Rating – Non-domestic rates – Completion notice – Validity – Local Government Finance Act 1988 – Respondent local authority serving completion notices to bring renovated building into rating list with effect from specified date – Completion date falling before date of service – Appellant claiming notices invalid – Valuation tribunal deciding notices valid for substantial compliance with statutory requirements – Appellant appealing – Whether completion notice valid if specified completion date preceding date of service – Appeal allowed
The appellant owned three units on the Guinness Trading Estate, Trafford Park, Manchester. They formed part of a larger building which was subject to extensive renovation starting in 2014, and were deleted from the rating list as a result. Completion notices dated 3 May 2016 were served by the interested party local authority which stated that the property could reasonably be expected to be completed by that date. The notices were received by the appellant on 9 May 2016. The properties were entered into the rating list as three separate hereditaments on various dates from 3 to 15 May 2016.
On 31 August 2016, proposals were served on the respondent valuation officer in respect of each property, proposing the deletion of the relevant entry on the basis that the completion notices were invalid because they specified a completion date that preceded the date of service. An appeal to the Valuation Tribunal for England (VTE) arose from those proposals. The appellant argued that the notices were invalid because, whether they were served when received or served in the ordinary course of post, the completion date fell before the date of service.
The VTE took the view that although the notices did not comply with the statutory requirements in the Local Government Finance Act 1988, there was substantial compliance, and no prejudice to the appellant, and therefore they were valid. The appellant appealed. The appeal was conducted under the tribunal’s written representations procedure.
Held: The appeal was allowed.
(1) Non-domestic rates were levied on hereditaments, and a building that was unfinished or was being renovated so that it could not be occupied for the purpose for which it was designed was not a hereditament. There was no scope for including in the rating list a building which was nearly ready for occupation unless the completion notice procedure had been followed: Porter (VO) v Trustees of Gladman Sipps [2011] UKUT 204 (LC); [2011] PLSCS 179 applied.
(2) The completion notice procedure was created by section 46A of the 1988 Act. It provided that schedule 4A should have effect, and that where a completion notice was served and the building has not been completed on or before the date stated in the notice, it should be deemed to have been completed. The procedure was applicable to new buildings, which were defined in section 46A(6) to include buildings that had been taken off the list during renovation, such as the appeal properties. Therefore, while the Valuation Office could enter a hereditament on the list on the basis that it was in fact complete, the completion notice procedure supplemented that power by deeming it to be complete even if it was not.
Schedule 4A provided that where the building was not yet complete “the authority shall propose as the completion date such day, not later than three months from and including the day on which the notice is served” and where a building had been completed “the authority shall propose as the completion day the day on which the notice is served”. There was no provision in paragraph 2 of schedule 4A for the authority to propose a completion date that preceded the date of service of the notice. If the building was already complete, the completion date was the date of service; if it was nearly there, the completion date had logically to be later than that, and was to be a date not more than three months after service.
(3) In a case concerning the consequences of a failure to comply with a statutory time limit, the first question was whether parliament intended total invalidity to result from failure to comply with the statutory requirement, If so, no further question arose. If not, a further question arose whether, despite invalidity not being the inevitable consequence of a failure to comply with a statutory requirement, it nonetheless had that consequence in the circumstances of the given case and, if so, on what basis. If a court had concluded at the first stage that total invalidity was not the outcome of a failure to comply with a statutory requirement, then it was unlikely at the second stage to conclude on the facts in the light of the statutory scheme that invalidity should be the consequence if there had been substantial, but not strict, compliance: North Somerset District Council v Honda Motor Europe Ltd [2010] RA 285; [2010] PLSCS 182 followed.
(4) Parliament could not have intended substantial compliance to be good enough in the present context as that would result both in uncertainty and in retrospectivity. There was some uncertainty inherent in the date of service itself. But a far greater uncertainty arose if substantial compliance was good enough. In the present case, the time between the completion date and the date of service was at most six days, but what about 10 days or a couple of months? It was not acceptable for the validity of a notice which created a liability to taxation on a counterfactual basis to be so uncertain: UKI (Kingsway) Ltd v Westminster City Council [2018] UKSC 67; [2019] EGLR 5 applied.
Moreover, if the notices were valid then they provided for a completion date that was, whatever the date of service, in the past when the notice was served and (if different) when it was received. The completion notice procedure enabled a building to be deemed to be complete when it was not. It would be startling if the billing authority could create a liability for tax on a basis that was both counterfactual and retrospective. On a proper reading of the statute, a notice that purported to do so was invalid.
Accordingly, the appeal succeeded and the properties were to be deleted from the rating list.
Luke Wilcox (instructed by CBRE Ltd) made written submissions for the appellant; the respondent did not appear and was not represented.
Eileen O’Grady, barrister
Click here to read a transcript of Hermes Property Unit Trust v Roberts (VO)