The latest judgment was a further hearing of an appeal against the Valuation Tribunal for England’s decision to dismiss Ludgate House’s appeal against the Valuation Officer to act on two proposals made by Ludgate House as ratepayer, first, to remove the subject property from the 2010 rating list and, second, to alter the effect date of an alteration to the list (this appeal having been allowed in part but substantively dismissed).

That decision was appealed to the Upper Tribunal and heard in 2019. The main issue before the Upper Tribunal at that hearing was the question of who was in rateable occupation of the building, as between Ludgate House and the licensees, who were permitted to occupy the building as property guardians.  The Upper Tribunal decided that the individual rooms in the building occupied by the guardians each constituted separate hereditaments, in the rateable occupation of the relevant guardian occupying the relevant room.  

On appeal to the Court of Appeal in 2020, the Court of Appeal disagreed and decided that Ludgate House was in rateable occupation of the entirety of the Building, so that the Building constituted a single hereditament for rating purposes. 

The matter was remitted to the Upper Tribunal to determine a number of consequential matters, namely: (1) what was the proper approach to the valuation of the non-domestic part of the hereditament; (2) what is the correct figure for the valuation of the non-domestic part of the hereditament; (3) what was the correct effective date.

The issues of most interest are (1) and (3). 

On (1) the Upper Tribunal concluded that the mode and category of occupation of the Building, on the material day, should not be taken to be restricted to use of the Building for occupation by property guardians pursuant to a scheme of property guardianship, rather it was the use of the building as an office, subject to the temporary occupation of property guardians pursuant to a temporary scheme of property guardianship. The physical state of the building, on the material day, was an office building. The domestic part of the building, on the material day, was limited to the four units occupied by the four guardians who moved into those units on the material day. The hypothetical tenant should be assumed to be taking the building as an office building, subject to the temporary use of the building for a property guardianship scheme. The assumed state of this property guardianship scheme, as at the material day, is as it was then – its implementation had not been completed, with only four property guardians having been granted licences and with only four property guardians having moved into the building. The hypothetical tenant has the same rights as existed in reality, pursuant to the property guardianship agreement and the licences granted to the Guardians, to terminate the scheme or to consolidate the occupation of the property guardians into a particular part or parts of the building, in order to make the most efficient use of the space within the building.  The hypothetical tenant is assumed also to have the ability to decide whether to continue with the scheme and, if so, to decide how many property guardians should be permitted to occupy the building, and in which locations. 

The RV was agreed by the experts in those circumstances which the Upper Tribunal found to apply which addressed issue (2).

Issue (3) the effective date was a complex issue including novel arguments which repays careful reading and is beyond the scope of this article. The Effective Date Issue was whether a unliteral alteration made to the rating list by the VO to reinsert the building into the list could be brought within the terms of Regulation 14(7) the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009, with the consequence that the effective date of the alteration becomes the day on which it was actually made (in this case 24 May 2017). If so, the effective date of the alteration was 24 May 2017 which was after the 2010 List was closed with the consequence that the alteration was ineffective. This would have meant Ludgate House were not liable for rates. The Upper Tribunal determined that by reason of Regulation 14(2)(a)(iii) the effective date was the material day and that regulation 14(7) did not apply. In consequence the effective date was 1 July 2015 and not 24 May 2017 as contended by the rate payer. It dismissed Ludgate House’s novel argument that the alteration arose from a state error the consequences of which should fall on the Government and not the ratepayer.

The Upper Tribunal dismissed the ratepayer’s appeal.

Mark Westmoreland Smith was instructed by HMRC and acted for the Valuation Officer.