The decision of the Upper Tribunal (Lands Chamber) in Arnold v Dearing (VO) (2019) UKUT 0224 (LC) concerned a former public house, known as the Crooked Spaniard, at Saltash, near Plymouth. The property had ceased trading as a pub in 2008, and had begun to be used as a wedding venue. It had previously been agreed that the proper assessment for the property in that use was rateable value £18,000 with effect from 1 April 2010. The use as wedding venue stopped in 2010 and part of the property was let out for storage use. That tenancy ended on 1 April 2015.

The ratepayer made a proposal seeking to divide the assessment to reflect the letting of part for storage use. That proposal was not agreed and the Valuation Tribunal for England, having heard the ratepayer’s appeal, refused to divide the assessment. The ratepayer appealed to the Upper Tribunal (Lands Chamber).

By the time of the hearing before the Upper Tribunal the parties had agreed that the assessment should, properly, be divided to reflect the letting of part, but disagreed as to the effective dates of any division. The parties also agreed that the effect of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009, as amended, was to limit the effective date of any division of the assessment to 1 April 2015. The ratepayer contended that the division should continue beyond that date. The respondent Valuation Officer contended that, as the letting expired on 1 April 2015, from the following day, 2 April 2015, the assessment should revert to its former description and rateable value. The parties also disputed the values to be applied to the two separate parts.

The respondent Valuation Officer argued that, applying the reality principle to the appeal property following the ending of the tenancy part of it, pointed clearly to the fact that the property was a former public house and wedding venue, and not a storage facility with a bar attached to it. The appellant argued that such a change went beyond the scope of the proposal which had been made to divide the assessment, and that there was no actual reversion to the former use.

The Tribunal found that it was proper for the respondent Valuation Officer to rely upon regulation 38 (7) of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 to justify the reversion to a single hereditament with the description of wedding venue and premises.

In respect of the valuations of the different parts, the Tribunal preferred the approach adopted by the respondent to the valuation of the part of the property not used for storage, and determined a rateable value of £1,575 based on the value applied to a small clubroom in the locality. In respect of the part let out for storage, the parties had been able to produce little evidence that the Upper Tribunal found helpful. The Tribunal was of the view that the rent paid this part of the property was not a reliable indicator of value because it was agreed six years after the valuation date and was on terms that were very different to the statutory basis. From the limited evidence available, the Tribunal determined an assessment of rateable value £3,500 for this part of the property.

Having decided that, at the conclusion of the letting of part, the assessment should properly revert to a single hereditament, the Tribunal determined that the correct level of value was that previously agreed between the ratepayer and the Valuation Officer, which was rateable value £18,000 as a wedding venue and premises, from 2 April 2015.

Whilst the valuation aspects of this decision are of limited general significance, being based as they are, on the particular circumstances of an unusual property, the decision of the Upper Tribunal that Regulation 38 (7) of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 can be applied to re-merge two assessments following the end of the tenancy, will be of interest to all practitioners. From this it appears that the wording of that regulation, which many had taken to apply only to the ending of temporary external factors, may well have much wider implications.