In the March edition of this briefing, we covered Harrods’ appeal to the Lands Tribunal in respect of its Knightsbridge store. That appeal challenged the basis on which business rates due in relation to the flagship store were calculated.
The Lands Tribunal has recently decided that the rateable value of the store in the 2000 rating list should be reduced to £16,575,000 (from £19,750,000). This will result in a substantial refund of overpaid rates and a reduced liability for Harrods in the future. The rateable value had been previously reduced by the London (South West) Valuation Tribunal to £18,850,000.
The appeal represented a rare opportunity to argue the proper application of the statutory formula to large retail premises, with the Tribunal allowing Harrods’ appeal, andmaking allowances for the following features:
- Repair costs: the Tribunal agreed that these were out of the ordinary, by reason of the building’s listed status, external repairs and additional internalmaintenance, awarding a deduction fromthe rateable value to account for these addition costs;
- Fragmentation: the Tribunal found that the store was disadvantaged by the location of its goods delivery and despatch facilities some distance fromthe sales floors, and its valuation incorporated an allowance to reflect this feature; and
- Modernity: the Tribunal awarded a deduction fromthe store’s rateable value to reflect its lack of air-conditioning facilities.
The Tribunal also agreed that the Knightsbridge store was so large that Harrods itself would have been the only bidder for the property if it were available to let but did not consider that any allowance should be given to Harrods for this feature.
The outcome is an encouragement to other retailers to reconsider their reluctance to challenge rating assessments.