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In an unusual case, the Upper Tribunal (Lands Chamber) has determined that a former retail warehouse building in Bedford should be treated as exempt from rates as an agricultural building, because it was used solely in connection with agricultural operations carried out on agricultural land close to the building. The case of Edward Wootton (trading as E F Wootton & Sons) v Gill (VO) (2015) UKUT 0548 (LC) concerned a building that had been developed as a retail warehouse and occupied by Courts Furnishings and subsequently by The Home Store, but which had become vacant in 2010.
The owner of the building, who farmed agricultural land adjoining the building and elsewhere, became liable for empty rates. He created an access from his land to the vacant building and installed a roller shutter door to allow the building to be used for storage of silage bales and agricultural machinery. Agricultural land, and agricultural buildings, are exempt from business rates – including empty rates. The owner of the building asked the Valuation Officer to delete its assessment once the use for storage of silage bales and agricultural machinery started, but the Valuation Officer refused to delete the assessment. The Valuation Tribunal for England also refused to delete the assessment, on the grounds that the building was not subsidiary to agricultural land and was not solely used for agricultural purposes.
The ratepayer appealed to the Upper Tribunal (Lands Chamber) which found that the building was occupied together with agricultural land, including land adjacent to the building. The Tribunal also found that the sole use of the building was in connection with agricultural operations on that land and other land. On this basis the Tribunal was satisfied that the agricultural exemption should apply and ordered that the assessment should be deleted for the period of the agricultural use.
This case shows the effect that the burden of 100% empty rates liability, introduced in 2008, has on property owners, and the means and ingenuity they will apply to mitigate that liability. The Tribunal accepted that the use was “opportunistic”, but that did not remove the need to apply the law correctly. The Tribunal also helpfully reminded both the Valuation Office and Billing Authorities that taxpayers are entitled to order their affairs so as to reduce tax liability and that, if such an arrangement is within the law, then it is open to the taxpayer to adopt it and no additional tax liability can arise simply because the arrangement is designed to avoid tax. Avoidance is legal, evasion is not! Whilst the present, punitive, empty rate regime persists we can expect to see more such inventive activity.
