The receipts and expenditure valuation for rating purposes seeks to arrive at the annual rental value of premises by assessing the gross receipts a prospective tenant could expect to achieve from a business at the premises. From this figure, operating expenses, including repair costs, are deducted to arrive at a net profit which is then apportioned between the tenant, to provide a return on capital and profit (the tenant’s share) and the landlord, as rent for the annual tenancy (the landlord’s share).
The Upper Tribunal has considered such a claim dismissing an appeal in Waters v Cox (Valuation Officer) [2024] UKUT 232 (LC).
The case concerned a farm and farm attraction owned by the appellant and his brother which occupied two sites either side of the London to Salisbury railway line, north-east of Andover town centre. The northern site contained the farm attraction occupying former farm buildings and extending to around 5.5 acres and an acre of parking. It had activity areas, animal pens and a large play barn as well as a shop, café and storage facilities. The southern site of around 9.5 acres was used for grazing animals and parking. Access for vehicles and pedestrians between the two sites was by means of a brick-built bridge under the railway.
The rateable value for the farm in the 2017 List was £100,000. The appellant sought a reduction to £54,500, the respondent to maintain the existing figure.
It was agreed the receipts and expenditure valuation method was the appropriate means of arriving at the rateable value which, under Schedule 6 to the Local Government Finance Act 1988, is an amount equal to the rent which it is estimated the hereditament might reasonably be expected to let from year to year on various assumptions as to its state of repair. The property must be valued reflecting matters affecting its physical state or enjoyment, the mode of occupation, the physical state of the locality and the use and occupation of other premises in the locality.
The accounting information demonstrated a rising pattern of gross receipts so the Tribunal adopted a fair maintainable trade of £1,325,000, and the actual figure for depreciation of equipment. It decided that the hypothetical tenant, like the appellant, would not employ a manager or be concerned over rights reserved to Taylor Wimpey following a 2008 sale of land adjacent to the northern site. Consequently, these matters did not affect the valuation. The tenant’s share should be 68%. The outcome was a rateable value of £123,750, which meant that the farm was under-assessed.
Louise Clark is a property law consultant and mediator
