1 March 2017

Good News for Business Rate Payers: the Supreme Court decision in S J & J Monk v Newbigin (VO), 1st March 2017

If you are renovating or converting commercial property, do you still have to pay business rates whilst that work is being undertaken? That was the question for the Supreme Court in SJ & J Monk v Newbigin.  Until recently, the long standing practice of the Valuation Office had been to give buildings undergoing reconstruction a nominal rateable value of £1, but that all changed with the Court of Appeal decision in Newbigin.  The effect of the Court of Appeal’s judgment was that unless the property was incapable of being economically returned to its former state, it would remain at its original rateable value, and business rates would continue to be payable even though it could not be used at all during the course of redevelopment.  A factory being converted to flats, for example, would continue to be rated as if it could be occupied as a factory, despite the fact that it was not intended that it ever be used a factory again.

However, in a landmark ruling on 1st March 2017, the Supreme Court overturned the decision of the Court of Appeal, and restored the previous long-settled practice of distinguishing between properties that are in disrepair or being repaired, from those where the works go beyond repair.  Whilst the former must still be rated as if they are in a state of reasonable repair; the later should be given a nominal rateable value on the grounds that for the duration of the work they are not capable of beneficial occupation.

For a fuller summary of the decision by David Reade QC and Dominic Bayne, who appeared in the Supreme Court on behalf of the successful appellant, please follow this link.