Applicant purchasing power stations – Applicant liable as occupier to local non-domestic rates – Applicant also liable under agreement of sale to reimburse vendor for central non-domestic rates – Whether liability for both payments offending principle against double taxation – Application for judicial review refused – Appeal dismissed
Powergen UK plc owned two electricity power stations, Fiddler’s Ferry in Cheshire and Ferrybridge in Yorkshire, which were included in the central rating list as property occupied for the purposes of electricity generation. In 1994 the Secretary of State, exercising his power to disapply the ordinary basis for assessing rates, contained in the Local Government Finance Act 1988, made the Electricity Supply Industry (Rateable Values) Order 1994.
In July 1999 the applicant purchased a 199-year lease of the two power stations. The applicant was thereafter liable to local non-domestic rates for the balance of the rating year of 1999/2000 in the sum of £13.5m, a liability calculated by reference to the power stations’ declared net capacity. Powergen was liable to pay the balance of the central non-domestic rates, payable for the year 1999/2000, calculated in the same way, because, by virtue of the 1994 Order, there was no reduction in the amount payable by it in respect of its class of heriditaments until the end of the relevant rating year. However, the applicant was ultimately liable for these rates because, under the contract for purchase of the power stations, it was liable to reimburse Powergen for central non-domestic rates. The applicant disputed its liability to pay the central non-domestic rates in addition to local non-domestic rates.
The central valuation officer refused to make any amendment to the central rating list, effective from the change of occupation in July 1999, contending that he could amend the list only with effect from the beginning of the next rating year after a change of occupation. The Secretary of State confirmed the officer’s decision. The applicant challenged the decision of the Secretary of State by way of judicial review. It was submitted that Powergen was not liable to pay central non-domestic rates on the basis that such liability would effectively offend the fundamental principle against double taxation, adapted in the rating context to the principle against double assessment. In the alternative, it was submitted that the Secretary of State had used his powers irrationally when making the 1994 Order.
The judge dismissed the challenge, holding that, although the liability under the rating scheme for both payments clearly gave rise to double assessment, it was permitted by the legislation and involved neither irrationality nor a breach of the European Convention on Human Rights. The applicant appealed.
Held: The appeal was dismissed.
1. Powergen’s continued liability for central rates at an unchanged figure, despite the disposal of the power stations, was not intrinsically objectionable, or at any rate not sufficiently objectionable that it required any more statutory authorisation than the 1988 Act provided. The position was not that Powergen was continuing to pay rates on power stations no longer in its occupation or ownership, but that it was not entitled to a rating revaluation of its remaining heriditaments, and thus a recalculation of its rating liability, until the end of the rating year. Therefore, Powergen was not being rated for the power stations after their sale, it was merely being rated on its remaining heriditaments according to a valuation that still reflected them.
2. The choice for the Secretary of State when making the 1994 Order had been essentially between daily or annual recalculation of Powergen’s rating liability. Daily calculation would be resource intensive, and although annual recalculation inevitably involved Powergen not escaping any liability for the decommissioning of a power station until the end of the rating year, it also involved it escaping liability for commissioning a new power station during the year. That result could not be said to be irrational or unfair. Furthermore, the only reason why the applicant was liable to make two payments in relation to the power stations was because it had chosen to enter into a contract with Powergen under which it agreed to reimburse Powergen for the central rates. Accordingly, the adverse consequences of the scheme from the applicant’s point of view were self-imposed. R v Inland Revenue Commissioners, ex parte Woolwich Equitable Building Society [1990] 1 WLR 1400 and Milford Haven Conservancy Board v Inland Revenue Commissioners [1976] 1 WLR 817 applied.
Michael Beloff QC, Nigel Pleming QC and Christopher Lewsley (instructed by Jones Day Reavis & Pogue) appeared for the appellant; Richard Drabble QC and Timothy Mould (instructed by the Treasury Solicitor) appeared for the respondent; Robin Dicker QC (instructed by Freshfields Bruckhaus Deringer) appeared for the interested party.
Thomas Elliot, barrister
