This case was about works being undertaken to an office building in Sunderland which involved stripping the unit back to a shell prior to creating three new office suites.
The Ratepayer argued the property should be deleted from the rating list whilst the works to the unit were ongoing on the basis that the property was incapable of beneficial occupation. The Valuation Officer contended that despite the condition of the property, the works to put it back into repair were “economic” and therefore felt it should not be deleted.
Initially the Valuation Tribunal found for the Valuation Office and The Ratepayer (SJ & J Monk) appealed the decision to the Upper Tribunal (UT) who then decided in favour of the Ratepayer and deleted the assessment. The case was then subsequently appealed to the Court of Appeal who reversed the decision of the UT, which they found to be legally flawed, and found in favour of the Valuation Officer that the assessment should not be deleted.
The case was then appealed to The Supreme Court which unanimously allowed the ratepayer’s appeal and reversed the Court of Appeal decision. This new decision allows the ratings liability of a property under extensive refurbishment works to be reduced to £1.
This will be very welcome news to developers as the previous Court of Appeal decision was viewed to be a disincentive to development as it would add to project costs. However, those with ideas of exploiting this decision by removing certain features of the building e.g. plumbing, and claiming their premises are incapable of beneficial occupation should be aware that the Local Government Finance 1988 Act contains anti-avoidance powers.
A fuller summary of the decision by David Reade QC and Dominic Bayne, who appeared in the Supreme Court on behalf of the successful appellant is available here and the Supreme Court’s judgment is available here.
