Rating – Hereditament – Valuation – Warehouse – Appellant valuation officer appealing against decision of Valuation Tribunal amending entry in local non-domestic rating list for warehouse – Whether chipboard decking supported by timber joists resting on non-rateable racking and steel staircases forming part of hereditament or non-rateable plant – Appeal dismissed
The appellant valuation officer appealed against a decision of the Valuation Tribunal for England (VTE) amending the entry in the local non-domestic rating list for a warehouse and premises at Unit 12A, Dewsbury Road, Stoke-on-Trent (“the hereditament”) to a rateable value of £14,250 with effect from 1 April 2010. The appellant sought a rateable value of £15,500.
The hereditament, which was located on the Fenton Industrial Estate to the east of Stoke-on-Trent, was a heated warehouse of portal frame construction with brick/profile steel clad walls and a lined steel roof. It was built in 1990. The chipboard decking with which the appeal was concerned was installed in 1992, before the respondent became the lessee. Along one side of the ground floor of the warehouse were offices. The remainder of the ground floor was used for storage on static painted steel Dexion racks. The deck was not designed as an integral part of the racking. It was built around and supported by the racking, the primary purpose of which was storage.
The sole issue on the appeal was whether chipboard decking which was supported by warehouse racking and reached by two staircases, was to be valued as part of the hereditament. The appellant officer regarded the decking as part of the hereditament and therefore as rateable. The respondent ratepayer argued that the decking was not part of the fabric of the building but was non-rateable plant.
Held: The appeal was dismissed.
(1) The test of rateability was whether the structures were enjoyed with the land and enhanced its value. Importantly, however, the principle that a chattel which was enjoyed with land and enhanced its value might nevertheless be rateable together with the land, was qualified in the case of plant and machinery. The word “plant” included whatever apparatus was used for carrying on a business; not stock in trade, but all goods and chattels, fixed or movable, live or dead, which were kept for permanent employment in the business. Whether any particular article more properly fell within “plant”, or in some other category, depended on the circumstances of the case: LCC v Wilkins (Valuation Officer) [1957] AC 362 applied. Jarrold (Inspector of Taxes) v John Good and Sons Ltd [1963] 1 All E.R 141 and Field Place Caravan Park Ltd v Harding [1966] 2 QB 484 considered.
(2) Whether a particular structure was part of the premises or hereditament in which a business was carried on, or part of the plant with which it was carried on, was sometimes difficult to decide. Each case depended largely on its own circumstances. The exercise to be undertaken began by identifying the hereditament to be valued and deciding whether the structure, in this case the chipboard decking, was part of the hereditament itself or part of the non-rateable plant employed in the business. Factors which were relevant to that enquiry included the nature of the item, whether it could readily be removed and reassembled elsewhere, and the extent and purpose of any fixings which secured it to the main structure of the premises. Fixings which could easily be loosened to enable the item to be relocated, or whose purpose was to stop it from being knocked out of position while in use, might indicate that the item was not part of the premises. Fixings which supported the item on the walls or other structural parts of the building might have the opposite effect. The size of the item relative to the area of the premises as a whole might be relevant, as might be its bulk or substantiality, but the mere passage of time since the item was installed was less significant. If the premises had been adapted to accommodate the item, that would tend to support the case that the structure had become an integral part of the premises themselves. However, those were factors to be taken into account, rather than features which would necessarily be decisive one way or the other.
(3) In this case the tribunal was satisfied that the chipboard decking formed part of the ratepayer’s plant, and not part of the hereditament. That conclusion was the inevitable consequence of the parties’ agreement that the Dexion racking on which the chipboard was laid was itself plant. As it was common ground that the racking itself was non-rateable plant which contributed nothing to the value of the premises, it followed that it could not at the same time be part of the hereditament itself. Because the racking was plant, its value “has no effect on the rent to be estimated” as required by para 2(a)(ii) and 2(b) of the Valuation for Rating (Plant and Machinery) (England) Regulations 2000. The most convenient way of giving effect to that requirement was to assume that the racking was not present for the purpose of valuing the hereditament. If the racking was assumed not to be present, the decking which was supported on the racking, and which could not exist without it, had also to be assumed not to be present. For the deck to have a value as part of the hereditament would require that the racking which supported it have an effect on value. That would be impermissible, as it would be contrary to para 2(a)(ii) or 2(b).
John Jolliffe (instructed by HMRC Solicitor’s Office) appeared for the appellant; Alan Watson FRICS (of Rapleys LLP) appeared for the respondent.
Eileen O’Grady, barrister
To read a transcript of Wilkinson (VO) v Edmundson Electrical Ltd, click here