Automated Summary
Key Facts
The Upper Tribunal (Lands Chamber) allowed an appeal by the Valuation Officer regarding the rateable value of Ascot House, a modern headquarters office building in Maidenhead, Berkshire. The case centered on whether the tenant's Category B fit-out works increased the building's rateable value compared to its original Category A condition. The Valuation Tribunal for England had previously valued Ascot House at £875,500 (Category B), but the Upper Tribunal determined the correct rateable value to be £1 million with effect from 1 April 2017. The Tribunal concluded that Category B space, of whatever size, term of lease or location, attracts rents of more than £200 per sqm, and the valuation of £212 per sqm or £1 million was consistent with market evidence, particularly the rent of £266 per sqm agreed for The Arc, Leatherhead, which was considered a good comparable.
Tax Type
Property valuation for business rates purposes
Issues
- The court determined whether the tenant's Category B fit-out works increased the rateable value of Ascot House, rejecting the argument that Category B condition adds no value.
- The court determined that the statutory decapitalisation rate (4.4%) was not mandatory for valuing tenant's fit-out works, as the valuation was not conducted using the contractor's basis.
Tax Years
2017
Holdings
- The court determined the rateable value of Ascot House at £1 million with effect from 1 April 2017, based on a Category B valuation of £212 per sqm, which is consistent with market evidence of Category B lettings including the rent of £266 per sqm for the Arc, Leatherhead.
- The court firmly rejected the proposition that a building in Category B condition is worth no more than a building in Category A condition, which should assist parties in other cases regarding the valuation of office buildings in Category B condition for the 2017 rating list.
Remedies
The Tribunal allowed the Valuation Officer's appeal and determined the rateable value of Ascot House at £1 million with effect from 1 April 2017.
Tax Issue Category
Other
Legal Principles
The Tribunal held that the statutory decapitalisation rate is not mandatory when valuing tenant's fitting out works, as the case does not involve the full contractor's basis of valuation. The Tribunal applied the principle of substance over form, determining that the rateable value should be calculated based on the actual substance of the valuation exercise, not on a strict mechanical application of a formula.
Precedent Name
- Hewitt (VO) v Telereal Trillium
- Morrison EF (GP) Limited v Assessor for Central Scotland
- Edma (Jewellers) Ltd v Moore (VO)
- Dorothy Perkins Retail Ltd v Casey
Cited Statute
- Regulations governing the exclusion of plant and machinery from rateable value
- Act governing business tenancies and tenant improvements
- Primary legislation governing non-domestic rating valuation in England
- Regulations prescribing decapitalisation rates for rating valuations
Judge Name
- Martin Rodger KC
- Peter McCrea
Passage Text
- For these reasons we allow the VO's appeal and determine the rateable value of Ascot House at £1 million with effect from 1 April 2017.
- We do not accept Mr Ormondroyd's submission that the use of the statutory decapitalisation rate is, as he put it, 'mandated by law' in cases of this sort. The statutory rate is applicable only 'to a hereditament ... the rateable value of which is being ascertained using the contractor's basis of valuation'.
- We have firmly rejected the proposition that a building in Category B condition is worth no more than a building in Category A condition, which should assist parties in other cases.