Supreme Court Reverses Landmark Business Rates Decision In Woolway -V- Mazars

The Supreme Court Decision on Business Premises Assessment

July 2015 the Supreme Court handed down its judgment in the case of Woolway (VO) v Mazars LLP. Mazars, an accountancy firm, occupied the second and sixth floors of Tower Bridge House, an eight-storey office building in central London. The Valuation Officer had assessed the two floors separately for business rates and Mazars challenged this, seeking to merge the two assessments to form a single unit of assessment. The Valuation Tribunal agreed that the two assessments should be merged because the two floors were occupied by the same business and were inter-dependent.

The Valuation Officer (VO) appealed against this to the Upper Tribunal (Lands Chamber) which found that the two floors should be a single assessment. However decided that the test should not be whether the use was inter-dependent, but whether it was possible to move between the two floors without leaving the building. The VO appealed against this to the Court of Appeal, who agreed with the decision of the Upper Tribunal.

The VO then appealed to the Supreme Court which has now determined that the two floors must form separately rateable assessments. The judgment suggests that the principal test of whether property should form a single assessment for rating is a geographical one, and the test should be whether or not the parts “directly intercommunicate” with one another. The Supreme Court decision makes clear that units of property which are occupied together but do not directly intercommunicate can, on occasion, form a single hereditament but, for them to do so, the use of one part must be necessary for the effectual enjoyment of the other part and that question depends not upon the use of a particular occupier but on the objectively ascertainable character of the property. This has previously been taken to be whether or not the units were adjacent.

Implications of the Supreme Court Decision

In effect, the Court is saying that if two properties are occupied together but do not directly intercommunicate they should not be assessed together unless one part could not effectively be let without the other.