Rating Manual section 6 part 3: valuation of all property classes

Section 40: agricultural showgrounds

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

This Instruction applies to all showgrounds nationally.

Historically Agricultural Showgrounds developed from the late 19th and early 20th Centuries in counties which had substantial agricultural economies. Their main objective was to provide education and a focus for the agricultural community. The sites were run by Societies, predominantly now being charities. The major shows operate from permanent sites, often owned freehold by the Society; smaller shows, predominately of one day duration, operate from temporary sites, held on a variety of tenures, mostly tenancies and contractual licences.

Whilst historically the main event at the site was the annual show of the society, more recently economic pressures have encouraged exploration of additional funding opportunities. Thus the permanent sites have become more intensively used with activity all year round. In addition the emphasis of the annual show has developed from being solely agricultural to encompass wider commercial interests.

With the increasing emphasis on a more commercial approach, many sites have been developed with permanent buildings and laid out with permanent facilities. This has led to increased use of the sites at non show times as operators seek to maximise the return on their investment.

Typically good showgrounds will be well located with good access by public transport as well as good road access and car parking available. The on-site infrastructure needs to be adequate to provide all weather access around the site, toilet, catering facilities as well as police, first aid and information facilities sufficient to cater for the maximum numbers of visitors on show days. All facilities need to at minimum meet the health and safety requirements.

2. List description and special category code

Non-Bulk Class Primary Description - MX List Description - Agricultural Showground and Premises SCAT code: 004 Suffix N for major showgrounds (NSU) Suffix S for remainder (Unit Specialist)

3. Responsible teams

The major showgrounds are dealt with by the National Specialists Unit whilst the remainder are the responsibility of Unit Specialist Teams.

4. Co-ordination

The Agricultural Showground class co-ordination team has overall responsibility for the co-ordination of this class. The team are responsible for the approach to, accuracy and consistency of valuations. The team will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. Caseworkers and referencers have a responsibility to:

  • follow the advice given at all times – Practice Notes are mandatory
  • not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team
  • seek advice from the co-ordination team before starting on any new work

5.1 Planning

Show grounds can be split into three distinct types:

Prestige Agricultural shows on purpose built sites generally with the shows held over 2 - 4 days. There will be permanent buildings on the site and for which full planning permission will exist. e.g. sites such as Royal Welsh and Royal Bath and West.

The one or two day shows with more basic facilities such as Anglesey and Pembrokeshire which may also have full planning consent.

Green field sites holding one day local shows with little or no adaptation and where the land reverts to agricultural use between shows. The only buildings on the site may be a store in which equipment is kept between events. The Town and Country Planning (General Permitted Development) (England) Order 2015 Schedule 2, Part 4, Class A) permits (subject to the reinstatement of the land) the provision of buildings etc, required temporarily for an agricultural show, and (Class B) the use of land for such a purpose, for not more than 28 days in any year. (The same provisions apply to Wales under the 1995 Order).

5.2 Rateability

Permanent agricultural showgrounds are rateable. Where sites are used as a showground for only a few days a year the picture may be less clear especially when the land is occupied as agricultural, and therefore exempt, in the interim, within the definition of ‘agricultural land’ contained in para 2 of Schedule 5 of the LGFA 1988.

In many cases small local shows of short duration may not be rateable particularly where there are no buildings on the site and when next in use, the land is used for agricultural purposes such as the grazing of livestock. Reference should be made to NSU for advice if contemplating a decision of not rateable.

In some cases there will be a building on the land used for the storage of showground equipment, such as temporary fencing, hurdles or grass cutting machinery. This is rateable in its own right. Some shows are held in public parks and therefore may not be rateable (para 11 of Schedule 5 LGFA 1988).

Although a showground is permanent there may be areas of land that are only brought out of agricultural use at the time when the annual show is held, such as a field for overflow car parking. Depending on the length of time the land is used for this purpose it may be rateable - see United Counties Agricultural Society v Knight (VO) LT (1973) RA 13.

Reference should also be made to Rating Manual: section 6 part 6 - part D : Appendix 1. Any difficulties with claims for exemption should be referred to the Technical Adviser.

6. Survey requirements

A measurement of the overall site covered by the operation is required together with comments on different uses as appropriate.

A full note of location within and referencing of all buildings on the site.

When carrying out an inspection, note should be made of the following:

  • Location The type of location should be noted. Whether it has good main road access or is close to larger centres of urban population. This is important since a large number of visitors to shows are no longer from the local agricultural community. Excessive proximity to a Motorway or A road is not necessarily an advantage as abnormal and excessive traffic management costs may be incurred e.g. at Devon County Show.
  • Site The extent of the site should be noted; in particularly whether there is any circulation space within the site. Other factors such as access, visibility, and whether the site is flat or sloping and importantly the presence of permanent buildings together with the uses to which they are put.
  • Capacity The Society should be asked to supply details of the capacity of the showground in terms of the number of visitors visiting the site over the past 3 years and any restrictions on numbers imposed by the Local Authority as a result of Planning or Licensing conditions.
  • Additional facilities such as camping grounds, conference facilities, show jumping facilities.
  • Events Programme A list should be prepared of major events held at the showground over the past year and in particular any non-show use.

Plant and machinery

There is unlikely to be any rateable plant and machinery on the site of an agricultural showground operation, although should some form of plant be identified, a note should be taken.

7. Survey capture

Buildings should be measured to gross internal area (GIA) and a careful note made of areas of land available for various uses such as exhibition purposes, both temporary and permanent, and the infrastructure of the site.

It is essential that a plan of the full showground is made showing the layout of the roads, buildings, access points for the public and showing the position and extent of all separately assessed let-outs (with names). The plan should be dated, as should any amendments. Layout plans should be obtained for the main shows from the society and the VO survey should follow and use the plan references as used by the society for all buildings, car parks, exhibition areas etc.

Most exhibition stands and tents will be of a temporary nature, either owned by the exhibitor or rented on a short-term basis by the exhibitor or the show Society on behalf of exhibitors. It is expected that these would be removed at the end of the show. However there may be some which are left permanently erected and not used solely for the show. These need to be identified and measured. There may also be some frames left erected but without non-show use or value; these too should be identified to avoid confusion.

A careful note should be made of the nature and extent of internal access roads, facilities for use of the public such as toilet blocks and permanent facilities such as restaurants, the quality of the access; proximity to public transport, and the overall layout of the site. Notes should be made of the size and position of both permanent and temporary car parks.

Plans and surveys should be stored in the property folder of the Electronic Document Records Management (EDRM) system.

8. Valuation approach

8.1 Background

Direct rental evidence of the value of an agricultural showground is unlikely to be found but there are examples of sites where the land on which the shows are held is rented, usually for small local shows, and in such cases the hereditament should be valued by reference to the rent paid, adjusted as appropriate. Small local showgrounds with few buildings should be valued on the rental method, using such rental evidence that may be available. In the absence of direct rental evidence, a spot figure should be adopted having regard to the rents paid for land under Farm Business tenancies and the Agricultural Holdings Acts. The value should not be less than the former or 2x the latter.

For the 1990 and 1995 rating lists this class was valued using the “Contractor’s basis” in the absence of rental evidence and having regard to charitable status of the occupier (not established or run to make a profit).

However, over recent years many Societies have grown considerably in size, and the showgrounds are used for shows and exhibitions all the year round. “Commercial activities” which were not possible within the charitable objectives of the Society have been made possible by the creation of a trading company, which is wholly owned by the Society and covenants its trading surplus or a fixed sum back to the Society, in order to minimise the payment of corporation tax.

Many Societies are now enjoying a surplus of income over expenditure that is sufficient to enable the payment of a “market” rent to the hypothetical landlord. Valuation by the contractor’s method can result in disproportionate weight being placed on the value of showgrounds with a large number of modern buildings compared to the assessment of showgrounds which have fewer buildings, but which are more intensively used over the year and generate much greater levels of income.

For the 2000 and subsequent rating lists, it is considered more appropriate to value most hereditaments within this class, excluding small local show grounds referred to in para 8.2 below, by reference to a percentage of receipts, derived from the analysis of accounts of a number of Societies across England and Wales. Rating Manual - Section 4 - Part 2 : The Receipts and Expenditure Method.

8.2 Main sources of income

The principal source of revenue for many shows remains admission income to the Annual Show held at the permanent showground. For the 10 largest societies, this will form between 25% and 40% of annual income to the Society although not all annual accounts specify gate receipts separately. For smaller local shows, this source of income may be in the order of 75% - 90% of gross receipts.

Admission charges will vary considerably depending on the size and value of the show, but can be substantial.

There will often be separate admission charges for grandstand and car parks.

Annual subscriptions from members will vary greatly from Society to Society.

Trade stands, retail exhibitions excluding rent from permanent “let-outs” which should be assessed separately, subject to the usual tests. Typically this will range between 20% and 25% of the total receipts of the Society.

Entry fees for livestock and horses in various competitive classes.

Sponsorship will vary, both in number and amounts, but generally reflects the retail economy. This income stream is highly dependent on the local economy and the approach of the Society. National sponsors, such as Jaguar Land Rover, are particularly dependent on their prosperity and world trade.

Donations

Sales of catalogues, programmes, income from advertising etc

Income from direct sales in restaurants, bars etc. Most catering is run on concessions, based on 10-15% of turnover or a lump sum having regard to previous years’ trading. The percentage will be higher where the showground provides its own fixed equipment such as refrigerators and ovens.

Investment income. Some Societies have very low cash reserves, sufficient only to cover expenditure during a year, but sale of land for development has made some Societies “cash rich” and in receipt of large sums of investment income from interest and dividends.

Income from let-outs of buildings, or parts of buildings, at many of the larger showgrounds. Such leases, longer-term licenses etc. are often on terms that support a separate assessment for rating purposes and where this exists – or will come into force with the new Rating List - this income should be excluded to avoid double assessment.

Often sources of income will not be broken down into separate headings in the annual accounts, so that further investigation is necessary. Income from trading companies will be shown separately.

8.3 Main items of expenditure

Expenses of running an Annual Show will include cost of car park attendants, security, police, cleaning and refuse disposal, hire of mobile toilets, marquees etc., prize money, expenses of officials and judges, and publicity.

Administration expenses including the costs of office staff, employment of a Secretary and other officers, printing and insurance.

Hire of land for temporary car parking (if not owned by the Society).

Ground maintenance - grass cutting, repair of buildings etc.

Cost of exhibition events other than the annual show.

Grants and education awards.

Often expenses will not be broken down into separate headings in the annual accounts, so that further investigation is necessary. Expenses of trading companies will be shown separately.

8.4 Let outs

A major exhibitor at an agricultural show may sometimes take a tenancy or lease of a specific plot within the showground and erect permanent or semi-permanent buildings such as display stands, offices etc. Provided the normal rules of unit of occupation are met, then, on the facts a separate hereditament may be created. Also, individual buildings may be separately let.

In some cases a sponsor will fund the construction of a permanent exhibition building, which is often named after the sponsor, but if the building is in the paramount occupation of the Society, a separate assessment will not be appropriate.

It is therefore important to obtain full details of any leases or licences in respect of any part of the site in order to decide whether any part shall be separately assessed.

Where the trading company meets the normal rules of rateable occupation for any building, group of buildings or specific plot within the showground then a separate hereditament may be created.

8.5 Information required

Before valuation on a shortened receipts method is attempted it is necessary to obtain the Annual Report and Accounts of the Society for a period of 2 or 3 years close to the valuation date. Normally there should be no problem in obtaining such copies since they are not confidential and are available to the public. It should be ensured that fair maintainable trade adopted includes the full trading receipts of any trading company, not just the trading surplus or fixed sum covenanted to the Society. (This will need adjustment where part of the showground is in the rateable occupation of the trading company).

8.6 Sources of information

The full receipts and expenditure Form of Return (FOR) (VO 6036) should be used for the major sites, but preferably, each Society should be asked for copies of its Annual Report and Accounts for the three years preceding the AVD, together with the accounts for any separate trading company it has established.

Clarification should be sought where any questions arise from these accounts.

The shortened receipts FOR (VO 6030) should be used for the smaller sites.

In addition to receipts information, it will be helpful to know the number of visitors to the showground for each year, and the number of Members of the Society.

Details of let outs should be obtained from the tenants by serving VO 6003 FORs as necessary.

9. Valuation support

The Non Bulk Server (NBS) should enable input of factual data to achieve valuations that follow the recommended approach for agricultural showgrounds. All valuations should be entered onto the NBS under the relevant Scat Code.

Practice note: 2017 - agricultural showgrounds

1. Market appraisal

Factors affecting showground operators.

1.1 Attendance

Showground attendances since 2012 have been influenced by a number of external factors, for example the London Olympics and Queens Jubilee. As a consequence visitor numbers were down on previous years though this may still in part be down to the impact of the post 2008 recession.

The weather is an obvious influence which cannot be anticipated and in 2013 a mixed Spring/Summer had a negative influence on attendances, leading to cancellations, postponements and abandonment of events which had started.

In 2014 numbers seemed to hold up generally.

As an example of the trend between 2008 to 2014 figures provided for the Royal Bath & West show the following -

  • 2008 - 151,000
  • 2014 - 141,000

It is felt that in general terms the above trend is likely to be replicated at the other main showgrounds.

1.2 Economic and technical factors

The 2009 economic downturn has resulted in less disposable income being available amongst site visitors and operators have seen reduced discretionary spending after entry ticket purchase.

In terms of food and drink, visitors tend to bring their own for the day rather than purchase from on-site catering operators.

Attracting retailers to take up space on sites has also proved challenging. Outside of the pressures from the economic situation it has proved difficult to get sufficient internet coverage on showground sites to enable retailers to offer credit and debit card sales. There have also been difficulties for retailers arising from the withdrawal of the mobile phone networks from temporary upgrades of coverage to enable the on-site operation of credit card machines to generate high value sales. To mitigate this, showground operators are making arrangements for the provision of cash machines on site but such facilities are costly and limited in number.

In general there has also been a loss of sponsorship from the bigger companies.

Agricultural shows are not always profitable; for example the Royal Society of England has ceased to hold its flagship event, The Royal Show, and several smaller events have ceased operations in recent years.

1.3 Risks – disease outbreaks amongst livestock

There is the ever present risk of disease outbreaks across the whole range of animal classes that feature in the shows. In most recent years blue tongue and TB have created problems amongst livestock but there is also avian flu and several ever present threats to the equine classes. The strict rules and regulations in place regarding the movement of animals to prevent disease outbreaks are onerous. If there is an outbreak depending on the nature of the disease this can have devastating implications for a show.

2. Changes from the last practice note

For the 2010 rating lists, the valuation approach for all but the smaller local sites, was to adopt a receipts based method, using the Annual Report and Accounts of each Society, suitably adjusted as appropriate. The same approach should be adopted for 2017.

Valuations for this class of property should be prepared using the Non-Bulk Server (NBS).

3. Ratepayer discussions

Discussions have been held with The Association of Show and Agricultural Organisations (ASAO) and its views considered prior to the preparation of this Practice Note.

ASAO set out to:

  1. Promote agriculture, horticulture and the countryside through shows and other events
  2. Encourage and share best practice between agricultural societies and related organisations
  3. Encourage and support education across the full spectrum of agriculture, horticulture and the countryside through shows, conferences, projects and initiatives

4. Valuation scheme

4.1 Range of values

For the 2017 rating lists, small local showgrounds comprising mostly unimproved land with only a few buildings, will generally be valued on a rentals method. Where available any current rental evidence, considered to be at arm’s length, should be adopted as the starting point.

In the absence of direct rental evidence, a spot figure should be adopted having regard to the rents paid for land under Farm Business tenancies and the Agricultural Holdings Acts. The value adopted for the land should not be less than either the former or 2 x the latter. Additions are to be made for any buildings not included in any rent passing, and dependent upon local evidence, these should be valued on a rentals or contractor’s basis. This is the minimum rental value reflecting the likelihood that if not used as an agricultural showground the land would only attract agricultural use and where, without any infrastructure works or improvements, the site will not have any additional value as a showground to a potential tenant. Regard should however also be paid to the level of receipts that are likely to be maintainable from year to year where these will influence the parties in a rental negotiation. Where a valuation based upon receipts gives rise to an assessment greater than the agricultural land rental value plus buildings, the higher figure should be adopted.

Showgrounds where the site incorporates more permanent infrastructure and facilities, such as roadways, hard tracks, gates, fencing etc. usually with a number of buildings, will be valued on the basis of a percentage of gross receipts, generally in the range of 7% to 10% of gross income net of VAT, having regard to the nature and amenities of the site, age and condition of buildings etc.

Accounts over a 3-year period, for both the Society and its trading arm (where applicable) should be examined when attempting to determine the level of “fair maintainable trade” as at the AVD. If there is a discernible trend of rising receipts then the last year figures for 2014/15 may be projected forward, similarly a trend of falling receipts should be treated in the same way. Appropriate regard should be had to the factors detailed in paragraph 1. All sources of income set out in the main Rating Manual Section relating to, or generated by, the hereditament should be included in determining the fair maintainable trade, but investment income must be excluded. Investment income and cash reserves will however be relevant to “ability to pay” arguments in those cases where a Society maintains income and expenditure broadly in balance.

Income from trading companies should be included in the gross receipts figure but if this appears in the accounts of the Society as a contribution net of expenses, it must be grossed up.

In considering the percentage bid, it should be borne in mind that costs of staging major shows has risen above an inflationary cost between AVD 2008 and 2015. In particular health & safety, insurance and policing costs have risen dramatically. Sites, which have managed to diversify, or attract a wide range of secondary shows/lettings, are likely to show the largest increases in turnover.

Further advice on the valuation for R2017 may be found in RM Section 1085 Leisure Attractions: Practice note 1: 2017.