Applicant acquiring two power stations – Applicant liable to pay both central and local non-domestic rates for the properties during the year of change in occupation – Whether unlawful double assessment – Local Government Finance Act 1988 – Application dismissed
Powergen UK plc owned two electricity power stations, which were included in the central rating list as property occupied for the purposes of electricity generation. Up to and including the year 1999/2000, the two power stations were subject to central non-domestic rating, governed by sections 52 to 54 of the Local Government Finance Act 1988. In 1994 the defendant Secretary of State made the Electricity Supply Industry (Rateable Values) Order, which disapplied the ordinary rules of the Act in respect of the class of hereditament occupied by Powergen. The rateable value of the power stations was, from then on, determined in accordance with the 1994 Order.
In July 1999 the applicant, Edison First Power Ltd (EFPL), acquired the two power stations from Powergen, and Powergen ceased to occupy them with effect from that date. It was part of the agreement between EFPL and Powergen that, upon completion, an apportionment was to be made of various charges and payments in respect of the power stations. These included the rates payable by Powergen for the year 1999/2000, because, by virtue of the 1994 Order, there was no reduction in the amount payable by Powergen in respect of its class of hereditament until the end of the rating year. Properties occupied by EFPL were included in the local rating list and were subject to local rating, governed by sections 41 and 42 of the 1988 Act.
Powergen subsequently claimed £13.5m from EFPL, representing the central rating payment for the power stations for the part of the year that EFPL was in occupation. EFPL paid that sum. Subsequently, EFPL received demands, from the local authorities in whose area the stations were situated, for the payment of local non-domestic rates of a similar amount for the period from the change in occupation in July 1999 to March 2000. It made those payments also.
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 only amend the list with effect from the beginning of the next rate year after a change of occupation. The Secretary of State refused to refund the amount paid under the central list for the period from the change of occupation in July 1999 up to 31 March 2000.
EFPL challenged the actions of the Secretary of State by way of judicial review. It submitted that: (i) the effect of the 1994 Order had given rise to double taxation without statutory authority; and (ii) the Secretary of State had used his power to make orders in an irrational way.
Held: The application was dismissed.
1. There was no dispute that there was a presumption against double taxation and, on the facts, there had clearly been double assessment. However, the presumption could be overridden by suitable statutory language: Milford Haven Conservancy Board v Inland Revenue Commissioners [1976] 1 WLR 817 considered. Under the statutory scheme, the central list, in contrast to the local list, operated upon a basis that did not take into account changes in occupation during the year. Thus, where there was a transfer from one to the other, there was the possibility of either double assessment or no assessment at all. Double assessment was permitted by the statute. The scheme embodied in the 1994 Order was therefore within “the four corners” of the 1988 Act.
2. Although the order worked to the disadvantage of EFPL, it was part of a system that had been the subject of extensive consultation before it was established, and that had been accepted by the industry in general as fair. It was not irrational for the Secretary of State to adopt the scheme that he did. The distortion of the market, in relation to a transaction such as that involving EFPL, was not such as to render the whole scheme irrational: R v Secretary of State for the Environment, ex parte Nottinghamshire County Council [1986] AC 240 applied.
Nigel Pleming QC and Christopher Lewsley (instructed by Jones Day) appeared for the applicant; Richard Drabble QC and Timothy Mould (instructed by the Treasury Solicitor and the solicitor to the Inland Revenue) appeared for the respondents; Guy Roots QC and Daniel Toledano (instructed by Freshfields) appeared for Powergen UK plc, an interested party.
Sarah Addenbrooke, barrister
