TWO DO NOT BECOME ONE...

SUPREME COURT DECISION SPICES UP ARCANE BUSINESS RATES RULE

The Supreme Court has made a landmark decision on business rates assessments for companies occupying multiple but unconnected floors in a building. The second and sixth floors in an eight storey block were held to be separate hereditaments, each with its own rateable value. Both the Valuation Tribunal and the upper Lands Tribunal had decided that together the two floors constituted a single hereditament but the taxman disagreed and appealed.

The Supreme Court has reversed those decisions and agreed with the VO that the two floors should be treated as two separate hereditaments and therefore rated separately.

The effect of this is to prevent ratepayers getting a reduction where assessments are combined. However, each case on its merits! Putting assessments together can still be accepted by the taxman but it all depends on the facts and staying within long-approved valuation principles. It’s now just a lot harder to presume that bits of a building can be combined and the business rates bill automatically reduced.

Whilst the decision conflicts with real world practice and how businesses operate, the decision must be correct on its facts as it’s made by the Supreme Court. Disappointingly for the Spice Girls of business rates appeals, two did not become one, on this occasion at least!