THE Supreme Court has handed down a landmark judgement that if a business has separate offices within the same building they must be treated separately for business rates purposes.
The case arose from a disagreement in early 2010 between accountants Mazars and the valuation officer about whether offices on the second and sixth floor of an eight-storey office block could be counted as a single unit of property.
Although Mazars’ view that it should be was supported by the Valuation Tribunal for England, the Upper Tribunal and the Court of Appeal, today’s Supreme Court judgement unanimously reverses the previous decisions.
The leading judgement, by Lord Sumption, sets down three broad principles – a geographical test, which will likely require intercommunication or direct access between them, a functional test of whether one space is necessary for the “effectual enjoyment” of the other, and third, that the functional test is objectively applied by the valuer “exercising professional common sense”.
CBRE’s senior director of UK rating, David Cownie, said the decision makes the current system “inequitable” which requires reform.
He said: “Property tax in the UK is the highest in the world and this is another blow for many ratepayers nationwide. The system is inequitable if businesses occupying the same amount of floor space in a building are required to be rated at different levels, due to how that floorspace is configured. The application of business rates has become increasingly ridged and onerous on ratepayers and the Government’s commitment to reform cannot come soon enough.”
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