The case, Thomas Miller & Co v Valuation Officer, was taken in order to determine how the vital rental evidence which supports the underlying levels of rateable value on City offices should be treated.
The Valuation Office Agency’s approach would have resulted in a 20 % higher level of rateable value. The decision overturns a previous case at Exchequer Court, 33 St Marys Axe, Travellers Management Ltd v Valuation Officer, which was decided in the Valuation Officers favour on the 7th June.
The case involved a refurbished office block at 90 Fenchurch Street which was leased by Thomas Miller.
The treatment of the rent free inducement in order to arrive at a net effective rent was the main element in dispute. The appellants sought to apply the same approach which had being established on previous rating lists which involved taking the majority of rent free up to the first five year rent review.
The Valuation Officer sought to apply a totally new approach of spreading the inducement over 10 years. The substantial difference to the end result meant there was a 20% gap between the parties.
The Tribunal determined that although they considered the appellants approach correct it should not be followed blindly.
The end result had to stand up to scrutiny. In particular, the level of value should not be out of kilter with other comparable assessments.
The Tribunal were presented with comparables to support the approach and the decision has reduced the assessment from rateable value £ 1,770,000 to £ 1,396,000
Keith Cooney Knight Frank's Head of Business Rates said:
“This is an important decision for the City of London ratepayers as it establishes a precedent on the treatment of the vital rental evidence which underpins the business rates assessment.
We welcome this decision which provides clarity to ratepayers and their representatives as well as the Valuation Office Agency. This should now enable a full and proper scrutiny of the evidence to proceed and levels of value adjusted accordingly. This will ensure the ratepayers are treated fairly and are not charged excessive business rates.”
Bjorn Bowles – Partner Knight Frank added:
“This decision provides a precedent in how to treat rent free periods in on offices the City of London. It ensures a consistent approach is adopted between previous Rating Lists and the City and West End markets”
