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Archive for March, 2017

It all turns on the facts of the case

In November 2016 we considered business rates.  We mentioned the awaited Supreme Court judgement in Newbigin v SJ & J Monk.  Published on 1 March ([2017] UKSC 14), the question before the court was in circumstances where premises are stripped out for refurbishment, at what point are they incapable of beneficial occupation and not liable for business rates?

Having accepted a surrender of a lease for a single office suite, the landlord completely stripped out the property with the intention of creating adaptable space either to be used for single occupancy or for three separate suites.  The building works included removal of all internal components excepting enclosures for lift and stairways leading to other floors.  Suspended ceilings, raised floors, masonry walls, partitioning, electrical, sanitary and drainage systems were all removed.  Whilst the works were conducted the landlord’s agents proposed a rateable value reduction for the premises from the previous £102,000 to £1.  The valuation officer refused and an appeal was lodged with the Valuation Tribunal.  The Tribunal held the premises were out of repair but assumed in reasonable repair pursuant to the Rating (Valuation) Act, 1999.  The Upper Tribunal did not agree - the works went beyond those for disrepair and reduced the rateable value to £1.  The Court of Appeal overturned the decision and the case came before the Supreme Court.

Their Lordships concluded the premises were undergoing reconstruction on the material day and that the Upper Tribunal was entitled to alter the rating list as it did (i.e. giving a rateable value of £1) to reflect the reality of the stripped out premises.

Whilst welcomed by all business rate payers, the decision is based on the very particular facts of the case and the works being conducted.  Care should be taken in applying the decision to other facts and circumstances.