Small Business Relief: A Novel Scenario
Small business rates relief was introduced under the Non-Domestic Rating (Reliefs, Thresholds and Amendment) (England) Order 2017. It enables a ratepayer occupying one hereditament with a rateable value of no more than £12,000 to claim a 100% reduction in their rates bill.
This provides an incentive to split a larger hereditament into smaller units where the characteristics of the premises permit it. Can barristers’ chambers benefit from the relief?
What’s the background?
Pump Court Tax Chambers is a successful set of barristers' chambers, members of which also occupied an annex on two floors of a neighbouring building (as well as its other premises). That annex was entered as a single hereditament in the local non-domestic rating list with a rateable value of £152,000.
The appellant (the head of chambers) proposed that the list be altered to split the entry and show each of the rooms occupied by individual barristers as a separate hereditament. The Valuation Officer opposed this.
At issue was whether each of the rooms occupied by individual barristers were part of a single hereditament - or six individual hereditaments qualifying for the small business rates relief.
The judge in the Upper Tribunal (Lands Chamber) pointed out that this practice of barristers grouping together to occupy sets of chambers is not recent - yet there is no authority dealing with the question of how it should be rated.
Non-domestic rates are payable by the occupier of a hereditament. The judge set out the legal principles as to the identification of a hereditament and its occupation. The appellant argued that the individual members of chambers were in rateable occupation of their own rooms, whereas the Valuation Officer argued that the members were jointly in rateable occupation of the whole premises.
The outcome
The appellant’s appeal failed. The UT concluded that the individual members of chambers were not in rateable occupation of their separate rooms given that the whole of the premises were in joint occupation of all members.
All the members had agreed to jointly acquire premises from which to conduct their separate businesses; and all agreed to be bound by the terms of the Constitution and policies approved by Chambers. Also, under clause 46 of the Constitution, the property acquired for chambers was held beneficially on trust jointly for the members.
Furthermore, chambers retained paramount control of the building, for example it allocates and services the rooms. The rating list would continue to show the premises as a single hereditament.
What does this mean?
The ruling is not unsurprising. Each member may have their own particular room – but the arrangement was analogous to individual lodgers having a room licensed by the landlord; or a
supermarket operator permitting occupation by a bank of an ATM site. The landlord and the supermarket, respectively, retain paramount control of the premises – as did chambers.
The ruling demonstrates that the rules will be applied with reference to the full facts and surrounding circumstances of the use and control of the premises in question. As the judge stated: “The wider context is important.”
1Prosser v Ricketts [2024] UKUT 264
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