Upper Tribunal hands down judgment in test case on rateable value of commercial offices


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The Upper Tribunal handed down judgment last week in a test case on how to approach the rateable value of commercial offices. The case is worth millions of pounds to HMRC in tax revenue. The issue before the UT was whether the rateable value of Grade ‘A’ office premises is increased by the fit out works carried out by the tenant.

The main points were:

  • The Tribunal rejected the proposition that a building in Category B condition is worth no more than a building in Category A condition; its rateable value of the building is increased by tenant’s fit out works;
  • In ascertaining the rateable value of the building, it is permissible to amortise the costs of the fit out works; there is no statutory requirement to apply the statutory decapitalisation rate.  The UT declined to follow Dorothy Perkins in this respect;
  • On an appeal of wide importance, it is incumbent on the parties to bring forward good quality market and factual evidence, if necessary by asking for the Tribunal’s assistance in the form of orders for disclosure or witness summonses.

The VO’s appeal was allowed. The Judgment may be accessed here.

Sarah Sackman represented the Valuation Office. She was led by Jenny Wigley KC of Landmark Chambers.