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Council wins Upper Tribunal appeal over valuation of museum for business rates purposes

A city council has won an appeal to the Upper Tribunal (Lands Chamber) over how museum properties are valued for business rates purposes.

In Stephen G Hughes v Exeter City Council the court said that the Royal Albert Memorial Museum (RAMM) in Exeter should not have been valued based on the cost of rebuilding (contractor’s), which is the Valuation Office Agency’s (VOA) preferred method.

According to Lambert Smith Hampton (LSH), which acted for Exeter, the court instead ruled that the museum buildings should be valued based on net income (receipts and expenditure).

LSH said the ruling reinforced the decision of a similar appeal by York Museums and Gallery Trust in 2017, in which it was determined the contractor’s basis was not an appropriate valuation method and the rateable value of the loss-making Yorkshire Museum should be reduced to £1.

Founded in 1868, RAMM is the largest museum in Exeter and is housed in a Gothic Revival building of local New Red Sandstone that has undergone several extensions during its history.

LSH said the museum had been entered in the 2010 non-domestic rating list at a rateable value of £510,000 with effect from 15 December 2011. This followed the completion of a £24m project of essential repairs and refurbishment that started in 2008. This assessment was appealed and a revised rateable value of £445,000 was agreed.

Following the York Museums and Gallery Trust decision, the agreed value was again challenged resulting in the appeal to Upper Tribunal by the VOA.

The Upper Tribunal’s ruling means RAMM’s rateable value will be reduced to £1, effective from 1 April 2015. The reduction should also be applied to the 2017 Rating List which will result in significant savings for the museum.

Colin Hunter, Director of Business Rates at LSH who advised Exeter City Council on the appeal, said: “This is the third appeal of this kind that we have taken to the Upper Tribunal and, in all cases, the court has found in our favour. However, what is interesting about this case compared with the others is that it makes it clear that the choice of valuation method isn’t a matter of legal principle but rather should be based upon fact and evidence.

“The result is therefore likely to have a significant impact on the way English and Welsh museums are valued in the future, particularly older museums situated within historic buildings which would have substantial rebuild costs.”

The VOA now has until 7 February 2020 to appeal against the decision.

Hunter added: “Whether the VOA decides to appeal or not remains to be seen. However, either way, we’re keen to bring the VOA together with representatives from the various museum bodies across England and Wales in order to agree a way forward. We will also have discussions with the Valuation Tribunal for England (VTE) to establish how best to clear the appeals against the 2010 rating list that are still outstanding, paving the way for the 2017 Rating List to be appealed or corrected.” 

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