Business Rates and Common Sense

The issue that arose in the case of Newbigin (Valuation Officer) v S J & J Monk was whether a property can be deleted from a rating list whilst significant building works are being carried out.  

In this case, an office building in Sunderland was undergoing works that involved stripping the units back to a shell prior to creating three new office suites.  The rate payer argued that the property should be deleted from the rating list whilst these works were ongoing.  The rate payer’s argument was, in summary, that the property was incapable of occupation and should not therefore be subject to any rates liability.  The Valuation Officer disagreed and contended that the works that were being carried out to the property were “economic works”, that is to say that the Valuation Officer was entitled to value the property based on an assumption that the property was in a reasonable state of repair and notwithstanding the ongoing development works. 

Initially, the Valuation Tribunal found in favour of the Valuation Officer.  The rate payer appealed the decision to the Upper Tribunal and the Upper Tribunal agreed with the rate payer.  This decision was subsequently overturned by the Court of Appeal.  The rate payer persisted and appealed to the Supreme Court and the Supreme Court unanimously allowed the rate payer’s appeal.  

The consequence of this important decision and the refreshingly pragmatic clarification of the law is that buildings that are undergoing significant refurbishment or development will now not be liable for rates liability whilst these works are continuing.  The test in any given case is whether the property is capable of material occupation or not.  

Newbigin is a welcome decision which accords with commercial common sense. Developers will be relieved that their rates liability will be reduced whilst their premises are being developed.

This article features in the Hughes Paddison Property Disputes Update. View the newsletter here.