RGM Properties Ltd v Speight (Listing Officer) HMRC

A building is a council-tax dwelling, and therefore a hereditament, when it is capable of occupation for the purpose for which it is intended to be used. The relevant purpose is residential use, rather than the commercial purpose of holding premises as letting stock. A completion notice under Local Government Finance Act 1992 section 17 and Schedule 4A to the Local Government Finance Act 1988 is a deeming mechanism and is not a precondition to entry in the valuation list where the property is already complete and capable of occupation. Procedural fairness requires a tribunal to permit evidence relevant to the reliability of critical evidence, but an appeal succeeds only where the unfairness is material. A tribunal’s factual conclusion is not perverse merely because conflicting evidence exists.

RGM Properties Ltd appealed to the High Court under regulation 43 of the Valuation Tribunal for England Council Tax and Rating Appeals Procedure Regulations 2009 against the VTE’s decision that four flats at The Hollins, Whitehaven, were dwellings assessable for council tax from 20 March 2008.

The VTE found that the flats were capable of occupation despite outstanding works, including damp-related work and the absence of a fire alarm. It also refused to admit further photographs at a reconvened hearing, which had been arranged to examine the reliability of the listing officer’s photographs. The appeal concerned the proper legal test, the need for a completion notice, and procedural fairness.

1. Appeal dismissed. The VTE had applied the correct test. A building is a hereditament when it is capable of occupation for the purpose for which it is intended. For these premises, that purpose was use as dwellings, not their commercial exploitation as letting stock. The VTE was entitled to find, on the evidence, that the flats were capable of residential occupation.
2. The authorities, including Ravenseft Properties v Newham LBC [1976] 1 QB 464 and Post Office v Nottingham City Council [1976] 1 WLR 624, supported the capable-of-occupation test. The distinction was between a building being ready or capable of occupation and the later provision of furniture or equipment needed for its use. Porter v The Trustees of Gladman Sipps [2011] UKUT 204 (LC) provided an otherwise uncontroversial summary, although the Court preferred “capable of occupation” to “ready for occupation”.
3. The statutory assumption concerning a reasonable state of repair operates only after a property is accepted as a hereditament, when its council-tax band is assessed. It cannot make an otherwise uninhabitable building capable of occupation. Conversely, ordinary disrepair does not prevent banding once the property is capable of being a dwelling.
4. Section 17 and Schedule 4A of the Local Government Finance Act 1992 and the Local Government Finance Act 1988 provide a deeming procedure where completion is delayed. They do not make prior service of a completion notice an absolute precondition to entry in the valuation list where the listing officer concludes that the property is already complete and is a hereditament.
5. The VTE acted unfairly by restricting the reconvened hearing to the date of the listing officer’s photographs when their reliability as a representation of the flats’ condition was the real issue. However, the unfairness was immaterial. The additional photographs could not realistically have produced a different result. A procedural error is therefore a ground of appeal only where it is materially unfair.
6. The VTE was not required to obtain a structural survey merely because the claimant asserted that the premises were structurally unsound. The decision was not perverse: it was open to the VTE on the evidence and did not fall within the rare class of wholly impermissible decisions.

The judgment states that the appeal was brought to the High Court under regulation 43 of the Valuation Tribunal for England Council Tax and Rating Appeals Procedure Regulations 2009 from the VTE’s decision dated 24 August 2010. The High Court dismissed the appeal.