Merged Muddle - A Business Rates Warning
“Merged Muddle: Business Rates Guidance Re-Written for Multi-let Buildings”
When valuing multi-let buildings, for the purposes of a rating assessment, it was commonly understood that floors within the same occupation throughout the building would be valued under one rating assessment provided they have contiguity throughout the building thus potentially reducing the Rateable Value of the property. This principle has now been overturned following the recent case of Woolway v Mazars in July 2015 in a decision handed down by the Supreme Court. The Valuation Office Agency has now re-drafted its own Rating Manual to reflect the decision with wide repercussions expected for the ratepayers who occupy similar premises.
This case concerned a multi let office building located in Tower Hamlets where the second and sixth floors were under the same occupation. It was proposed that the floors be valued under one assessment for the purposes of the rating list. Although the decision that the floors should not be merged is probably the correct one in this scenario, the ruling of the Supreme Court and the new interpretation has overturned more than 50 years practise and will affect a large number of tenants in multi-let buildings.
Due to the ruling and the interpretation of the Supreme Court the VOA have now re-written their own rating manual with new guidance. Properties now under the same occupation can only be merged if they are internally connected without shared access. For example a tenant occupying a first and second floor office which are only accessed via a shared lift or staircase cannot have its rates assessment merged under the new ruling. The same applies to horizontal separation, if the suites are not interconnecting and the tenant has to go through commons areas to get from one to another, there will be a separate assessment. If however they have an internal staircase or doorways which are not shared or communal then they can be merged.
How we can help
The Valuation Office will be issuing draft valuations in October 2016 in advance of the 2017 Revaluation and you will have the opportunity to appeal and challenge the information contained. If you think you might be affected by this new ruling or require general advice regarding your business rates assessment please contact our Business Rates department and one of our Business Rates experts will be in touch.