Rating Manual section 8: litigation

Part 4: Upper Tribunal procedure

The Valuation Office Agency's (VOA) technical manual for the rating of business (non-domestic) property.

1. Upper Tribunal (Lands Chamber)

This is a rewritten section within the Rating Manual dealing with appeals at the Upper Tribunal (Lands Chamber). This follows changes in 2010 to its name, structure and the regulations governing its operation. It should be read by any staff involved with appeals or potential appeals before the Upper Tribunal.

1.1 Introduction

The Upper Tribunal (Lands Chamber) (UTLC) is the successor to the Lands Tribunal. It is an independent and specialist judicial body dealing with, among other things, rating appeals from cases heard in the Valuation Tribunal (VT). The UTLC is now part of the Courts and Tribunal Service and the UTLC rules have been reissued (The Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010). There are some significant procedural changes in these new rules.

There are strict time limits and UTLC cases must be actively managed. Cases will require a high standard of professional input.

It is imperative that adverse VT decisions are identified quickly. There is a 28 day time limit for an appeal to the UTLC; this starts from the date the VT decision was issued. Equally paperwork from the UTLC must be actioned quickly or the opportunity to respond may be lost. If there is an adverse VT decision or an appeal is received from the UTLC, a Technical Adviser (TA) must be notified as soon as possible.

1.2 Appeals following Valuation Tribunal decisions

Complex or potentially contentious rating cases should be identified early and, ideally, prior to the hearing before the VT. This allows for technical and legal issues to be considered before any litigation starts.

As soon as any VT decision is received, it should be considered by the caseworker and the team leader. If it seems to be a questionable decision, a TA should be contacted urgently. It may be appropriate to consider asking the VTE to review its decision. (Different considerations apply in Wales.)

When an appeal is being considered, firstly the VT decision should be dispassionately reviewed to identify the issues which appear questionable. Following on from this an initial decision can be taken on the appropriate classification for the case and the appointment of the case manager.

From this point on, the case manager will advise on the procedure and the crucial documents that must be produced.

1.3 Time limits

Regulation 42 of the VT Procedures Regulations allow a 4 week window to appeal VT decisions to the UTLC. (See The Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009 SI 2009/2269. Also regulation 37 in The Non-Domestic Rating (Alteration of Lists and Appeals) (Wales) Regulations 2005 SI 2005/758). Appeals outside this period may be accepted, but this cannot be taken for granted. Any VO appeal should be made within the 4 week period.

Any response must be made within 1 month of the appeal being sent by the UTLC. In practice, the covering letter from the UTLC with the appeal will contain the dead line for the respondent’s Notice of Intention to Respond [NOITR].

2. VOA process

2.1 Initial case conference

As soon as possible after identifying a questionable VT decision or after receipt of a Upper Lands Tribunal Lands Chamber (UTLC) appeal, a case conference should be arranged to discuss the case. The aims are:

  • To consider the VT decision and the issues it raises. This should include a dispassionate review of all the issues and a SWOT analysis.
  • To decide if this is a Unit or National Specialist Unit (NSU) case.
  • To identify the VO for the case
  • To identify the VO’s expert witness[es] if the VO is not acting in a dual role
  • To ensure resourcing implications are discussed and there is an appropriate level of support available to the VO and expert witness[es].

Ideally attendance at this initial case conference would include the VT caseworker, the team leader, a TA, the probable VO for the UTLC appeal and the Unit head. Others may be necessary, depending on the issues in the case.

2.2 Classification of the case

Most appeals can be slotted into one of two types:

Unit case

An appeal with no significant valuation or legal implications and where any adverse outcome would be of limited effect. It is likely that such a case would proceed under the simplified procedure at the UTLC. This case will generally not require legal representation. It will be managed by a TA and the VO and expert witness for the case will usually be a unit caseworker or team leader.

NSU case

Appeals not dealt with as a unit case will be NSU cases. There are likely to be legal issues, high values or issues affecting a number of properties. The case will probably follow the standard procedure at the UTLC. Legal representation is likely and more than one VO expert or other witness[es] may be required. The case will be managed by the NSU and the VO for the case could be from the Unit or the NSU.

Cases can change between these classifications and UTLC procedures. In exceptional circumstances, ad hoc case management may be required

2.3 Case manager

In the majority of cases, a case manager will assist the VO. The role of the case manager will depend on the complexity of the case and the experience of the VO. For unit cases a TA will generally act as the case manager and will assist with the procedural issues of the case. Additionally, the TA can advise on the various reports required and contact with the UTLC, whilst mentoring VOs with limited experience of the UTLC

For NSU cases, the case manager will probably be a member of the NSU. Their role may include contact with HMRC Solicitor’s Office, assistance with reports and contact with the UTLC. See the Tribunal Procedure (Upper Tribunal)(Lands Chamber) Rules 2010, Part 3 permission to appeal .

2.4 RSA case type

Appeals against a local rating list entry must have a case raised in RSA using a case type “LT”. Cases should be registered within 3 working days of receipt of the appeal notification from the UTLC. Further advice is contained in RSA Procedures Manual Section 3 - Lands Tribunal Cases (link). It should also be remembered to close this case when the decision is issued or the case is otherwise settled.

Appeal cases against Central List hereditaments cannot be raised on RSA, this type of case will be dealt with by NSU who have their own procedures and registering processes but similar timeliness limits will apply.

2.5 Cost / Budget

The legal budget is managed by a caseworker in the NSU. As soon as a UTLC case is started, the legal budget manager must be notified of the case by email to the Litigation Inbox together with brief details of the case.

Namely;

  • The Name of the parties
  • The Hereditament address
  • The RA number
  • The RSA number
  • Standard or Simplified procedure case
  • Whether HMRC are to be instructed
  • Whether the case is a Unit or NSU case

The legal budget manager must be kept up to date with progress, particularly as hearing dates are set down or where cases are consented.

2.5 RSA case type

An “LT” rating case must be raised on RSA - See RSA Procedures Manual Section 3 - Lands Tribunal Cases. It should be remembered to close this case when the decision is issued or the case is otherwise settled.

2.6 Notifying BA and VT of the appeal

The VO is required to notify both the Billing Authority and the VTE of any appeal to the UTLC (Regulation 44 of the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009). There are similar provisions in the Welsh regulations (Regulation 39 of the Non-Domestic Rating (Alteration of Lists and Appeals) (Wales) Regulations 2005).

Caseworkers are required to ensure that both the VT and the BA have been notified. Whilst there is no prescribed way to notify the VT or BA email will be the quickest method and a template is provided in EDRM which can be copied into the correspondence. As 2005 cases will not appear in EDRM there is also a template VO 7974, provided within the ASL tab in word templates, for this purpose.

For cases in England, the Local Authority Relationship Manager (LARM) must be copied into the correspondence using the rates retention inbox ratesretention@voa.gsi.gov.uk. The LARM will then be in a position to discuss matters with the BA as necessary. A copy of the letter / email should be retained in the electronic case file in EDRM or the L Drive for 2005 cases in accordance with para 3.1 below.

2.7 Inform the Local Authority Relationship Manager (LARM)

The appropriate LARM should be informed of the appeal and any likely risks to the valuation list so they can discuss the case and possible implications with BAs. The Rates Retention Homepage lists the current LARMs by Billing Authority.

3. VOA paperwork

3.1 Filing paperwork

Once a case is raised on RSA, an EDRM case is created for R2010 and subsequent rating list cases. All material relating to the UTLC case should stored in the EDRM file. As there is likely to be a significant amount of material, care should be taken to ensure meaningful file names are used to make retrieval easier.

Rating appeals on R2005 or earlier lists will not have EDRM cases. The EDRM naming convention should be adopted.

3.2 Appeal report

An appeal report should be completed as soon as a VO appeal to the UTLC is being considered or as soon as an appeal from the UTLC is received. This document should contain a synopsis of the case, the RV at risk and highlight the key issues in dispute. Additions can be made to this document later and its completion must not be delayed if not all the information is available.

3.3 Time diary

It is important to keep a record of the time spent by all staff on the UTLC appeal. This is used in calculating costs. There is a diary sheet available, but a simple spreadsheet can be used instead if preferred. The important thing is to accurately record all the time actually spent on the case, by all VOA staff.

3.4 Authority to act

The statutory Valuation Officer for the area must authorise the caseworker as the VO for the case. A blank authorisation is available. This should be completed, signed personally by the Valuation Officer and retained by the caseworker.

3.5 Blank forms

Template letters and forms are available from Litigation and Technical Policy Team.

4. Upper Tribunal (Lands Chamber) process

It is vital that caseworkers and case managers are fully aware of the up to date rules and instructions for the UTLC. The Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 set out the statutory framework for the UTLC and there is a set Practice Directions - Lands Chamber Of The Upper Tribunal - issued 29 November 2010 which expand on the Rules. The UTLC rules and the procedure are available from the UTLC web site as are the latest fees and flow charts for rating appeals.

4.1 Interlocutory orders

Commonly an interlocutory order, or colloquially a “direction”, may be sought for a variety of reasons, such as an extension of time, a request for disclosure or service of documents. Any requests for interlocutory orders should be made as soon as possible; not left to the last moment before a deadline. There is no standard form and the case manager can assist in its drafting. A fee is payable (see the current fees on the UTLC web site) and any application for an interlocutory order must include a letter, sent only to the UTLC, stating the fee will be met under the VOA account arrangement. A template is available. The legal budget manager in the NSU must be notified.

4.2 Appeal / Response

A form to make an appeal is available from the UTLC website. This should be used rather than any other adapted form. A respondent’s notice is included with an appeal from the UTLC and should be used. An electronic Word version is available.

4.3 Statements of case

If it is possible, the statement of case can be sent with the appeal or response. Given the time limits, it is probable an extension of time will be required to allow its proper preparation. Both the appeal and response notice include tick boxes to ask for an extension of time to submit the statement of case and the request should also be included in a covering letter. A fee is payable.

The requirements for the statement of case are set out in section 6 of the UTLC practice directions. It must summarise the issues to be resolved, the party’s contentions and the evidence in support, together with any legal argument.

4.4 Expert’s report

In virtually every case the VOA will require an expert witness. That person will need to produce an expert’s report for the case. The UTLC sets out its expectations in section 8 of its practice statement. Additionally the RICS has a Practice Statement and Guidance Note (Surveyors acting as expert witnesses (3rd edition) and Surveyors acting as expert witnesses - briefing and addendum 2009. Both are available on the RICS website) which is compulsory for its members.

The report must be written by the expert. While the style is a matter of personal choice, it is suggested it should be written in the first person, be broken down into clear, logical sections and be well indexed. Appendices should be used for supporting material. The case manager will be able to provide detailed advice on drafting the report.

4.5 Statement of facts

A statement of (agreed) facts can save time and effort when producing the expert’s report. Any facts which are not agreed will require the necessary evidence to support them. The statement of facts should also include a clear indication of the issues to be decided by the UTLC and any facts that it is required to determine.

It is important to try and open a dialogue with the other side from the outset and to try to agree as much as possible. This will hopefully shorten the expert’s report and the amount of evidence required, thereby expediting the hearing. Conversely, the lack of progress with a statement of facts must not hold up work on the expert’s report and the assembly of any evidence.

4.6 Trial bundle

A trial bundle is a collection of all the relevant papers for a case. It should be fully paginated with an index. Ideally it should be agreed with the other parties. A trial bundle is not required for cases run under the simplified procedure. Where HMRC solicitors are instructed, they will prepare or agree the trial bundle.

It can greatly help in the preparation of the trial bundle if clean copies of all relevant documents are readily available. They can be stored electronically or in a binder although, given the move to a paperless office and EDRM, the former is preferred. It is important to retain documents “as sent” for the trial bundle: care must be taken when there are a number of drafts or amended versions.

5. RICS

The RICS has produced a number of Practice Statements which members must follow. There are three which are directly relevant to rating appeals at the UTLC

5.1 Expert witness

Surveyors Acting as Expert Witnesses (4th edition) came into effect from 02 July 2014. It is available to RICS members on the RICS website

5.2 Advocate

Surveyors Acting as Advocates (1st edition Practice Statement, 2nd edition Guidance Note) also came into effect on 01 Jan 2009. This is required reading for caseworkers acting in the dual role of both expert and advocate which commonly happens in simplified procedure cases.

5.3 Rating consultancy

Rating Consultancy (3rd edition, code of practice) is mandatory for all RICS members engaged in rating work. It sets out guidance on seeking instructions and terms of engagement. Whilst of limited application to the VO carrying out a statutory function, it useful to be aware of how this code of practice will bear on the activities of the rating agents.

Additionally the RICS produce Rating Appeals (3rd edition, guidance note). This publication looks at rating appeals up to and including the Valuation Tribunal hearing and is currently being reviewed to take account of the changes to the VT process for 2010 cases.

6. HMRC solicitors

The VOA has a dedicated team of solicitors within HMRC. They can provide advice, seek legal opinion from counsel and instruct counsel to appear in appropriate cases. There is a VOA liaison caseworker within the solicitors’ team.

6.1 Advice

A protocol for seeking advice from HMRC solicitors is available to Technical Advisers and other case managers. A copy can be obtained from the Litigation and Technical Policy Team.

In all but simplified procedure cases, it is likely the VO should be represented at a UTLC hearing by counsel. HMRC solicitors will instruct counsel and, in consultation with the case manager, arrange for case conferences.

It is important to alert HMRC solicitors as soon as possible when seeking legal representation. There are only a limited number of barristers specialising in rating work and it’s likely the other party will be seeking representation from the same limited pool.

7. Upper Tribunal Lands Chamber rules

The UTLC is part of the Courts and Tribunal service. It should be remembered that rating appeals only form a small part of its work.

There are 2 important documents covering the operation of the UTCL and both are available on the UTLC website. All caseworkers involved in UTLC litigation must be familiar with these documents.

7.1 2010 rules

The Tribunal Procedure (Upper Tribunal) (Lands Chamber) Rules 2010 (SI:2010/ 2600) are the regulations covering the operation of the UTLC and contain significant changes to the previous rules available on the UTLC web site

7.2 Practice directions

The 2010 rules permit the UTLC to regulate its own procedure (Rule 5(1) of the UTLC Rules 2010). The President has issues Practice Directions, Lands Chamber Of The Upper Tribunal (29 November 2010) available on the UTLC web site 18 All caseworker involved in litigation before the UTLC must be familiar with these Practice Directions.

Additionally there is a flow chart available on the UTLC website which gives a good overview of different case types for rating appeals.

8. Withdrawal or agreement of a case

8.1 Withdrawal

An application for a case to be withdrawn can be made at any point but it should be noted that the UTLC must give consent unless all parties agree to the withdrawal (Part 10 Rule 50 UTLC Rules 2010).

Where the appellant wishes to withdraw, the VO should consider recovering costs. If HMRC solicitors are involved in the case, they will take the lead in seeking a withdrawal and any cost issues. In all other cases, the case manager should assist.

If the parties can reach agreement, the case can be settled by consent. One party should draft a request for the consent order and the other party should support this. The consent order should include all the information necessary to complete the case including the full Rating list entry required and agreement on costs. The case manager or HMRC solicitors can assist in its drafting.

8.3 Case clearance

Once confirmation is received from the UTLC that a case has been withdrawn or a consent order is issued, the RSA LT case must be cleared.

8.4 Costs

Generally in cases on simplified procedure each party will bear their own costs and the case decision will make no order on costs. If there have been exceptional circumstances or the other side ask for costs the VO must discuss the cost issue with the case manager before contacting the UTLC.

Standard and special procedure cases will generally include an award for costs. When the UTLC issues its decision, it will also ask for submissions on costs from both parties. The usual rule is the successful party will receive its cost, but this can be challenged in unusual cases. HMRC solicitors and the case manager will generally deal with the cost issue. It is vital the VO can accurately account for the time spent on the case as this will form a significant element of the costs.

In all cases the legal budget manager must be kept appraised of the cost position in all litigation.

9. Calderbank offers

A Calderbank offer is written “without prejudice save as to costs”. Its effect is that the UTLC is unable to refer to the offer except when dealing with the question of costs at the end of the proceedings. The court has complete discretion to decide what weight should be given to the offer when considering costs.

A Calderbank offer will not be appropriate in all cases and must be fully discussed with the case manager and HMRCS. It is more likely to be appropriate in cases where the sole issue is valuation and there is some scope to reach a settlement.

If a Calderbank offer is to be used, it must be sent to the other party and the letter must clearly start “without prejudice save as to costs”. A copy is also sent to the UTLC and can then be referred to after the decision has been issued and costs are being discussed. The instructions are found in the UTLC Practice Direction paragraph 12.7. Generally HMRCS should issue any Calderbank letter.