Part 2: Grounds of Proposals
The Valuation Office Agency's (VOA) technical manual for the rating of business (non-domestic) property.
Proposals Part 2 covers the grounds for making a proposal under Reg 4(1) SI 2000/2268 and their interpretation, which includes those against inaccurate VO list alterations, MCCs, Tribunal decisions, exemptions, mergers and deletions etc.
PART 2
LEGISLATION
ENGLAND
(a) The Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009’ (SI 2009/ 2268) ‘ Appeal Regulations’
(b) 2017 List - (‘Appeal’ Regulations) as amended by The Non-Domestic Rating (Material Day for List Alterations) 1992 (SI 1992/556) (as amended by SI 2017/155)
(PICO regs affecting the 2010 Rating List for England only)
WALES The Non-domestic (Alteration of Lists and Appeals)(Wales) Regulations 2005 [WSI 2005 No.758 (W.63)]
1.1 The Grounds of Proposal are set out in the above regulations, Reg 4, and are identical for the English and Welsh regulations so the same interpretations below will apply. The grounds of proposal have remained unaltered between lists.
For 2017 the Proposer however has to provide more reasoned explanations for the application of the grounds (Further information - Chapter 6 Proposals Part 8 re CCA and the 2017 Rating List England)
An interested person may make a proposal to alter the rating list in respect of a hereditament, subject to prescribed time limits on the following grounds:
Reg 4(1)
(a) Compiled list
The rateable value shown in the list for a hereditament was inaccurate on the day the list was compiled.
(b) Material change of circumstances 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 the list was compiled.
(c) Plant and Machinery
The rateable value shown in the list for a hereditament is inaccurate by reason of an amendment to the classes of plant and machinery set out in the Schedule to the Valuation for Rating (Plant and Machinery) (Wales) Regulations 2000(1) which comes into force on or after the day on which the list was compiled
(d) Inaccurate VO alteration
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.
(e) Tribunal decision
The rateable value or any other information shown in the list for a hereditament is shown, by reason of a decision in relation to another hereditament of a valuation tribunal, the VTE, the Lands Tribunal, the Upper Tribunal or a court determining an appeal or application for review from either such tribunal, to be or to have been inaccurate.
(f) Inaccurate effective day in VO alteration
The day from which an alteration is shown in the list as having effect is wrong.
(g) Insertion of entry into list
A hereditament not shown in the list ought to be shown in that list.
(h) Deletion of entry from list
A hereditament shown in the list ought not to be shown in that list.
(i) Partially domestic or exempt
The list should show that some part of a hereditament which is shown in the list is domestic property or is exempt but does not do so.
(j) Not partially domestic or exempt
The list should not show that some part of a hereditament which is shown in the list is domestic property or is exempt but does so.
(k) Merger or reconstitution of hereditaments
Property which is shown in the list as more than one hereditament ought to be shown as one or more different hereditaments.
(l) Division of assessment
Property which is shown in the list as one hereditament ought to be shown as more than one hereditament.
(m) Inaccurate address
The address shown in the list for a hereditament is wrong.
(n) Inaccurate description
The description shown in the list for a hereditament is wrong; and
(o) Omission of requirements of s42 (contents of local lists)
Any statement required to be made about the hereditament under section 42 of the Local Government Finance Act 1988 has been omitted from the list.
1.2 Requesting other changes to the Rating list
Reg 6(5)
Provides that where a proposal is made contending that either the RV or the effective date is incorrect by reason of an alteration made by the valuation officer, the proposer may request either or both of the following -
a) the restoration of the list to its state before the alteration was made; and
b) a further alteration of the list in respect of that hereditament.
This is particularly useful where it is contended that the effective date should be later than that adopted by the VO.
If this is the agreed outcome of the proposal then in order to give effect to the agreement the VO will not only have to bring the effective date forward to a later date on the appeal, but will also as a separate step have to restore the entry in the list to what it was at the earlier (but incorrect) effective date. Otherwise, the list entry will remain from that date as a live entry up until the agreed later effective date.
1.3 Restrictions on making proposals
The “one bite at the cherry” rule: reg 4(3)(b)(i)
The regulations only permit an interested person to make a single proposal in respect of each event, defined as the compilation of the list, a material change of circumstances or an alteration of the list by the valuation officer [regulation 4(3)(b)(i)].
This is what is commonly referred to as the “one bite at the cherry” rule and for example prevents an interested person from making repeated proposals to alter the compiled list by instructing new agents even though a previous proposal has been agreed or withdrawn. A second proposal on the same grounds made by or on behalf of the same interested person is unlawful (or treated as invalid in Wales).
The restriction only relates to a given interested person, so that where the occupier has changed the new occupier is able to make a fresh proposal. Similarly, both the owner and occupier of a property may each make proposals. NB for CCA, the legislation has been amended restricting such proposals. (see Reg 4(3), SI 2009/2268) see also RM section 6, part 8, part C 4.17)
A further proposal may not be made for the same hereditament arising from the same facts where the original proposal has been considered and determined by the Valuation Tribunal or the Upper Tribunal.
1.4 Grounds on which Billing Authorities (BAs) may make proposals
For the 2010 Rating List England and 2017 Rating List Wales the BA had limited grounds on which they could make proposals
See Chapter 6, Part 5: 2010 Rating List England & 2017 Wales for details
For 2017, in England the rights of the Billing Authority to make proposals no longer apply except in their own right where they are an actual Interested Person of a hereditament i.e. actual owners or occupiers See Chapter 6, Part 8, Part C, 8.10 2017 Rating List England (CCA) for further details
1.5 Grounds on which a former interested person may make a proposal
Reg 4(2)provides a limited number of circumstances in which a person who is not currently an interested person may make a proposal. Where he has reason to believe that-
(c) the RV shown in a list is inaccurate by reason of an amendment to the classes of P&M set out in the Schedule to the Valuation for Rating (Plant and Machinery)(England) Regulations 2000 (b) which comes into force on or after the day on which the list was compiled (the combined heat and power exception provisions), but see paragraph 3.3.1 c. above; or
(d) the RV shown in a list by reason of an alteration made by a VO is or has been inaccurate; or
(f) the day from which an alteration is shown in the list as having effect is wrong
he may make a proposal if he was an interested person at any time during which the alteration in question had effect.
There is however no right to make proposals under:-
to make a proposal challenging the RV shown in a VO list alteration under 4(1)(d where the alteration in question gives effect to a decision of a valuation tribunal, the Lands Tribunal or a court determining an appeal or application for a review from either such tribunal in relation to the hereditament concerned [Reg 4(3)(c)];
or
(apart from 4(1)(e)) where a proposal to alter the same list in relation to the same hereditament and arising from the same facts has already been considered and determined by a valuation tribunal [other than where the valuation tribunal dismissed the appeal because every party other than the VO failed to appear under Reg 30(4)] or by the Lands Tribunal [Reg 4(3)(b)(ii)]. Reg 4(1)(e) requires that the list entry be shown to be inaccurate by reason of a decision in relation to another hereditament
For the 2017 Rating List England - regulations have amended these rights for former IPs
See Chapter 6, Part 8, Part C, 8.12 on for further details.
2.1 Reg 4(1) (a) Compiled List Proposals
‘The rateable value shown in the list for a hereditament was inaccurate on the day the list was compiled’
A “compiled list proposal” [RSA code of grounds “01”] is one made on ground 4(1)(a):”the rateable value shown in the list for a hereditament was inaccurate on the day the list was compiled;”
The important thing to note from this is that the Rateable Value being appealed is that which appeared in the list ON 1 April 2017 (or 1 April 2010 for the previous list). It does NOT refer to any rateable value subsequently entered into the list, regardless of the effective date appearing in the list.
For example: an assessment which was created by a VON on 1 June 2010 but with an effective date of 1 April 2010 is not the compiled list entry and must not be linked to an “01” compiled list proposal.
The Non-Domestic Rating (Material Day for List Alterations) 1992 (SI 1992/556) (as amended by SI 2017/155 for England 2017)
prescribe that:
Reg 3(2) Where the determination is with a view to making an alteration to correct an inaccuracy in the list on the day on which it was compiled, the material day is the day on which the list was compiled.
Reg 3(7) In any other case,
(a) where the determination is with a view to making an alteration to a list compiled before 1st April 2005, the material day is the day on which the proposal for the alteration in respect of which a determination falls to be made is served on the valuation officer or, where there is no such proposal, the day on which the valuation officer alters the list; and
(b) where the determination is with a view to making an alteration to a list compiled on or after 1st April 2005, the material day is—
(i) where the alteration is made in pursuance of a proposal, the day on which the proposal was served on the valuation officer;
(ii) where the alteration is not made in pursuance of a proposal—
(aa) if the day on which the circumstances giving rise to the alteration is reasonably ascertainable, the day on which the circumstances giving rise to the alteration occurred.;
(bb) if that day is not reasonably ascertainable, the day on which the valuation officer alters the list.
If a proposal has been made challenging a rateable Value as at 1 April 2017 as a complied list error (01) when in fact the RV appears in the list at that date by virtue of a VO alteration, in this situation, the proposal has been completed on incorrect grounds and should be rejected.
-for 2017 Rating List England - it should be made incomplete and the Reg 8 procedures followed
-For 2010 Rating List England and 2017 Wales (and all earlier lists) - the appeal should be made be invalid and the appropriate Reg 8 procedures followed
2.2 Reg 4(1)(b) Proposals for a “Material Change of Circumstances”. (MCC)
‘The rateable shown in the list for a hereditament is inaccurate by reason of a material change of circumstances which occurred on or after the day the list was compiled.’
Also see
Upper Tribunal decision in RA/24/2018 UT Merlin v Cox
Rating Manual: Section 3: Material change of circumstances including mode or category
(for further details on MCCs)
There is a clear distinction between the material day for a proposal made against the compiled list, (Reg 3(2) ), and one made on the grounds of a post-compilation MCC, (Reg 3(7)).
By definition a post-compilation MCC has not occurred when the list is compiled and cannot be reflected in the rateable value to be determined.
There have been a number of instances where cases have been incorrectly linked at first registration or where caseworkers have re-linked compiled list proposals to post-compilation altered assessments in order to achieve an agreement in respect of the current list entry. Whilst this practice may be convenient for the purposes of settling appeals, it is incorrect and must cease immediately.
The distinction between Reg 4(1(b)(MCC) and the grounds under Reg 4(1)(a) (compiled list appeal) is that this refers only to “the rateable value shown in the list for…” and makes no limitation as to when the value became shown in the list. Therefore, it is possible to re-link such a proposal to the assessment applying at the pertinent date.
For lists Prior to 2017 England, and for 2017 and earlier Wales
The time limits were extended now by reg 5 (2) (a) which allow a proposal on the ground set out in regulation 4(1)(d) or (f) to be made before the day on which the next list is compiled or within six months of the date of the alteration, whichever is the later.
Caseworkers must decline any request to re-link compiled list proposals under these circumstances or for MCC proposals where the material day is earlier than the effective date of the altered assessment.
For 2017 England- Reg 5 has been revoked and new provisions introduced for MCC proposals (See Reg 6A)
Interpreting - Reg 4(1)(b) Material Change of Circumstances
allows a proposal to be made to reflect a material change of circumstance -
The term is defined in Regulation 3 as follows:-
“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 Act”. (Local Government Finance Act 1988).
The matters referred to above are defined in the 1988 Act as follows:-
(a) matters affecting the physical state or physical enjoyment of the hereditament;
(b) the mode or category of occupation of the hereditament;
(c) the quantity of minerals or other substances in or extracted from the hereditament;
(cc) the quantity of refuse or waste material which is brought onto and
(d) matters affecting the physical state of the locality in which the hereditament is situated or which, though not affecting the physical state of the locality, are none the less physically manifest there; and
(e) the use or occupation of other premises situated in the locality of the hereditament.
Tests to apply for MCCs
This recent case fully examines the concept and wording of MCCs and the meaning of hereditament and locality. It provides useful guidance on the application of the legislation in relation to the scope of proposal on grounds of an MCC and what it may relate to and identifies some useful guidelines when considering MCC proposals
Lord Justice Holgate, para 193
‘(i) Does the mater concern and intrinsic characteristic of the hereditament or of the locality. or is it an extraneous matter, for example, something to do with the personal attributes of the actual occupier or the way in which a party conducts its business? If the latter, then generally it will not fall within para 2(7)
(ii) Does the matter concern a characteristic of the hereditament? If so the issues is whether it falls within para 2(7)(a) or (b) (or either (c) or (cc) in the case of minerals or waste deposit hereditaments):
(iii) If the matter does not concern a characteristic of the hereditament, does it concern a characteristic of the locality in which the hereditament is situated? If so , does it fall within para 2(7)(d) or (e)?
(iv) If the matter concerns a characteristic of the locality, but does not affect the physical state of the locality or concern the use or occupation of other premises there, does it nonetheless fall within the second limb of para 2(7)(d)? Under that limb the question is whether the matter is itself physically manifest in the locality. ‘
Hereditament and locality are mutually exclusive
Merlin - para 87
‘There is nothing in LGFA 1988 to suggest that when Parliament enacted the current rating regime it intended ‘locality’ to include the hereditament being valued’
Interpretation of para 2(7)d
’ matters .. which , though not affecting the physical state of the locality , ar e nonetheless physically manifest there’
‘Merlin - para 107 -161
‘we reject the appellant’s broad submission that any economic or intangible matter falls within para 2(7)(d) merely if it results in some effect which is physically manifest in the locality of the hereditament. Instead, the matter relied upon must in itself be something which is physically manifest in that area. If that test is satisfied, there is no legal requirement to identify a cause to which that matter can be attributed in order to satisfy 2(7)(d)’
.
MCC proposal - missing information required under the regulations
Any proposal made on the grounds of an MCC has to be considered carefully in relation to the information that needs to be specified in accordance with the regulations applying to that specific Rating List (and country).
If any information is not provided that is required by the regulations then that proposal will be:-
2017 Rating List - England - incomplete and Reg 8 Should be followed
2017 Rating List - Wales (and earlier lists) - invalid and Reg 8 should be followed
2010 Rating List - England (and earlier lists) invalid and Reg 8 should be followed
MCC proposal - complete proposal but where there is no effect on value
Where all the regulatory requirements have been met and there is an MCC but the change has no effect on the value of the property, the proposal should be treated as
2017 List England - complete (see Ch 6, part 8 (CCA) Part C 4.2
ls on application for 2017
2017 List - Wales - valid
2010 List and earlier - valid
but remains to be substantiated in terms of valuation.
MCC and scope of proposal
If a proposal is made on the grounds of an MCC and it is agreed not to be value significant, then the proposer cannot seek a reduction on other grounds eg Reg 4(1) a or (c) ie the proposal cannot be widened to review the whole assessment
If an MCC proposal is of value significance, then the whole assessment should be considered before any reduction is given by way of allowance
eg if a MCC proposal has been made for a temporary disability and an allowance is warranted, then any reduction must be given off the correct valuation as at the material day and not the figure appearing in the list if this is incorrect.
2.3 Reg 4 (1) (d) Inaccurate VO alteration
‘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.’
2017 England List only
No proposal under this provision may be made on this this ground if
-
it is against a previous list alteration made as a result of a previous proposal relating to the hereditament or
-
to the decision by the Valuation Tribunal, the Lands Tribunal or a court determining an appeal or application for a review from either tribunal (Reg 4(3)(c) refers)
2017 Wales and 2010 England and all earlier lists.
No proposal under this provision may be made where the list alteration is giving effect to the decision of a valuation tribunal, the Lands Tribunal or a court determining an appeal or application for a review from either tribunal (Reg 4(3)(b)(ii) refers)
ie there is no restriction on submitting a proposal against a list alteration following a previous proposal but it may be difficult for the Appellant to prove that the alteration was incorrect
Thorntons plc v Clarion Solicitors Ltd RA 80 2017 2018 UKUT 0109 LC
Which considered the issue of validity of a proposal against a VO alteration against an agreed assessment
If the compiled list entry has been altered by the VO, then any proposal against a valuation as at 1/4/10 (2010 lists) or 1/4/17 (2017 lists) which was not the original entry should be treated as unlawful and rejected (England 2017) or invalid (Wales 2017 and England 2010 and all earlier lists).
Such an appeal most likely should be against the VO notice of alteration (Reg 4(1)(d) unless other grounds apply. It cannot be a Reg 4(1)(a) compiled list proposal
2.4 Reg 4 (1)(e) Proposals against Tribunal decisions
‘The rateable value or any other information shown in the list for a hereditament is shown, by reason of a decision in relation to another hereditament of a valuation tribunal, the VTE, the Lands Tribunal, the Upper Tribunal or a court determining an appeal or application for review from either such tribunal, to be or to have been inaccurate.’
Lands Tribunal decision must be final before a proposal can be served
It should be noted that a Lands Tribunal decision is incomplete until all issues including costs have been determined. Sometimes an interim decision is given which deals with the substantive issues of an appeal but the decision on costs is reserved. Such a tribunal decision is not one that can be used as grounds for serving a proposal under regulation 4(1)(e).
Proposals may only be made citing a tribunal decision once the decision becomes final.
Where a proposal is made prior to the Lands Tribunal’s final decision, the VO should treat the proposal as invalid and issue a VO 7048 stating the following reason for invalidity:
The proposal is not valid because “the Lands Tribunal has not issued its final decision, this proposal should be re-served once the decision becomes final.”
See below regarding validity/ incomplete proposals.
A Regulation 4(1)(e) proposal is the only kind of proposal which can be made where there has been a previous tribunal decision in relation to another hereditament and arising from the same facts (unless the valuation tribunal dismissed the appeal because every party other than the VO failed to appear).
Proposals citing tribunal decisions - causal link
Regulation 4(1)(e) provides a proposal may be made to alter a list on grounds citing a tribunal decision in respect of a different hereditament. The wording of Regulation 4(1)(e) includes the phrase “…. by reason of a decision ….”. This implies that the decision of the tribunal has led to the opinion being formed that the list entry in respect of the hereditament on which the proposal is submitted is inaccurate. In other words, there should be a causal link between the decision and forming the opinion that the list entry on another hereditament is wrong.
This interpretation was upheld in the Lands Tribunal decision in
Downing (VO) v Corby Power Ltd [1997] RA 60
Note that the RA report erroneously names the VO as “Canning”.
The case involved a proposal made under Reg 4 (4)(b) of SI 1993 No. 291 which has been superseded by Reg 4A (1)(d) but the then requirements for a valid proposal are still relevant in connection with there needing to be a causal link between the VT decision cited and the opinion that the assessment on the appeal hereditament is incorrect.
Reg 4(4)(b) provided for a proposal to be made if a Billing Authority or interested person “is of the opinion that by reason of - …(b) a decision of a valuation tribunal …. the rateable value or other information shown in the list for any hereditament is wrong ..”
In Corby Power the appeal hereditament was a power station and was formula rated by reference to its potential output. The maker of the proposal cited a tribunal decision relating to a shop as grounds for the proposal. The proposer did not pretend that the decision in the case of the earlier proposal had any relevance to his proposal to reduce the assessment on the Corby power station, nor did he suggest that he had formed the opinion that the assessment on the power station was incorrect by reason of the decision in the earlier case.
In light of this evidence, it was clear that in making the proposal the proposer had not formed the opinion that the assessment of the power station was incorrect by reason of the earlier decision, which he had not read, and which if he had read, would not have assisted in forming the opinion that the power station was incorrectly assessed. In the Tribunal’s view no experienced valuer could have formed that opinion on the basis of the decision relating to the shop.
The President agreed with the submission for the VO, that the formation of the requisite opinion is a condition precedent to making a valid proposal, and concluded by saying that in his judgement the proposal made in this case was not validly made.
It may not always be apparent from consideration of the proposal by itself whether there is a causal link. This may only become evident once the merits of the proposal are under consideration. If the VO forms the opinion that there is no causal link then, even though all the statutory information required for a valid proposal has been included, validity can still be challenged.
It should be noted that if the cited decision is not a reasoned decision but one merely confirming what has provisionally been agreed between the valuation officer and ratepayer or agent, it is considered that the requirement to form an opinion that a list entry is incorrect “…. by reason of a decision …” is not satisfied.
Unless the cited decision explains why the particular decision was reached it is submitted that it cannot form the basis for concluding that the assessment of any other hereditament is incorrect. Consequently, there will be no causal link between the decision and the proposal served citing the decision. It can however be argued that an ‘unreasoned’ decision may support a proposal where the result of the agreement confirmed by the tribunal is sufficient to make it clear that the rateable value of the interested person’s hereditament is wrong, particularly if the two properties are very similar. The argument loses its force as the characteristics and/or localities of the two hereditaments diverge.
Tuplin (VO) v Focus (2009) RA 226
although the VO’s invalidity point was rejected the door was left open by the President to the VO arguing that the proposal was in the alternative without grounds as there was no causal link between the case cited and the opinion that the RV of the subject was inaccurate.
In cases of doubt advice should be sought from the Technical Adviser to whom a copy the proposal should be provided. Since the burden of proving invalidity falls upon the VO, invalidity notices should therefore only be reserved for the most obvious cases.
2.5 Reg 4(1)(k) Merger or reconstitution of hereditaments
‘Property which is shown in the list as more than one hereditament ought to be shown as one or more different hereditaments.’
Reg 4(1)(k) is also used for proposals made under the regulations relating to Properties in Common Occupation Act
see also
RM Chapter 6, Part 1 and part 5 Appendix 3: Limited circumstances for serving a 2010 Proposal
RM Chapter 6 Proposals part 8 CCA Part C 4.18:
for application and rights to make re 2017 lists