Frozen food supermarket chain Iceland is to take its challenge over the valuation of a Liverpool store to the Supreme Court.
The appeal raises questions over the impact of air-handling systems on business rates valuations and, while the figures at stake are relatively small, the eventual ruling could have a widespread impact on rates calculations for similar retail premises across the country.
The central issue in the case is whether the air-handling system used by Iceland in the store at 4 Penketh Drive, Liverpool is plant or machinery “used or intended to be used in connection with services mainly or exclusively as part of manufacturing operations or trade processes” within the meaning of the Valuation for Rating (Plant and Machinery) (England) Regulations 2000.
If it does fall within that meaning, as Iceland contends, the air-handling system would be ignored in calculating the rateable value of the premises.
The Valuation Tribunal for England (VTE) decided in Iceland’s favour in October 2012 that it did, but the Upper Tribunal (Lands Chamber) (“the UT”) reversed that decision in January 2015, concluding that it did not.
The Court of Appeal agreed with the UT, but now the Supreme Court has granted Iceland permission for a final appeal.
The valuation officer (VO) maintains that the system does not meet the requirements of the regulations and that a value should be attributed to the air-handling system, thereby increasing the rateable value of the premises.
The VO had set a rateable value of £108,000 from 1 April 2010, which was reduced by the VTE to £98,000. The Upper Tribunal, allowing the VO’s appeal, raised it to £104,000.
Iceland hopes to persuade the Supreme Court to rule that the system falls within the exception to paragraph 2 of Class 2 of the 2000 Regulations, with the result that it should be ignored in valuing the premises for rating purposes.
In the decision under challenge, the Court of Appeal ruled that the exception should be construed quite narrowly, and that the display of goods for retail sale was the antithesis of a trade process.
It said that the fact that a particular retailer required more substantial, powerful or even complex equipment did not turn plant and machinery used for cooling the air into “plant or machinery… used in connection with services mainly or exclusively as part of… trade processes”.
In effect, it found that keeping food in its frozen state so that it could be sold was not any kind of trade process.
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