Act”) requires the valuation officer for a billing authority to compile and then to maintain a local non-domestic rating list for the authority’s area.  The first list was to be compiled on 1 April 1990 with further lists on 1 April in each subsequent fifth year.  The list so compiled comes into force on the day it is compiled and remains in force until the next list is compiled five years later. 

6.           Section 42 of the 1988 Act requires that each local non-domestic rating list shows all non-domestic hereditaments.

7.           Section 41(4) provides that "before a list is compiled the valuation officer must take such steps as are reasonably practicable to ensure that it is accurately compiled on 1 April concerned". The duty is therefore to compile and maintain an accurate list.  The valuation officer’s duty under section 41 to maintain the list also necessarily requires that the list be kept up to date.  Although there is no explicit provision in the 1988 Act empowering a valuation officer to alter a list for which he is responsible, it is implicit in the general duties imposed by section 41(1) that the valuation officer has power to alter the list on his own initiative in order to reflect changes of circumstances or to correct errors, as the Court of Appeal confirmed in National Car Parks Ltd v Baird (Valuation Officer) [2004] EWCA Civ 967.  Section 55 includes provisions for the alteration of lists which assume the existence of such a power. 

8.           By section 55(2) of the 1988 Act the Secretary of State may make regulations concerning the alteration by valuation officers of lists which have been compiled under Part III of the Act. By section 55(6) such regulations may include provision as to the period for which or day from which an alteration of a list is to have effect (including provision that it is to have retrospective effect).

9.           The power to make regulations under section 55 is exercisable in relation to property in Wales by the National Assembly for Wales.  The relevant regulations are The Non-Domestic Rating (Alteration of Lists and Appeals) (Wales) Regulations 2005 (SI 2005/758) (as amended) (“the 2005 Regulations”) which came into force on 1 April 2005.  The equivalent regulations applicable in England are The Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 (SI 2009/2268).  So far as they relate to the issue raised by this appeal, the 2005 Regulations are in the same terms as their English counterpart.

10.        Regulations 3 to 13 of the 2005 Regulations comprise detailed provisions for the making of proposals to alter a rating list by any interested person, including the occupier of a hereditament.  Regulation 4, which is headed “circumstances in which proposals may be made” lists in paragraph (1) fifteen separate grounds for making such a proposal.  These include that:

“(b) the rateable value shown in the list for a hereditament is inaccurate by reason of a material change of circumstances which occurred on or after the day on which the list was compiled;
…
(d) the rateable value shown in the list for a hereditament by reason of an alteration made by a valuation officer is or has been inaccurate;
…
(f) the day from which an alteration is shown in the list as having effect is wrong;

(g) a hereditament not shown in the list ought to be shown in that list;

(h) a hereditament shown in the list ought not to be shown in that list;
…
(k) property which is shown in the list as more than one hereditament ought to be shown as one or more different hereditaments;

(l) property which is shown in the list as one hereditament ought to be shown as more than one hereditament.”

 

11.        The reference in regulation 4(1)(b) to a “material change of circumstances” is amplified in regulation 2(1) which explains that a material change of circumstances, in relation to a hereditament, means a change in any of the matters mentioned in paragraph 2(7) of Schedule 6 to the 1988 Act.  Those matters include matters affecting the physical state or physical enjoyment of the hereditament, its mode or category of occupation, or the use or occupation of other premises situated in the locality of the hereditament.

12.        The time from which an alteration made to a rating list on or after 1 April 2005 is to have effect is prescribed in detail by regulation 14 of the 2005 Regulations, which provides as follows:

“14.  - (1) Subject to regulation 34, this regulation has effect in relation to alterations to a list compiled on or after 1 April 2005.

(2) Subject to paragraphs (3) to (7), where an alteration is made to correct any inaccuracy in the list on or after the day it is compiled, the alteration shall have effect from the day on which the circumstances giving rise to the alteration first occurred.

(3) Subject to paragraph (4), where an alteration is made to give effect to a completion notice, the alteration shall have effect from the day specified in the notice.

(4) Where under Schedule 4A to the Act a different day is - 

(a) substituted by a different notice under paragraph 1(3) of that Schedule;

(b) agreed under paragraph 3 of that Schedule; or

(c) determined in pursuance of an appeal under paragraph 4 of that Schedule,

the alteration shall have effect from the day so substituted, agreed or determined.

(5) Where the day on which the relevant circumstances arose is not reasonably ascertainable  - 

(a) where the alteration is made in pursuance of a proposal, the alteration shall have effect from the day on which the proposal was served on the valuation officer; and

(b) in any other case, the alteration shall have effect from the day on which it is made.

(6) An alteration made to correct an inaccuracy (other than one which has arisen by reason of an error or default on the part of a ratepayer)  - 

(a) in the list on the day it was compiled; or

(b) which arose in the course of making a previous alteration in connection with the matters mentioned in the foregoing paragraphs,

which increases the rateable value shown in the list for the hereditament to which the inaccuracy relates, shall have effect from the day on which the alteration is made.

(7) Where an alteration falls to be made after the first anniversary of the day on which the next list is compiled it shall have retrospective effect only if it is made in pursuance of a proposal.”

13.        The procedure for altering a list by means of a proposal made by an interested person does not apply to alterations made by the valuation officer on his or her own initiative.  Under regulation 17(1) of the 2005 Regulations alterations made to the rating list by the valuation officer are required simply to be notified to the relevant billing authority in writing within four weeks of the alteration being made.  Regulation 17(2), with limited exceptions, requires that by no later than the date on which notice is given to the relevant authority the valuation officer must also serve a notice in writing on the ratepayer (and on any proposer) stating the effect of the alteration. 

14.        Where a ratepayer or other interested person objects to an alteration made by the valuation officer, he may challenge the alteration by making his own proposal, relying on sub-paragraph (d) or on one of the other grounds stated in regulation 4(1).  Where the valuation officer does not accept the proposal as well-founded, it must be referred by the valuation officer to the relevant valuation tribunal.

The factual background to the appeal

15.        The material facts were not in dispute before the VTW.  Both parties proceeded on the basis of a statement made by Mr Dale on behalf of West Coast, a large part of which was recited by the VTW in its decision.  I take the following facts from the decision and from Mr Dale’s statement as the factual basis for my consideration of the appeal.

16.        The Premises comprise three contiguous workshop units in a modern building located on the marina at Pwllheli.  They have a combined internal area of approximately 550 m², the greater part of which is on the ground floor, although one of the three units has an office area at first floor level and another has a small mezzanine store.  The three units adjoin each other but have no internal access between them. 

17.        West Coast specialises in the sale and repair of powerboats, and the provision of services to the owners of powerboats.  It first occupied space at the marina in February 2009, when it took a lease of two units, numbers 3 and 4.  It agreed an annual rent of £5,175 plus VAT for Unit 3, which it continued to occupy at that rent at the time of the appeal.  In February 2010 it took a separate lease of Unit 2, which had been vacated by its previous occupier, and agreed a rent for that unit at the same rate as for Unit 3.  Later in 2010 the opportunity arose to take significant additional space in Unit 1, which was suitable for occupation as an office, shop and showroom.  With effect from 1 February 2011 West Coast took a new lease of Unit 1 at a rent of £19,915 and at the same time gave up its lease of Unit 4.

18.        Each of the units occupied by West Coast appeared separately in the 2010 rating list as “workshop and premises”.  West Coast received separate rate demands for each of the units it occupied, each of which included an element of small business relief.

19.        On 20 September 2011 the VO, having become aware that a single occupier now carried on business from all three of the units comprised in the Premises, made an alteration to the rating list and gave notice of it to West Coast.  The previous entries for the three separate hereditaments comprising Units 1, 2 and 3 were deleted and replaced by a single entry for a new hereditament comprising the Premises, the whole being described as “workshop and premises” with a rateable value of £16,750.  The new assessment was recorded as taking effect on 31 January 2011, that being the date on which the VO then understood West Coast had taken possession of Unit 1.

20.        On 30 September 2011 West Coast submitted a proposal to the Valuation Officer to alter the rating list by restoring the three separate hereditaments which had previously existed.  In his statement in support of the proposal Mr Dale objected to the principle of treating the three units as a single hereditament.  He did not challenge the rateable value attributed to the Premises and his principal practical objection concerned the effect which the alteration had on the level of small business relief available to West Coast.

21.        West Coast’s proposal was, in effect, a challenge to the alteration in the rating list made by the VO with effect from 31 January 2011.  Following discussions between the parties the VO decline to accept the proposal and referred the disagreement to the VTW where it was treated, in accordance with regulation 13(1) of the 2005 Regulations, as an appeal by the ratepayer against the VO’s refusal to alter the list.

The VTW’s decision

22.        The question for the VTW was whether the Premises were correctly shown in the rating list as comprising one hereditament rather than three. 

23.        The VTW directed itself, by reference to the decision of the Court of Appeal in Gilbert v S Hickinbottom & Sons Ltd [1956] 2 QB 40, that where two or more properties are within the same curtilage or contiguous to one another, and are in the same occupation, they are as a general rule to be treated for rating purposes as if they formed parts of a single hereditament. Applying that principle, the VTW upheld the VO’s contention that the Premises should be treated as one unit of assessment and rejected West Coast’s appeal.  There has been no appeal by West Coast against that conclusion.

24.        Having disposed of the main substance of the appeal, the VTW then considered the date from which the alteration should take effect.  It concluded its decision with the following brief remarks on that subject:

“The Tribunal considered the fact, as the service of the Notice of Alteration to the Appellant was some nine months after the effective date quoted by the Valuation Office; it felt, in the circumstances, it warranted a revision to the effective date of the alteration.

Therefore it decided, in the interests of fairness and by applying a test of reasonableness, that the effective date should be amended to 20 September 2011, the actual date of the alteration quoted on the notice.

Consequently, based on the above conclusions, the Tribunal agreed to uphold the Valuation Officer’s contention that the Units 1-3 should be treated as one unit of assessment and decided in the circumstances, a revision to the effective date from 31 January 2011 to 20 September 2011 was warranted.”

25.        It is relevant to point out that the VTW’s attention appears not to have been drawn by the either party to regulation 14 of the 2005 Regulations, the relevant statutory provision concerning the effective date of alterations to the rating list.  The VO had referred in his evidence to the Rating Lists (Valuation Date) (Wales) Order 2007, but that did not assist the VTW in determining when the alteration to the rating list took effect.  In its decision the VTW recorded no separate submissions on the issue of the effective date and it was perhaps for that reason that it considered itself free to select a date based on what it considered to be fair and reasonable.

The Valuation Officer’s appeal

26.        The VO submitted a notice of appeal to the Tribunal on 20 November 2012.  The sole ground of appeal was that the VTW had failed to apply regulation 14 of the 2005 Regulations and had erred in law in identifying the effective date of the alteration of the rating list as 20 September 2011.  The VTW had taken upon itself a discretion to fix the effective date which the statutory scheme did not allow.

27.        In his statement of case in support of the appeal the VO contended that the correct date from which the alteration should have taken effect was 1 February 2011.  The alteration in the list had been prompted by a change of circumstances, namely the commencement of occupation by West Coast of the three contiguous units comprising the Premises.  That change of circumstances had taken place, according to Mr Dale’s un-contradicted evidence, on 1 February 2011.  On the basis of that evidence the VO acknowledged that the alteration he had originally made with effect from 31 January 2011 was premature by one day.  The VO therefore invited the Tribunal to set aside the VTW’s decision so far as it related to the effective date of the alteration and to substitute 1 February 2011. 

Discussion

28.        The VO is clearly correct that the only source from which the effective date of an alteration to a non-domestic rating list can be identified is regulation 14 of the 2005 Regulations which deals exhaustively with that issue.  There is simply no provision in the statutory scheme for the exercise of a general discretion as to the effective date whether based on fairness, reasonableness or any other consideration.  In particular, the date on which notice of an alteration is given to the occupier of a hereditament under regulation 17(1) cannot be the date from which the alteration takes effect unless one of the sub-paragraphs of regulation 14 so provides.

29.        The general rule laid down by regulation 14(2) is that an alteration made to correct any inaccuracy in a rating list on or after the day it is compiled has effect from the day on which the circumstances giving rise to the alteration first occurred.  That general rule is subject to modification in the cases mentioned in paragraphs (3) to (7) of regulation 14, but unless one of those paragraphs applies, the only relevant date which it is necessary to identify is the date on which the change of circumstances giving rise to the alteration first occurred.

30.        In this case the change of circumstance justifying an alteration in the rating list, as the VTW found, was the commencement of occupation of the Premises by West Coast on 1 February 2011.  That change took place after 1 April 2010, the day on which the current rating list was compiled.  When the change took place the list became inaccurate and the VO came under a duty to make an alteration in the list to correct the inaccuracy.  It may be that different alterations to the 2005 and 2010 lists might also have been justified (to show units 3 and 4 as a single hereditament with effect from February 2009, or units 2, 3 and 4 as such with effect from February 2010) had the VO appreciated at an earlier stage that West Coast occupied and carried on the same business from those contiguous units. No such alterations have been made, but that fact did not affect the VO’s duty to take steps to alter the list when he became aware that the Premises had come to be occupied as a single unit from 1 February 2011.

31.        Having identified 1 February 2011 as the day on which the circumstances giving rise to the alteration first occurred, it is then necessary to consider whether any of paragraphs (3) to (7) of regulation 14 displaces the general rule which would cause the alteration to take effect from that date. It is apparent that none of those paragraphs are applicable. 

32.        Paragraphs (3) and (4) concern completion notices served under schedule 4A of the 1988 Act to define the date on which a new building is complete and capable of being entered in the rating list, and so has no relevance to this case. 

33.        Paragraph (5) applies only where the day on which the relevant circumstances arose is not reasonably ascertainable, but in this case there is clear evidence to establish that date. 

34.        Paragraph (6) applies only to alterations to correct an inaccuracy in the list present on the day it was compiled, or which arose out of a previous alteration, neither of which applies in the present case.  Being then in separate occupations, the Premises were not a single hereditament on 1 April 2010; although the list may have been inaccurate on the date it was compiled, any such inaccuracy can only have been the failure to show Units 2, 3 and 4 as a single hereditament.  That inaccuracy ceased to exist on 1 February 2011, when the ratepayer vacated Unit 4 and took occupation of Unit 1, and the alteration made by the VO on 20 September 2011 was not made to correct it but rather to put right a different inaccuracy. Nor was the alteration made to correct an inaccuracy which arose out of a previous alteration, hence neither limb of paragraph (6) is of assistance in this case.

35.        Finally, paragraph (7) of regulation 14 precludes further alterations to a list more than 12 months after the compilation of the next list, and is equally inapplicable.

Disposal

36.        Had the VTW been reminded of regulation 14 of the 2005 Regulations in the written material or submissions put before it, I have no doubt that it would have undertaken the appropriate analysis and reached the only conclusion lawfully open to it, namely that the alteration to the list to show the Premises as a single hereditament in substitution for the separate entries for the three individual units, took effect from 1 February 2011.  I therefore allow the VO’s appeal and (pursuant to regulation 37(5) of the 2005 Regulations) vary the order made by the VTW, substituting 1 February 2011 as the date from which the alteration took effect.  As the alteration was made by the VO on his own initiative, he will no doubt ensure that an appropriate alteration is made in the list to reflect the outcome of the appeal.

37.        At the conclusion of the hearing of the appeal Mr Ormondroyd made it clear that the VO was not seeking an order for his costs in this appeal.

 

 

Dated: 27 August 2013

 

 

 

 

 

Martin Rodger QC

Deputy President