Non-domestic rates – Exemption – Agricultural building – Appellant owning modern retail warehouse no site adjoining farmland – Appellant using warehouse for storing animal feed and agricultural machinery while negotiating sale to supermarket chain – Whether warehouse exempt from rates for period of storage use – Para 3(a) of Schedule 5 to Local Government Finance Act 1988 – Whether warehouse an agricultural building occupied together with agricultural land and used solely in connection with agricultural operations – Appeal allowed
The appellant owned a modern retail warehouse located within an out-of-town shopping area to the east of Bedford. The warehouse was positioned next to a busy dual carriageway leading to the town centre and was bounded on the other side by open farmland which also belonged to, and was farmed by, the appellant. Until 2009, the appellant let the warehouse to a company which sold household goods and furnishings, but he then retook possession after the tenant company got into financial difficulties and was unable to pay the rent. At that point, the appellant was already in negotiations with a supermarket chain regarding a possible sale of the warehouse for conversion to a food superstore, a deal which was dependent on the grant of planning permission for a change of use and the construction of a new service road. Ultimately, the sale to the supermarket chain proceeded in early 2012 after the necessary planning permissions were obtained.
In the meantime, between June 2010 and January 2012, the appellant used the warehouse for storing silage bales, which he had made on the adjoining agricultural land for use as cattle feed, as well as other animal feed and agricultural machinery.
The warehouse was entered in the 2010 rating list with a rateable value of £342,000. The appellant proposed that the unit should be deleted from the list for the period from June 2010 to January 2012 on the ground that it was exempt from rates, under para 3(a) of Schedule 5 of Local Government Finance Act 1988, as an agricultural building occupied together with agricultural land and used solely in connection with agricultural operations on that land. The respondent valuation officer, and the Valuation Tribunal for England (VTE) on appeal, rejected that proposal. The appellant appealed.
Opposing the appeal, the respondent argued that the warehouse could not benefit from the exemption where the storage use of the unit was a “contrivance” designed for the purpose of avoiding liability for rates.
Held: The appeal was allowed.
When asking whether a building was “occupied together with” agricultural land, all factors had to be taken into account to determine whether the building and land were worked together so as to form one agricultural unit: Farmer (VO) v Buxted Poultry Ltd [1993] AC 369; [1993] 1 EGLR 155 applied. The fact that the use was motivated by a desire to obtain exemption from liability to pay non-domestic rates made no difference. It was well established that an arrangement should not be treated differently because it existed for the purpose of tax avoidance: Kenya Aid Programme v Sheffield City Council [2013] EWHC 54 (Admin); [2013] 2 EGLR 138; [2013] EGILR 16 and Makro Properties Ltd v Nuneaton and Bedworth Borough Council [2012] EWHC 2250 (Admin); [2012] PLSCS 150 applied. The appellant’s motive in using his retail warehouse for the storage of silage and agricultural implements was therefore irrelevant to the issue of whether the building was occupied together with the adjoining agricultural land. Irrespective of the advantage that the appellant might achieve in reducing his liability for non-domestic rates, it was both convenient and beneficial for him to store silage in the building. Although that use was temporary and opportunistic while negotiations over the sale of the building to the supermarket chain continued, and notwithstanding that the appellant’s primary motivation was fiscal rather than agricultural, the fact remained that the use itself was substantial, exclusive, beneficial and prolonged. The unit was clearly occupied together with the appellant’s adjoining agricultural land and also with the remainder of the appellant’s holding, which was managed by him as a single agricultural unit. It was therefore occupied “together with” agricultural land between June 2010 and January 2012 so as to satisfy the first limb of para 3(a) of Schedule 5 to the 1988 Act.
During that time, the unit was also used solely in connection with the agricultural operations which the appellant carried out on his land so as to satisfy the second limb of para 3(a). Again, the correct focus was on the use itself, not on the motive for the use or whether the appellant could have arranged his enterprise differently. The building had to be used in connection with agricultural operations on the land with which it was occupied, but there was no further test of necessity in the relationship between the use of the buildings and the use of the land. The fact that it was not necessary for silage or machinery to be stored in the building was therefore irrelevant: W & JB Eastwood Ltd v Herrod (VO) [1971] AC 160 considered.
It followed that the exemption in para 3(a) applied and the warehouse should be deleted from the rating list for the period from June 2010 to January 2012.
Cain Ormondroyd (instructed by Geoffrey Leaver Solicitors LLP, of Milton Keynes) appeared for the appellant; Matthew Donmall (instructed by the legal department of HM Revenue and Customs) appeared for the respondent.
Sally Dobson, barrister
Click here to read the transcript of Wootton (t/a EF Wootton & Son) v Gill (VO)
