The Supreme Court has now issued guidance on how multi-let buildings will be valued for the purposes of business rates. Historically there has been some confusion as to how to treat the valuation of different floors in a multi-let building where a particular occupier occupies more than one floor.
Business rates are a tax on individual properties, not on a business. If the occupier holds two separate properties, it will pay business rates for each. The question is then what is the property to be valued and how is this identified when the properties are geographically proximate, for example in the same building but on different floors?
The case concerned accounting firm Mazars who occupied the 2nd and 6th floors of a London office block. The two floors occupied by Mazars were entered as separate properties in the 2005 ratings list as they were not contiguous. Mazars applied to merge the two entries on the rating list on the basis they were functionally inter-dependent. The Valuation Tribunal agreed the entries should be merged. This decision was then approved by the Upper Tribunal (Lands Chamber). The Valuation officer then took the issue to the Supreme Court.
The Supreme Court disagreed and has held that the occupation of the individual floors should be entered as separate entries on the rating list. Where two separate floors are occupied if they are not next to one another and do not directly intercommunicate i.e. have internal doors / staircases linking them then they will be two distinct taxable properties. In reaching the decision the Court has given clear guidance for valuers. The valuation agency website suggests that there could be increases in rates and also a back dating of those increases. This, when combined with the new valuations listing due next year may cause some occupiers concern and they may want to examine the basis on which they are paying business rates.
- Woolway –v- Mazars  UKSC 53