At 2.55pm on September 11, 2001, when the world was focused on the terrorist attack on New York’s twin towers, a ministerial adviser wrote in a memo:

“It is now a very good day to get out anything we want to bury.”

For that, she was sacked.

This week, with half the office workers in England and Wales on holiday or marooned at home by rail strikes and Team GB accruing its first medals in Rio 2016, the Valuation Office Agency found a very good day to get something it wanted to bury.


What was the background? In July 2015 the Supreme Court ruled that where a tenant in a building in multiple occupation occupied two floors that were not adjoining (or “contiguous”) each floor was a separate unit of property for rating purposes. Had the two floors been treated as one, the occupier might have saved some money. Sometimes, the rateable value of one merged unit can be less than the total value of the two (or more) individual units.

So the ruling of the Supreme Court was favourable to the Valuation Officer whose preferred outcome was that the two non-contiguous floors were each valued separately.

Contiguous floors

What is the rule for adjoining or contiguous floors? Let’s think of a tenant on second and third floors in an office block.

Valuation officers had for some years adopted the practice of treating contiguous storeys under common occupation as one hereditament, but non-contiguous storeys as distinct hereditaments.

So the second and third floors would be rated together although the second and sixth floors, say, would each be rated separately.

In what seems to be a coup for the Valuation Officer, the Supreme Court by a majority concluded that if vertically contiguous units in an office block do not intercommunicate and can be accessed only via other property (such as the common parts of the building) this will be a strong indication that they are separate hereditaments. If direct communication were to be established, by a staircase, the occupier would usually be said to create a new and larger hereditament in place of the two which previously existed.

In other words, and unless in a future case the ratepayer can persuade the Court to come to a different conclusion, the Supreme Court appeared to decide that the Valuation Office Agency’s previous approach was wrong and gave away value to ratepayers.

The consequences

It was expected that the changes to rating lists following this decision would be introduced with the new rating list that comes into force on 1 April 2017.

Something to bury

The VOA’s press release on 8 August 2016 changes that perception.

The press release gives some examples of how the VOA will interpret this ruling. One is that Company H owns a five floor office block. It occupies four floors and rents out one floor. All floors are accessed by common parts. Previously Company H had its four floors rated in one merged assessment, with a discount for the total area occupied. Company H will now have separate rating assessments for each floor. Company H could lose the allowance for size or fragmentation that it would achieve in the open market. Company H’s rate bill is set to increase.

It gets worse. This change may affect the business rates ratepayers have already paid, as any changes are likely to be backdated to 1 April 2015 in England or 1 April 2010 in Wales or the date that the ratepayer became the occupier.

Finally, the VOA say “until we review each property, we will not be able to let you know whether your property is affected, or how much your rates bill could change.”


In summary, the court changed the law and taxpayers are left with retrospective liabilities for which they have not budgeted and cannot budget because the taxing authority cannot stipulate what the amount of the extra liability is. And this is where the taxing authority has got to in its public pronouncement over a year after the court ruling was given.

At the very least, this is a shabby way to treat business. No wonder the VOA wanted to bury it. Thank goodness they needed no more cover than annual holidays and a rail strike.

What should you do?

If you receive a retrospective demand, BLP would like to hear from you. It is important to find out how the VOA will behave and the scale of the problems created by this aggressive approach to tax collection. And we can support you in finding the right professional advice. 8 August 2016