Rating – Public houses – Respondent owner lacking licence and premises closing down – Proposal by respondent to alter rating list granted – Whether grounds for making alteration – Whether change in mode or category of occupation – Whether lack of licence affecting valuation – Appeal allowed
The respondent unregistered company owned and occupied two public houses in Manchester. In 1996, the police objected to applications for licence renewals and transfers in respect of the premises on the ground that the identities of the respondent’s shareholders were not known, making it impossible to establish whether the applicant for a licence was a fit and proper person. The licensing justices refused the respondent’s applications, but their decision was subsequently quashed and appeals by the relevant police authority, including an appeal to the House of Lords, were dismissed. Meanwhile, both public houses closed in 1997, but one reopened in 2000 and the other in 2001 after protection orders were granted.
The respondent proposed to alter the description of the premises in the list to “Stores and Premises” and to reduce the rateable value. In 2004, a valuation tribunal decided that both hereditaments should be entered as “Public House (without licence)”, with a rateable value of £1,400 with effect from June and September 1997 respectively. The tribunal found that the lack of an on-licence for the premises, in highly unusual circumstances, would seriously affect any rental bid since the potential for income from the premises was negligible, and considered it appropriate to take into account the fact that the premises could not be used for their intended purpose.
The appellant valuation officer appealed, contending that each hereditament should be valued and entered into the list as a public house capable of operating with the benefit of a licence. He submitted that there had been no material change in circumstances with regard to the matters listed in para 2(7)(b) of Schedule 6 to the Government Finance Act 1988, such as to justify an alteration of the list under regulation 4A(1)(b) of the Non-Domestic Rating (Alteration of Lists and Appeals) Regulations 1993; there was no change in the “mode or category of occupation” of the premises within para 2(7)(b) of Schedule 6 since the premises were in the physical form of public houses and could have been so used if protection orders had been sought by suitable licensees. He argued that police concerns with regard to the respondent did not affect the valuation for rating purposes, which had to be made on the basis of a hypothetical landlord and tenant.
Decision: The appeals were allowed.
Both of the hereditaments in question were purpose-built public houses that, on the material day, were not in use because no one had a licence to sell liquor in either of them. The mode or category of occupation had not changed; the valuation tribunal had rejected the respondent’s description of the hereditaments as “Stores and Premises”, preferring its own description of “Public House (without Licence”). The only change had been that from occupation as a public house to non-occupation; it was not a change within para 2(7)(b). Nor did the loss of the licence have the effect of changing the mode or category of occupation. There had therefore been no basis upon which the tribunal could order the list to be altered: Scottish & Newcastle (Retail) Ltd v Williams (VO) [2000] 2 EGLR 171 considered.
Quite apart from the 1993 Regulations, a hereditament that was unoccupied was properly to be entered into the valuation list under a description and with a value that took into account the mode or category of purpose for which it was designed or last occupied and for which it could again be expected to be occupied in the future. The hereditaments in question were in physical terms public houses, had only ever been occupied as such and could be expected to be occupied as public houses in future.
Further, the fact that no licence could be obtained because of the identity of the owner was not a matter that could affect the valuation, given that the hereditament was to be assumed for valuation purposes to be vacant and available to be let by a hypothetical landlord to a hypothetical tenant, which would not be subject to that inhibition. The entries in the list that appeared prior to the valuation tribunal’s decision should be restored.
David Forsdick (instructed by the legal department of HM Revenue & Customs) appeared for the appellant; Martin Edwards (instructed by Winbourne Martin French, chartered surveyors) appeared for the respondent.
Sally Dobson, barrister