Council tax – Listing – Residential property – Appellant owning house in multiple occupation – Respondent listing officer proposing to assess rooms for council tax as individual dwellings – Appellant proposing property assessed as single dwelling – Valuation Tribunal for England (VTE) agreeing with respondent – Appellant appealing – Whether VTE conflating concepts of rateable occupation and dwelling – Appeal allowed
The appellant was the freehold owner of a property in Twyford Abbey Road, Park Royal. The property was licensed as a house in multiple occupation (HMO) and contained six rooms which had been separately entered into the valuation list. Each room contained a bathroom. Any occupier of the rooms had exclusive possession of their own room and shared use of the communal areas. Access to each room was through those communal areas. None of the rooms contained cooking facilities or sufficient space for hanging laundry. Each room contained a lockable door and was let under an assured shorthold tenancy agreement. Each tenant was granted quiet enjoyment of the room and communal areas.
The property was listed from 1 April 1993 for council tax purposes as a single dwelling until, based on information from the local authority, the respondent listing officer proposed to assess the rooms as individual dwellings. The appellant proposed that the property remain assessed as a single dwelling so that he, rather than his tenants, would be liable for council tax. The appellant appealed to the Valuation Tribunal for England (VTE).
The question arose as to the number of “dwellings” that made up the property for the purposes of section 3 of the Local Government Finance Act 1992 for council tax purposes. The appellant contended that the whole property should be assessed as a single dwelling. The respondent argued that, when the law was properly understood and applied, the property comprised six dwellings: one for each of the six rooms contained within the property.
The VTE agreed with the respondent and dismissed the appellant’s appeal. The appellant appealed.
Held: The appeal was allowed.
(1) Section 1 of the Local Government Finance Act 1992 established the duty for a billing authority to levy and collect council tax in respect of dwellings within its area. Under section 3, a dwelling was any property which, by virtue of the definition of hereditament in section 115(1) of the General Rate Act 1967, would have been a hereditament for the purposes of that Act if it remained in force. Section 115(1) of the 1967 Act materially provided that “hereditament” meant property which was or might become liable to a rate, being a unit of such property which was, or would fall to be, shown as a separate item in the valuation list.
The case law treated the concepts of hereditament and ratable occupation as distinct, albeit there was a degree of linkage between them. In Woolway (VO) v Mazars LLP [2015] EGLR 56; [2015] AC 1862, the Supreme Court established three broad principles which were relevant when deciding whether distinct spaces under common occupation formed a single hereditament: (i) the primary test was geographical, based on visual or cartographic unity and whether the premises constituted a single unit on a plan; (ii) where two sections were geographically distinct according to that test, they might nevertheless be treated as a single hereditament by applying a functional test, if the use of one was necessary to the effectual enjoyment of the other; and (iii) the question of whether the use of one section was necessary to the effectual enjoyment of the other depended on the objectively ascertainable character of the property.
In John Laing & Sons Ltd v Kingswood Assessment Committee [1949] 1 KB 344, the court set out the four necessary ingredients in rateable occupation: (i) there had to be actual occupation; (ii) it had to be exclusive for the particular purposes of the possessor; (iii) the possession must be of some value or benefit to the possessor; and (iv) the possession had not to be for too transient a period.
(2) In Cardtronics Europe Ltd and others v Sykes (VO) [2021] UKSC 21; [2020] EGLR 26, the Supreme Court referred to Mazars as having given authoritative guidance on the application of the definition of hereditament, and to John Laing & Sons Ltd v Kingswood Assessment Committee [1949] 1 KB 344 as containing the classic statement of the ingredients of rateable occupation; and then proceeded to address the two questions separately in its judgment.
In the present case, the VTE did not address itself to the correct test. It conflated the test for rateable occupation and the question of whether each unit was a separate hereditament. The primary, geographical, test was whether the putative hereditament could be represented as a single unit on a plan and had the quality of visual or cartographic unity, typically apparent in physical differentiation with a sharply defined boundary on the ground between one hereditament and another. The significance of intercommunication between two adjoining spaces depended on its nature. If a door or staircase led directly from one living space to another, they were likely to be part of a single hereditament. If, on the other hand, it was necessary to go through a common part or a public area, then they were likely to be separate hereditaments: Mazars and Cardtronics applied.
(3) The functional aspect of the test might enable two geographically distinct spaces to be treated as a single hereditament, where the use of one was necessary to the effectual enjoyment of the other. That might commonly be tested by asking whether the two sections could reasonably be let separately. However, the latter point did not introduce into the concept of hereditament the requirement that it had to have all the elements of a self-contained unit. The way in which premises were occupied could be relevant when determining how many hereditaments they comprised. Although exclusive possession was not determinative of the existence of a separate hereditament, it might be relevant.
The application of those principles could not be a mere mechanical exercise; it would commonly call for factual judgment on the part of the valuer and the exercise of a large measure of professional common sense.
(4) The appropriate course was to remit the case to a differently constituted VTE for redetermination in accordance with the applicable principles. The VTE was an expert specialist tribunal and would be familiar with the “landscape” in terms of the treatment of differently configured multiple occupancy properties and issues such as whether a separate residential hereditament could exist even where cooking or other facilities were communal.
Andrew Carter (instructed by Streathers Solicitors LLP) appeared for the appellant; Luke Wilcox (instructed by HM Revenue and Customs Solicitor’s Office) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Stanuszek v Bunyan (Listing Officer)
