Rating – Non-domestic rates – Liability – Self-catering holiday cottages – Appellant challenging removal of hereditament from non-domestic rating list and placing self-catering cottages on council tax valuation list – Preliminary issue arising – Whether 70 day letting rule to be applied to each cottage in hereditament or whole hereditament – Preliminary issue in favour of respondent
The appellant owned a complex of nine self-catering holiday cottages in South Wales known as Gaer Cottages situated at Y Gaer, Cribyn, Lampeter, Ceredigion (the hereditament). The hereditament was created by the conversion of redundant farm buildings in the mid-1980s following the grant of planning permission which restricted the use of the hereditament to holiday accommodation only and included a condition prohibiting the occupation of the development between 10 January and 28 February each year. It was therefore unlawful for the self-catering units to be occupied all year round as conventional residences. The nine units comprised three separate self-contained buildings with a total of 34 bed spaces. Some of the cottages had been adapted for use by people with disabilities. The complex provided an in-door heated swimming pool, a games room and a play area for the use of its guests. It was set in grounds of eight acres adjoining a house which was occupied by a director of the appellant which operated the hereditament.
In Wales, as a result of section 66(2BB) of the Local Government Finance Act 1988 (inserted by the Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2010) before self-catering holiday accommodation might be treated as non-domestic property for the purpose of liability to business rates, it had to satisfy four conditions which included that the accommodation should have been let commercially in the year prior to the assessment for a total of 70 days or more. The hereditament was entered in the 2010 compiled non-domestic rating list with a rateable value of £12,000. In 2016, the respondent valuation officer deleted the hereditament from the 2010 non-domestic rating list from 1 April 2010. Each of the nine self-catering cottages was subsequently entered in the council tax valuation list from the same date.
A preliminary issue arose whether the 70 day rule applied to: (i) the hereditament as a whole; or (ii) each of the nine individual cottages; or (iii) each of the three self-contained buildings. The issue was considered on the basis of written representations.
Held: The preliminary issue was determined in favour of the respondent.
(1) The opening words of section 66(2BB) directed attention to “a building or self-contained part of a building”. That unit of property was not to be domestic property only if each of the subsequent paragraphs applied, including in particular sub-para (d) which required that “the short periods for which it was so let amounted in total to at least 70 days”. Section 66 was concerned with classification of property into domestic and non-domestic property. That classification would be impossible to achieve if the only unit to be considered was the hereditament itself, with no separate provision being made for hereditaments comprising domestic and non-domestic parts. In this case the hereditament included domestic property (the farmhouse occupied by the director) and property which might be non-domestic (the self-catering cottages); it might also include property which was exempt (if any agricultural land was occupied with the dwellings as a single unit). It was necessary in such a commonplace situation to consider the individual components of the hereditament in order to identify whether they were domestic or non-domestic property. Section 66(2BB) clearly directed attention towards any building or self-contained part of a building, and not towards the hereditament as a whole:Calvert v Thomas[2013] UKUT 482 (LC) and Redrose Ltdv Thomas[2014] UKUT 311 (LC) considered.
(2) Section 6 of the Interpretation Act 1978 provided thatunless the contrary intention appeared words in the singular in a statute included the plural, but a contrary intention was readily apparent in the drafting of subsection (2BB). In particular, it could not have been intended that sub-para (a) should require that the whole hereditament, or even every building in it, must have been available for letting commercially during the relevant period. It followed that the 70 day rule, in its original 2010 form, was not capable of being applied in this case to the hereditament as a whole. The statutory language required that it be applied to a building or self-contained part of a building. It was apparent from sub-para (a) that the only self-contained parts of a building with which subsection (2BB) was concerned were parts which were capable of being let as self-catering accommodation. No more complex exegesis was required to demonstrate that that was so. The default position, as provided by section 66(1), was that property was domestic if it was used only for the purposes of living accommodation or, broadly, was ancillary to such property. For that position to be disapplied in relation to the whole of a building which was used for living accommodation, subsection (2BB)(a) required that the whole of the building had to be available to be let commercially as self-catering accommodation. For it to be disapplied in relation to a self-contained part that self-contained part must have been available for letting.
(3) As a matter of the structure of subsection (2BB), each of the four conditions had to be applied consistently either to the whole of a building or to a self-contained part of a building. The “it” in sub-para (d) was the whole building, or the self-contained part, in each case which had been referred to in sub-para (a) and again in (c). If it was said that the whole of a building used for the purposes of living accommodation was nevertheless not domestic property it was the whole of the building which had to satisfy the four criteria: in particular, it had to be intended that the whole be available for letting commercially, and the whole must have been let for the required 70 days. If a self-contained part was non-domestic, it must have been available for 140 days and it must have been let for 70 days. It was not sufficient that the whole was available to be let if only a self-contained part was actually let for the required period. In that case only the self-contained part which satisfied each of the conditions would be non-domestic property.
Eileen O’Grady, barrister
Click here to read transcript: Gaer Ltd (trading as Gaer Cottages) v Williams (VO)
