Completion Notices for

Business Rates

IRRV London and Home Counties Association

December 2013

Gordon Heath BSc IRRV (Hons)

IRRV National Council Member

Chairman IRRV Law and Research Committee

Honorary Member of the Rating Surveyors Association

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COMPLETION NOTICES

• Purpose to establish starting point of empty period of a new building for business rates purposes ONLY

• Served by the billing authority

• Not directly related to completion for other purposes

• Enables empty rate to be charged after the exemption period

COMPLETION NOTICES

• Still important despite 18 months relief for some new buildings

• if an authority is aware that the remaining work to be carried out on a new building can be reasonably expected to be completed within three months, the authority shall serve a notice on the owner of the building unless the valuation officer (VO) directs otherwise in writing

• if the building is complete then a notice may be served on the owner unless the VO directs otherwise in writing

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COMPLETION NOTICES

• Basic Problem - what is complete?

• 3 stages recognised by the construction industry

• Shell and core - not complete

• Category A – “Builders finish” - floors, ceilings and services - probably capable of completion in 3 months for small developments, but what about large developments?

• Category B - Partitioned ready for occupation – complete – meets the VOA Rating Manual’s definition of a hereditament and a completion notice is probably not necessary – but “complete” means “complete” and not “very nearly complete”

The Tewksbury Case

• Porter (VO) v Trustees of Gladman Sipps

• Upper Tribunal (Lands Chamber)

• [2011] UKUT 204 (LC)

• 28 March 2011, London

• Re: Completion and inclusion in the list of 19 Office Units, Miller

Court, Tewkesbury

The Tewksbury Case

• Gloucestershire VT deleted all 19 entries

• No completion notices served

• Speculative office development – 20 units

• 19 units empty on 1 May 2006

• Plastered walls, suspended ceilings, lighting, air conditioning, raised

floors with voids, WCs

• Some units had alarms, tea points, passenger lifts

• Power as far as the central core only

• External doors, double glazing, some fire doors

• No partitioning, data cabling or telephones

• Car Parking for each unit

The Tewksbury Case

• VO contended that the remaining work was minor or de minimis and

cabling, tea points, etc. were tenant’s fit out

• VO felt the properties were complete and were hereditaments

• Ratepayer contended that the properties were not capable of

occupation as offices without substantial work

• VO Rating Manual – property not a hereditament when substantially

complete but without tenant’s fit out

• Completion notice required at that stage

The Tewksbury Case

• Decision – building is a hereditament if it is ready for occupation

• Must be assessed in the light of the purpose for which it is designed

to be occupied

• No scope for rating a building that is very nearly ready for

occupation without a completion notice first

• Occupier would require more power points, tea points and some

partitioning plus consequential fitting out

• VT correct – Appeal dismissed

Prudential Assurance case

• Prudential Assurance Co Ltd v a Valuation Officer 2011

• VTE Surrey case – 24 May 2011

• Before Prof. Zellick

• RE:3 and 4 The Heights, Weybridge

• Principle established – the validity of a completion notice can be

challenged on a proposal to TOR in the VTE

• Challenge must be timely

• Principle not generally realised before this case

Prudential Assurance case

• Proposals to delete on ground hereditaments improperly entered as

not complete

• Completion notices served but on developer not the owner

• Subsequent agreement between owner and BA as to completion

day

Prudential Assurance case

• VO argued the VTE had no jurisdiction to consider whether or not

the notice was valid as:

• There is a statutory right of appeal for completion notices

• VO in no position to defend validity of completion notice as he did

not serve it

• President rejected VO’s submissions

• If no completion notice then properties not complete and entries

unsound

• BA could be added as a party

• Decision - VTE did have jurisdiction

• Decision – completion notice invalid

Prudential Assurance case

• Did purported ‘agreement’ document change position? - Yes

VTE noted the agreement :-

• did not purport to be a CN,

• did not appear to be a CN and

• the parties thought they were signing an agreement

BUT

• VTE saw ‘no impediment to concluding that, if not an agreement, it

should be treated as a completion notice

• It contained all the information

• Not an essential precondition to an agreement for a

CN to be served on the owner

Prudential Assurance case

• President clearly unhappy about the ratepayer’s stance:

• “…unattractive argument by which a corporate body professionally

advised at the time seeks to resile from an agreement freely entered

into simply because it later discovers that a technical failure offered

it a possible escape route.”

• Common ground between parties that naming and serving CN on

developer rather than owner was fatal to its status. But:

• “Evidence as to the fate of that notice following its receipt would

have been necessary to support any argument that it was indeed a

valid completion notice and we leave open to another day the

question when a notice incorporating mistakes may

nevertheless be valid.”

• Entries confirmed on basis of the agreement

Friends Life case

• Friends Life Company Limited v Alexander (Valuation Officer) and

Huntingdonshire District Council 2012

• Unit 1, Eaton Drive, St. Neots, Cambs.

• Developers - Miller Developments Ltd

• July 2006 Miller sold freehold to Friends Life

• April 2007 Completion notice served on Miller Developments Ltd

• November 2011 Friends Life made a proposal to delete from April

2010 because incomplete and no completion notice served

• Argued that Completion notice was defective and invalid

Friends Life case

• Council argued that:

1. Completion notice correctly served because onus is on Friends Life

to show Miller were not entitled to possession

2. Even if not correctly served, Miller were agents or representatives of

the owner or were managers of the property

3. Even if not correctly served, VT had a discretion to withhold relief

4. Even if VT did not have discretion, Friends Life had waived their

rights to impugn the notice

Friends Life case

• Appeal allowed - TOR from 1/4/10 because:

1. Completion notice not served on correct person because owner

(person entitled to possession) was Friends Life – it was for the

billing authority to show another party was entitled to possession –

billing authority not diligent

2. Service on Miller was not effective because no evidence of agency

3. VT had no discretion to withhold relief because there is no authority

to support the contention that the VT has underlying discretion to do

what was fair and just and “may” did not imply that discretion was

intended

Friends Life case

4. The contention that Friends Life had waived their rights was rejected

because failure to seek judicial review and continued payment was

not a waiver, Huntingdonshire insisted that it was correct to serve on

Miller even when the error was pointed out and although excessive

delay would create a presumption of validity, it was not excessive

because the ability to challenge by a proposal was not generally

realised until the Prudential case

• Property deleted from the 2010 list

• Challenge must be timely but the ability to appeal in the VTE was

not generally realised until the Prudential case

St Paul’s Square Liverpool case

• Valuation Tribunal case heard by Prof. Zellick

• English Cities Fund (General Partners) Ltd and Standard Life

Assurance Ltd (formerly Standard Life Investment Funds Ltd) v Mr D

Grace (VO) and Liverpool City Council

• Appeal against the entries in the list of 2 new office buildings

• Validity of completion notices

St Paul’s Square Liverpool case

5 St Paul’s Sq. - completion notice Aug 2008

• Correct owner not named – notice invalid

• Incorrectly served on Standard Life Investments Ltd

• Rates had been paid

• Removed from both the 2010 and 2005 lists

4 St Paul’s Sq. - completion notices March 2012

• Unlawful to serve floor by floor – seeking one tenant

• Attempt to circumvent the 3 month limit – notice invalid

• Removed from the 2010 list

Aviva and PPG case

• Aviva Investors Property Developments Ltd and PPG Southern Ltd v

Whitby (VO) and Mills (VO) 2013 Upper Chamber (Lands Tribunal)

• [2013] UKUT 0430 (LC)

• 4 newly erected warehouse buildings in Reading and Milton Keynes

– no completion notices

• Entered in the 2005 rating list from 1/4/05 and 3/7/06

• No small power distribution, no or limited lighting, no partitioning of

office space, one unit having no gas supply

• Held – Not rateable hereditaments that can be entered in the rating

list – appeals allowed

• All 4 were deleted from 2005 list

• Completion notice procedure important

• £50,000 costs awarded against the VOA

Beluga House case

• Tull Properties Ltd v South Gloucestershire Council 2012

• Valuation Tribunal case heard by Prof. Zellick

• Beluga House built in 1980s, TOR in 2003 following vandalism in an

illegal “rave”

• Brought back in the list in 2007 but retrospectively deleted as not

being capable of beneficial occupation

• Completion Notice 14 Aug 2008, effective from 20 Aug 2008

• Not a “new building” and not a structural alteration producing a

different hereditament or hereditaments

• Therefore the completion notice is invalid

• Must be deleted from the list

Beluga House case

• My conclusion – On this basis, for an existing hereditament that is

taken out of rating, if there is no structural alteration making it a new

hereditament, a completion notice cannot be served and the VO can

only bring it back into the list if it is a hereditament which means

“Practically complete and ready for occupation for the purpose

intended”

• Further points to consider:-

1. Landlords repairing obligations

2. TOR or reduce to RV £0 or RV £1

MY OVERALL CONCLUSIONS

• The completion notice procedure needs a full review and reform

• Completion notices should be served by and defended by the VOA

• Billing authorities should refer completed buildings to the VOA and

advise on the “person entitled to possession”

• There needs to be a process suitable for large hereditaments

• There needs to be a process for hereditaments that are TOR

• See my article in the IRRV magazine in December 2013 –

“Completion Notices – Not Fit for Purpose”