Arma Hotels Ltd v Dawn Bunyan (Valuation Officer)
[2023] UKUT 3 (LC)
Charles Waters v Wayne Cox (Valuation Officer)
22 August 2024
[2024] UKUT 232 (LC)
Upper Tribunal
A farm attraction's tax value was challenged. The court decided the correct value by looking at its income and expenses. They considered whether to include a manager's salary (they didn't) and whether a future potential road construction would lower the value (it didn't). The court decided the farm's tax value was already too low and dismissed the appeal.
Key Facts
- •Appeal against Valuation Tribunal for England (VTE) decision dismissing appeal against Valuation Officer's notice for Finkley Down Farm's 2017 rateable value of £100,000.
- •Appellant seeks reduction to £54,500; respondent seeks to maintain existing value.
- •Valuation method (receipts and expenditure) not in dispute; disagreement on components.
- •Finkley Down Farm is a farm-themed leisure attraction, operating on two sites separated by a railway line.
- •In 2008, 3.5 acres of land were sold to Taylor Wimpey, reserving rights for Taylor Wimpey to build an access road through the farm within 20 years.
- •The farm transitioned from seasonal to year-round opening in 2013 after a new play barn was built.
Legal Principles
Rateable value is defined as the estimated rent at which the hereditament might reasonably be expected to let from year to year, considering its state of repair and tenant's responsibilities.
Paragraph 2(1) of Schedule 6 of the Local Government Finance Act 1988, as amended
Valuation must reflect matters affecting the hereditament's physical state, mode of occupation, and locality as they existed on the material day (April 1, 2017) and by reference to values on the antecedent valuation date (April 1, 2015).
Paragraph 2(7) of Schedule 6 Local Government Finance Act 1988
Receipts and expenditure method: determine annual rental value by assessing gross receipts, deducting operating expenses, and reflecting tenant's return on capital and profit.
Hughes (VO) v York Museums and Gallery Trust [2017] UKUT 20 (LC)
Valuation considers intrinsic qualities and circumstances affecting rental value, excluding matters personal to the occupier.
Robinson Bros (Brewers) Ltd v Houghton and Chester-le-Street AC [1937] 2 KB 445 and Dawkins v Ash Brothers [1969] 2 AC 382
In small businesses, the hypothetical tenant is often assumed to run the business themselves, without separate director's or manager's salaries being included as working expenses.
Rating Forum guidance, Wishart v Hulse (VO) [2018] UKUT 224 (LC), Facciolo v Constantin (VO) [2020] UKUT 0123 (LC)
Statutory restrictions on use are considered, but restrictions from private agreements (like covenants) are generally not.
Williams (VO) v Scottish and Newcastle [2001] EWCA Civ 185
Outcomes
Appeal dismissed.
The Tribunal found that the respondent's approach to Fair Maintainable Trade (FMT) and tenant's share was more realistic and aligned with the statutory hypothesis. The Taylor Wimpey rights were deemed too remote a contingency to affect the hypothetical tenant's valuation. The inclusion of a manager's salary was rejected, adopting the approach for small to medium sized businesses. The final rateable value was higher than the list assessment.