Valuation for rating – Revenue principle – Assessor’s scheme – Stately home – Separate Coffee Shop – Unum quid – Relevance of contents – Valuation and Rating (Scotland) Act 1956 section 6 (8)

Roxburghe Estates v Assessor for Scottish Borders Council
24 July 2003

The rate-payer was occupier of a stately home, Floors Castle. The subjects of appeal were exhibition rooms within the Castle together with a gift shop and restaurant and a separate Coffee Shop. Three issues arose: first, whether the Coffee Shop was part of the unum quid; second, whether the Assessor’s method of valuation by taking a figure of 3% of gross turnover was to be preferred to direct application of the revenue principle (which would produce a nil valuation because the subjects were not capable of being operated at a profit); and third, if the subjects were to be assessed on the Assessor’s scheme, whether specific allowance should be made to reflect the valuable contents. The subjects of appeal were operated as part of the “Castle Opening Operation”. The main purpose of this operation was to generate revenue to help defray the substantial cost of maintaining the castle, its contents and policies. Other parts of the Castle used as domestic accommodation were subject to Council Tax. Part used as the Estate Office was separately entered in the roll at an appropriate figure. Although the Castle Opening Operation had on occasion made a small profit it was clear that it would now run at a loss having regard to the expense of operation and maintenance. The only accounts available to the Tribunal included items of expenditure attributable to the operation of the Castle as a whole and showing each item of expenditure apportioned between the domestic operation and the Castle Opening Operation. Different percentage apportionments in relation to different items of expenditure had been taken in agreement with the Inland Revenue in an attempt to produce "fair" accounts. However, the purpose of preparing accounts for the Revenue was not established in evidence.

Held: 1. On the facts the Coffee Shop should be entered separately on the roll. It was operated along with a separate garden centre business; was open all the year round; and was outside the pay barrier which controlled visits to the other subjects. 2.The Tribunal was satisfied that although the reason for opening the subjects to the public was to generate as much income as possible the fundamental reason for occupation of the subjects was not primarily commercial. Accordingly it was inappropriate to use the revenue principle. In attempting to assess what the hypothetical landlord and tenant would agree as a rent in the circumstances, the Tribunal had little to go on. However it was entitled to have regard to the fact that the Assessor’s scheme had been agreed by proprietors of a wide range of broadly similar types of property. This evidence was not strong but, in absence of any other relevant evidence, could be accepted as a guide. 3. Although it would be appropriate to distinguish between empty and furnished subjects, it would be inappropriate to make specific allowance for movables on the available evidence because the 3% had been accepted by ratepayers with valuable moveable contents. It was observed that the need to find suitable premises for accommodation of valuable movables was part of the motivation for occupation. 4. However,having regard to certain specific factors including the part played by contents, and the scale of the expense cost involved in relation to the particular subjects (much larger than any of the comparable subjects), some modification of the Assessor’s approach was appropriate. This had to be made on a broad basis and a reduction from 3% to 2% should be made.

Cases referred to

Hoare V.O. v National Trust; National Trust v Spratling V.O. 1998 RA 391 (CA)
Hoare V.O. v National Trust; National Trust v Spratling V.O. 1997 RA 295 (LT)
Maxwell Scott v Roxburgh Assessor (1890) 17 R. 833

See full decision:  LTS/VA/2002/3