By Stuart Hicks – Director
A recent decision of the Upper Tribunal (Lands Chamber) has many interesting aspects for rating practitioners; but for those running historic buildings as museums and galleries it delivers a much welcome result. The ruling came in a test case on how these types of properties should be valued for rating purposes.
It centres around an appeal by the York Museums and Gallery Trust which runs the Castle Museum, Yorkshire Museum, Heritage Centre and York Art Gallery. The Trust challenged the rateable values for each property which in part determines the level of business rates that the Trust must pay. The Valuation Officer’s case was that the properties should be valued using the contractor’s basis of valuation (cost of replacement) whilst the Trust said that a receipts and expenditure approach should be adopted (related to the number of visitors and revenues generated at each site).
A significant number of museums across the UK are valued using the contractor’s basis which can translate into very high business rates in a sector well known to be subject to significant cuts in funding and significant financial pressure.
The decision now means that in many cases assessments will have regard to the financial position and visitor numbers associated with such properties. A popular attraction such as the Castle Museum will have a rateable value that reflects it popularity whilst smaller or lesser known properties will be subject to much lower, or even nominal assessments. In the subject case the Castle Museum was determined at a rateable value of £112,000 but the Yorkshire Museum was determined at a rateable value of £1.
Good news then for museums and galleries – there are over 700 that could be affected by this ruling – at a time when many are struggling with continuing austerity. The decision also has implications for others in the charitable sector.