A recent appeal in Scotland’s Lands Valuation Appeal Court offers clarification on the correct interpretation of key Scottish ratings legislation and the extent to which decisions from outside Scotland can influence Scottish rating law.
The decision also provides a useful reminder to ratepayers on the treatment of ATMs and their potential effect on the net annual value of subjects in the valuation roll.
Background
The case concerned a shop premises in Stockbridge, Edinburgh, and an ATM which was installed at the front of that shop. In short, the legal issue in the case was how the court should approach the proper valuation of those premises, and in particular what account should be taken of the ATM in doing so.
In the period since the premises had been valued for the Roll, the UK Supreme Court (UKSC) had handed down a judgment in a case called “Cardtronics”. This was an English case, and the Justices of the Supreme Court had required to decide how to treat ATMs when reaching a valuation for rating purposes.
The tenant of the Premises in this case argued that the Cardtronics decision amounted to a “Material Change in Circumstances” which, in terms of s2(1)(d) of the Local Government (Scotland) Act 1975 (the “1975 Act”), would mean that the Assessor was required to alter the Valuation Roll to update the value recorded for the Premises.
In terms of that alteration, the appellant argued that he was now in “occupation” of the ATM following the decision in Cardtronics and that the entry of the Premises on the Valuation Roll should include the ATM, as opposed to the ATM having a separate valuation and entry on the Roll.
The Assessor did not agree that it did, and the First Tier Tribunal (FTT) rejected the Tenant’s appeal against that decision.
The FTT found in fact that the appellant’s involvement was limited to basic maintenance, loading cash, and clearing blockages, the ATM was in separate occupation by the bank. It was the bank who was in “occupation” of the ATM.
In any event, Cardtronics was not a “relevant decision” under s.37(1) of the Local Government (Scotland) Act 1975 that would have amounted to a “material change in circumstances” because only decisions of Scottish tribunals and courts listed in the statute qualify. The case also did no more than apply established valuation for rating principles to the facts of the case.
The Tenant appealed to the Lands Valuation Appeal Court.
Decision of the Lands Valuation Appeal Court
For substantially similar reasons as the FTT, the Lands Valuation Appeal Court (LVAC) rejected the Tenant’s appeal.
In the first place, the LVAC agreed with the FTT that the decision in Cardtronics had simply applied established principles to a set of facts. There was no “change” such as to justify an alteration to the Valuation Roll.
Of particular note was the court’s concern to emphasise that the Scots law of valuation for rating is not the same as that of England and Wales. The decision could not therefore be a material change in circumstances.
Key takeaway
Proprietors, whether asset managers or those with a large property portfolio, will need to make sure that they take independent Scots law advice on any business rate liabilities that may arise – it is not safe to assume that the same approach can be taken between Scottish and English assets.
Please contact Matthew Farrell, Gareth Hale and David Ford at Brodies for any advice you may require on valuation for rating.
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