Separation of function to satisfy licensing requirements is insufficient to create separate hereditaments where there is a shared purpose.
The Upper Tribunal has considered this issue in Moore (Valuation Officer) v Bailey [2024] UKUT 304 (LC).
The case concerned an arable farm north west of Northampton which included two yards: one licensed by the British Horseracing Authority for racing horses managed by the respondent; and to the west, another accommodating horses for point-to-point events for which no licence was required, managed by the respondent’s husband.
The arable part of the farm benefitted from an agricultural exemption to non-domestic rates. The remainder was assessed as a racing yard and premises at a rateable value of £24,500 effective from 1 April 2017.
The respondent sought to divide the assessment between the two yards with an assessment for the racing yard of £11,000. An assessment below £12,000 would entitle her to claim small business rate relief to mitigate the entire rates bill.
The VO rejected the proposal but reduced the assessment to £19,000. On the respondent’s appeal the Valuation Tribunal for England decided that the property was two hereditaments and the rateable value of the racing yard was £12,000. Both yards ceased operating in 2022. The VO appealed.
The farm was occupied under a tenancy agreement which prohibited subletting, of which the respondent’s brother was tenant. He managed the farm. The farm business was run through a partnership of which the respondent, her brother and mother were partners.
Income and expenditure from both yards were included, separately, in the partnership accounts. Mr Bailey occupied the point-to-point yard with the partnership’s permission.
Although there were gates between the two yards, both racing and point-to-point horses had to cross the farmyard to reach shared gallops and the latter had to enter the racing yard to use a horse walker. A single supply of utilities was shared between the farm and the two yards. The respondent’s website referred to both racing and point-to-point horses.
The tribunal was satisfied that the farm partnership was in occupation of the whole of the farm including both yards which were used for the same purpose – the training and stabling of horses.
The partners shared a common purpose, to make a profit from the land and buildings comprising the farm, from a variety of activities. It was only to satisfy the BHA licensing requirements that some of the buildings and yard space were restricted to the stabling and training of race horses.
The farm was a single, part exempt, composite hereditament and the rateable value was £18,000.
Louise Clark is a property law consultant and mediator
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