Rating – Hereditament – Rateable value – Partnership occupying farm containing racing yard and point-to-point yard – Respondent partner seeking reduction in rateable value – Appellant valuation officer assessing whole farm as single unit – Valuation tribunal deciding property was two hereditaments – Appellant appealing – Whether farm assessable as one hereditament or two – Whether racing yard occupied jointly – Whether respondent in paramount occupation of point-to-point yard – Appeal allowed
The respondent was a partner in a partnership which also included her brother (T). The partnership occupied a farm at Holdenby North Lodge, Teeton, Northampton, under a tenancy agreement which accommodated horses used for racing and was licensed for that purpose by the British Horseracing Authority. Part of the farm accommodated horses used for point-to-point events run by B (who was not a partner) which required no licence.
The part of the farm that did not benefit from an agricultural exemption to non-domestic rates was originally assessed as a racing yard and premises at rateable value £30,750 but was reduced by the appellant valuation officer on 4 April 2018 to rateable value £24,500. Both assessments were effective from 1 April 2017 (the material day).
On 1 December 2020, the respondent sought a reduction in the rateable value, providing two valuations for the individual properties, one for the licensed yard at rateable value £11,000 and a possible rateable value £6,750 for the point-to-point yard.
The appellant issued a decision notice that the whole farm was correctly assessed as a single hereditament and a single unit of assessment. But the assessment was further reduced to a rateable value of £19,000.
The respondent appealed to the Valuation Tribunal for England proposing a rateable value of £12,000 for the racing yard but did not specify an assessment for the point-to-point yard. The VTE decided that the property was two hereditaments, and determined the assessment of the licensed yard at rateable value £12,000. The value of the point-to-point yard was not addressed. The appellant appealed.
Held: The appeal was allowed.
(1) Statute did not provide a definition of what constituted a hereditament. Whether a property fell to be shown as a separate item in the valuation list was determined by applying case law principles.
Given that non-domestic rates were a tax on individual properties, the first stage was to identify the property in question. In principle, the fact that the same occupier held two or more properties was irrelevant to their rateable status. They had to pay rates separately on each.
Two principles applied to the question whether the premises were one hereditament or two. One was geographical and depended simply on whether the premises constituted a single unit on a plan. The other was functional and depended on the use that was or might be made of it: Woolway (VO) v Mazars LLP [2015] UKSC 53 applied.
It could be seen from the plan here that the two yards were contiguous and shared a common boundary. The farm and the two yards could be occupied separately but the geographical test indicated this was one hereditament. It was not necessary to engage the functional test where two geographically distinct entities were treated as a single hereditament because the use of one was necessary to the effectual enjoyment of the other.
(2) Rateable occupation had to be actual occupation, exclusive for the purposes of the possessor, which was of benefit to the possessor and was not transient: John Laing & Son Ltd v Assessment Committee for Kingswood Assessment Area [1949] 1 KB 344 applied.
The requirement of “exclusive” occupation did not preclude another person being in occupation, it simply meant that the occupier had to be the only one occupying the property for its particular purposes.
Where a person already in possession had given to another possession of a part of their premises, if that possession was not exclusive, they did not cease to be liable to the rate, nor did the other become so.
The question was one of fact, namely, whose position in relation to occupation was paramount, and whose was subordinate; but the question had to be considered in regard to the position and rights of the parties in respect of the premises and the purpose of the occupation of those premises: Hollywell Union and Halkyn Parish v Halkyn District Mines Drainag Co [1895] AC 117, Westminster Council v Southern Railway Company Ltd [1936] AC 511 and Zhylzhaxynova v Moore (VO) [2024] UKUT 204 (LC); [2024] PLSCS 132 considered.
(3) The degree of control over the premises was an important component in the determination of which of two or more parties was in rateable occupation. If there was more than one candidate, who was in rateable occupation depended on the position and rights of the parties in respect of those premises, particularly, the ability to require the occupier to vacate the premises without notice: Ludgate House Ltd v Ricketts (VO) [2021] EGLR 3 considered.
The farm partnership was in occupation of the whole of the farm including both yards. The respondent was a partner and the only person capable of running the licensed racing yard as the licence was in her name. But it was the partnership that provided the site, carried out repairs, paid for the outgoings including staff and reaped the benefit in terms of earnings.
The partners utilised separate parts of the farm for different purposes but they jointly occupied the whole for a shared purpose, namely the profitable operation of the partnership. The tenancy agreement prohibited subletting. At the material day the partners, including the respondent, were in joint rateable occupation of the licenced racing yard and the remainder of the farm.
(4) B was in occupation of the point-to-point yard with permission of the partnership but without any formal tenancy or other occupancy agreement. He was not a member of the partnership which provided the buildings he occupied and met the costs of the operation he managed. The benefit of any profit went to the partnership.
On the John Laing analysis, there were two occupiers of the yard: the partnership and B. Which of the two should be the ratepayer depended on which was in paramount occupation.
Control of the point-to-point yard rested with the partnership. There was no subtenancy and B could be required to leave without notice. He was not in rateable occupation and there were no grounds for assessing it separately from the remainder of the farm occupied by the partners. The uses of the two yards were in the same mode or category of occupation: Cardtronics UK Ltd v Sykes [2020] EGLR 26, Hughes (VO) v Exeter City Council [2020] UKUT 7 (LC) and Prosser KC v Ricketts (VO) [2024] UKUT 264 (LC); [2024] PLSCS 159 considered.
Accordingly, the farm was a single, part exempt, composite hereditament. In practical terms the appellant had to amend the rating list to show a rateable value of £18,000, the figure agreed between the parties if the appeal succeeded.
Edward Waldegrave (instructed by HMRC solicitors’ office) appeared for the appellant; The respondent appeared by her agent.
Eileen O’Grady, barrister
