The Covid 19/Coronavirus pandemic and the government's response to it (i.e. the introduction of laws/issuing of directions, curtailing freedoms - both business and personal) changed the practical amenity that could be extracted from many business/commercial properties in England and Wales. One of the results of this, was that some business rates ratepayers began asking whether this meant that the rateable value placed on their property/hereditament might warrant a reduction, to take account of this reduced practical amenity (for the duration of the pandemic and government's responses to it (or, at least, the duration of the worse parts of it/the strictest government's responses)). Any such challenge to a hereditement's rateable value is made to the Valuation Office Agency (through the 'check and challenge' process). 

According to the explanatory notes ('Explanatory Notes') accompanying[1] the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 ('2021 Act'):

'Since the start of the coronavirus pandemic, the Valuation Office Agency has received a large number of checks (a prerequisite to challenging rateable values) arguing that interventions concerning the use of property (such as requirements to close businesses or to maintain social distancing to comply with health and safety legislation) are a material change of circumstances.'

and that 

'If successful, these checks and subsequent challenges may impact hereditaments shown on the rating lists and the level of rateable values across a wide range of properties, sectors and regions ahead of the next revaluation.'

This raised an important issue: The VOA undertakes general revaluations periodically, with the last one being 1 April 2017 (using a valuation date of 1 April 2015) and the next one due on 1 April 2023 (using a valuation date of 1 April 2019), which adjust (if required) a hereditament's Rateable Value to reflect changes in economic factors, market conditions or changes in the general level of rents since the last general revaluation. But did the Covid 19 pandemic and the government's response, constitute a 'material change of circumstances' in respect to these hereditaments, such that Rateable Values ought to be updated (on a check and challenge, prior to the general revaluation on 1 April 2023), to take account of these events/government interventions?  

The issue was unclear, so Parliament decided to step in and it enacted primary legislation, to clarify the law in this area. On 15 December 2021, Parliament brought into force the 2021 Act.

The 2021 Act - Intention 

The 2021 Act contains only a single[2] section relevant, namely section 1. That section stipulates that coronavirus and the Government's response to it, are not and were not, a material change of circumstances, for the purposes of determining what is the appropriate Rateable Value for a hereditament. 

Before setting out that section, it is helpful to quote what the government intended by the section. 

The Explanatory Notes states:

'The Government does not believe that changes to rateable values through challenges to the rating list or the removal of hereditaments from the rating list is the right mechanism to help businesses that need support during the pandemic. On 25 March 2021 the Government therefore announced that they would introduce primary legislation with retrospective effect to clarify that coronavirus and the Government's response to it is not an appropriate use of the material change of circumstances provisions.'[3] [bold added]

The Government justified this on the basis that 'The Government has instead provided support to ratepayers affected by coronavirus through business rates relief.'[4]

Section 1 of the 2021 Act 

Section 1 is entitled 'Determinations in respect of certain non-domestic rating lists' and provides:

'(1) This section applies to the making of a relevant determination in relation to a rating list.

(2) The following are relevant determinations for the purposes of this section-

(a) a determination, for the purposes of compiling or maintaining a rating list (whether or not it is still in force), as to whether a hereditament ought or ought not to be shown in the list;

(b) a determination, for the purposes of maintaining a rating list compiled on 1 April 2017 (whether or not it is still in force), as to the rateable value of a hereditament.

(3) A determination is not a relevant determination for the purposes of this section to the extent that it concerns whether a hereditament or some part of a hereditament-

(a) is or is not domestic property, or

(b) is or is not exempt from non-domestic rating under Schedule 5 to the LGFA 1988.

(4) In making a relevant determination, no account is to be taken of any matter (whether arising before or after the passing of this Act) that is directly or indirectly attributable to coronavirus.

5) But subsection (4) does not apply to any of the following matters (which, accordingly, may be taken into account in making a relevant determination, whether or not the matter is attributable to coronavirus)-

(a) the physical state of the hereditament in respect of which the determination is made, including whether that state affects the mode or category of occupation of the hereditament;

(b) the quantity of minerals or other substances in or extracted from the hereditament in respect of which the determination is made;

(c) the quantity of refuse or waste material which is brought onto and permanently deposited on the hereditament in respect of which the determination is made.

(6) For the purposes of this section, matters attributable to coronavirus include (but are not limited to) anything done by any person-

(a) with a view to compliance with any legislation which concerns the incidence or spread of coronavirus,

(b) with a view to compliance with any other legislation for reasons relating to the incidence or spread of coronavirus, or

(c) in response to, or otherwise in consequence of, any advice or guidance given by a public authority relating to the incidence or spread of coronavirus.

(7) This section applies to a determination made by reference to a day, or a matter as it is assumed to be on a day, which falls before, as well as on or after, the day on which this Act is passed.

(8) In this section

"coronavirus" means severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2);

"domestic property" has the meaning given by section 66 of the LGFA 1988;

"hereditament" has the meaning given by section 64 of the LGFA 1988, and the reference in subsection (2)(a) to a determination as to whether a hereditament ought or ought not to be shown in a list includes a determination as to whether something is or is not a hereditament;

"the LGFA 1988" means the Local Government Finance Act 1988;

"rating list" means a local non-domestic rating list or central non-domestic rating list under Part 3 of the LGFA 1988.

(9) The Valuation for Rating (Coronavirus) (England) Regulations 2021 (S.I. 2021/398) (which are superseded by the provision made by this section) are revoked.' [bold added]

SIMON HILL © 2023*

BARRISTER 

33 BEDFORD ROW  

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