In this appeal which was referred to the Tribunal under section 1(3A) of the Lands Tribunal Act 1949, the subjects entered in the Roll were described as ‘Port, Cromarty Firth’. They were entered at revaluation with effect from 1 April 2005 at a Rateable Value of £375,000. The appellants (“CFPA”), who are entered as occupiers, are the Authority established under the Cromarty Firth Port Authority Order Confirmation Act 1973, as revised (“the Order”).
 As developed at the hearing, the appeal involved two aspects:-
(i) Extent of subjects. The entry on the Roll might be described as a composite entry. It includes certain shore facilities and offices, etc. at Invergordon, including facilities built out beyond high and low water marks and held by the appellants under ground leases from the Crown Estates Commissioners (areas separately let out and therefore not occupied by the appellants being excluded and made the subject of separate entries). There is no dispute in relation to this treatment of these landward subjects. The Assessor, however, contends that the entry also correctly includes the area within the Cromarty Firth (including a rectangular area outside the mouth of the firth) which is designated under the Order as being included in the “Port”. The Assessor considers this area (which was coloured in red in a plan attached to the Order and which we shall describe as “the red area”) to be a harbour which is in the rateable occupation of the appellants.The appellants contend that this area should not be included in the entry because they do not have such rights in relation to it as to be in rateable occupation.
(ii) Revenue Principle Valuation. Parties are agreed that the subjects (whatever their correct extent) are properly valued under the revenue, or receipts and expenditure, principle. In short, this principle involves assessing relevant income and expenditure, considering appropriate adjustments and thereafter determining the ‘tenant’s share’ of the ‘divisible balance’, the remainder being the ‘landlord’s share’, i.e. the rent under the hypothetical tenancy. In the event of the appellants’ argument as to the extent of the subjects being upheld, certain income and expenditure should be omitted and there is no dispute that in that event the divisible balance is a negative figure but also that the value to be entered in the Roll should be £88,100, so that there would in that case be no need to consider valuation issues. In the event, however, of that argument not being upheld, the appellants again contend for a value of £88,100 (although a concession made in evidence as to the value of tenant’s plant appeared to increase that figure slightly), but the Assessor maintains his proposed value of £375,000. The valuation issues included: whether the valuation should be based on one year’s accounts (2003) or an average of 4 years (2001 to 2004); treatment of rent and rates; whether to allow depreciation of landlord’s as well as tenant’s assets; rate of interest on capital items; and the ‘tenant’s share’. There is an interrelationship making it appropriate to consider at least the last two of these issues together.
 In summary, the Tribunal has decided:-
(i) The “Port” area, as defined in the Order, is properly included in the assessment as a harbour occupied by the appellants along with the landward subjects.
(ii) The Assessor’s proposed Net Annual Value of £375,000 is upheld.
The appeal is accordingly refused.
 At the oral hearing on 29 June to 1 July 2010, the appellants were represented by Mr Haddow, QC, instructed by Messrs J & E Shepherd, Chartered Surveyors, Glasgow. He called Captain Ken Gray, the appellants’ Port Manager/Harbour Master, Richard Fea, their Finance Manager, and Alan McKenna, FRICS of Messrs Shepherds, to give evidence. The Assessor was represented by Mr Clarke, QC, instructed by the Assessor for The Highland and Western Isles Valuation Joint Board, who called Douglas Gillespie FRICS, the Assessor, to give evidence. Both sides also lodged productions. The Tribunal subsequently carried out a site inspection at which they visited the Cromarty Firth area and were shown the facilities at the Invergordon Service Base.
 It must be recorded that the Grounds of Appeal, which had an appended valuation at a figure of £115,500 and were not formally adjusted at any time, made no mention of the argument about the extent of the subjects and did not seek deduction of the related items of income and expenditure. During June 2010, the appellants apparently informed the Assessor that they sought deduction of certain items which they described as “conservancy income and expenditure”. This claim was advanced in writing for the first time in an e-mail of 21 June which, however, made no mention of a dispute about the extent of the subjects. That argument was only developed during the course of the hearing, when it was made the basis for the deductions sought. The appellants’ productions contained a number of valuations apparently ranging from £88,100 to minus £273,700. The Assessor, however, did not object to the appellants’ making their submissions about the extent of the subjects and contending for a reduced valuation of £88,100.
Adamson v Clyde Navigation Trustees (1860) 22D 606; (1863) 1M 974; and (1865) 3M (HL) 100
Gardiner v Leith Dock Commissioners (1864) 2M 1234
Mersey Docks and Harbour Board Trustees v Jones, noted (1865) 3M (HL) 100,102
Leith Dock Commissioners v Miles (1866) 4M (HL) 14
Edinburgh Parish Council v Assessor for Edinburgh(1906) 8F 521
Burghead Harbour Co Ltd v George (1906) 8F 982
Assessor for Lanarkshire v Clyde Navigation Trustees 1908 SC 620
Underdown (VO) v Clacton UDC and Clacton Pier Co. Ltd (1958) 3 RRC 274
Brighton Marine Palace and Pier Co v Rees (VO) (1962) 9 RRC 77
Cairngorm Chairlift Co Ltd v Assessor for Highland Region 1995 SLT (Lands Tr) 35
Re Southampton Container Terminal, 17.10.2008 (Hampshire South Valuation Tribunal)
Hong Kong Electric Co Ltd v Commissioner of Rating and Valuation  RA 123
Lands Valuation (Scotland) Act 1854
Douglas & Green, ‘The Law of Harbours, Coasts and Pilotage’, 3.16, 5.21-27
Armour on Valuation, 1-07,8,9,10,11,12, 6-28,29, 6-30, 6-33,34,35, 19-60 to 74
 The Order sets out the principal duties, responsibilities and rights of CFPA. Subsequent revision Orders are not material. The Order supplements CFPA’s powers and responsibilities as “port authority” under the Pilotage Act 1987, Harbours Act 1964 and Harbours Docks and Piers Clauses Act 1847.
 The Preamble to the Order refers to the natural advantages of the Firth, to recent industrial developments in the area and the exploitation of oil in the North Sea and the public interest “that further development be encouraged in that area”, and also narrates:_
“(4) In connection with the foregoing it is expedient that an Authority be established for the improvement, conservancy and development of the said area, and that such powers be conferred as will enable the Authority to function as a port authority at appropriate stages of such development, and that the other provisions of this Order be enacted:”
 Schedule 1 of the Order sets out the physical limits of “the Port” which are also identified on the plan attached to the Order. The port as defined comprises a substantial part of the Cromarty Firth (“the Firth”) extending from a point immediately to the east of the line of the Cromarty Bridge, which carries the A9 trunk route, to a designated seaward limit in the adjacent Moray Firth. The seaward limit extends approximately 3 miles out, 2.2 miles south and 3 miles north from the mouth of the Firth. Within the Firth the boundary is the mean high water mark. The “port premises” are defined in Section 3 as the “docks, landing places and all other works and land for the time being vested in, belonging to or administered by the Authority as part of the undertaking”.
 Section 7 of the Order provides:-
“7 (1) It shall be the duty of the Authority, subject to the provisions of this Order, to take all such action as they consider necessary or desirable for or in connection with-
(a) the improvement and conservancy of the Port;
(b) the provision, maintenance, operation and improvement of port and harbour services and facilities in, or in the vicinity of, the Port;
(c) the control of development in the Port, and the promotion of development in and in the vicinity of the Port.
(2) The Authority shall have power either themselves or by arrangement between themselves and other persons to take such actions as the Authority consider necessary or desirable whether or not in, or in the vicinity of, the Port-
(a) for the purposes of discharging or facilitating the discharge of any of their duties, including the proper development or operation of the undertaking;
(b) for the provision, maintenance and operation of-
(i) warehousing services and facilities;
(ii) services and facilities for the consignment of goods on routes which include the port premises;
(c) for the purpose of turning their resources to account so far as not required for the purposes of the undertaking.
(3) Particular powers conferred upon the Authority by this Order shall not be construed as derogating from each other or from the generality of subsections (1) and (2) of this section.”
 Section 13 provides:-
“13 (1) The Authority may deepen, widen, dredge, scour, cut and improve the bed and banks of the Port and the seaward approaches thereto, and for such purpose may blast any rock within the Port or in or near the seaward approaches thereto.
(2) Any materials taken up or collected in the exercise of the powers of this section shall become the property of the Authority and may be used, sold, deposited or otherwise disposed of as the Authority think fit:
Provided that no such materials shall be deposited below the level of high water except in such position as the Secretary of State for Trade and Industry may approve and subject to such conditions or restrictions as he may impose.”
 Section 14 provides:-
“14 (1) The Authority may construct, lay down, maintain and operate in and over the Port such works and equipment as are required for or in connection with the exercise by them of any of their functions.
(2) The Authority shall obtain the approval of the Commissioners of Northern Lighthouses and the Queen’s harbour master of the dockyard Port of Cromarty before placing in or near the Port a buoy, beacon, light or other device of any nature designed to assist navigation.”
 Section 15 provides:-
“15 (1) The Authority may upon such terms and conditions as they think fit grant to any person a licence (in this Order referred to as a works licence) or to construct, maintain, alter, renew or extend any works on, under or over tidal waters or tidal land below the level of high water in the Port notwithstanding any interference with public rights of navigation or other public rights by such works as constructed, maintained, altered, renewed or extended.
(2) Application for a works licence shall be made in writing to the Authority and shall-
(a) be accompanied by plans, sections and particulars of the works to which the application relates;
(b) specify whether the applicant holds such rights in, under or over land as are necessary to enable him to enjoy the benefits of the licence and, if not, the action taken to enable him to obtain such rights if the licence is granted;
and in granting such licence the Authority may require modifications in the plans, sections and particulars so submitted.
 The Order similarly authorizes the Authority to grant licences to dredge; and prohibits others from carrying on such works or dredging, and confers on the Authority a series of other powers, e.g. in relation to disposal of wrecks, removal of obstructions, boarding vessels, etc.
 Part V of the Order confers on the authority powers relating to regulation of the Port, including the making of bye-laws.
 Part VI and Schedule 3 authorises the Authority to charge and recover reasonable charges for services and facilities provided by them.
 There was little if any dispute about primary facts. On the basis of the evidence, submissions and our own site inspection, we find the material facts to be as follows.
 The Order confers on CFPA the standing of a “trust port”, like various other typically medium sized or small ports and harbours supported by a variety of types of businesses such as oil-related, fishing, ferry terminals, etc. CFPA is governed by a Board of representative elected members. It has no shareholders or owners. Profits are ploughed back into the harbour undertaking for the benefit of CFPA’s stakeholders, being a variety of local interests. CFPA’s investments are funded from its own resources on a commercial basis.
 From its junction with the Moray Firth the Firth runs in an initially westward and then a south westwardly direction for approximately 16 miles up to the line of the Cromarty Bridge. At the junction with the Moray Firth the Firth narrows and the land on both sides rises up quite steeply. A deep water channel mainly runs down the centre of the Firth. The water on both sides is of varying depths with substantial areas which dry out at low tide. The deep water channel runs for approximately three quarters of the length of the firth. Due to the limited clearance at the Cromarty Bridge and the shallowing of the channel it is not possible for vessels of commercial size to navigate beyond the bridge. The overall appearance is of a good sized sea loch with an extensive area of water. Although there are various marine facilities there are also lengthy distances of coast line which are simply agricultural fields extending down to the water’s edge. The total length of coastline adjacent to the appellants’ area of jurisdiction is approximately 59 miles. Several old harbours exist, including one used as part of a ferry service across the mouth of the firth. There are yacht moorings. There are no significant shore based marine facilities on the south side of the firth. The Firth has long been regarded as a safe refuge and anchorage for vessels. Prior to the 1973 Order, it had been a “Queen’s Harbour” used by naval vessels. The choice of Nigg Bay as the site of a large oil rig building yard and the establishment of an aluminium smelter at Evanton will have been influenced by the benefits arising from the sheltered marine location.
 The main onshore marine facility operated by the appellants is the Invergordon Service Base. This was constructed by the appellants on the sea bed owned by the Crown and is held by the appellants under a long lease from the Crown. It comprises a level area of land of approximately 30 acres, with deep water quays fronting the Firth, a small harbour and a larger wet basis called “The Queen’s Dock”. Serving both the quays and the dock are heavy lift pads, reinforced areas of hardstanding capable of supporting mobile cranes used in the loading or unloading of vessels or assisting in any repair or maintenance work being carried out to vessels or rigs at the base. Within the base are warehouse buildings as well as oil storage tanks for bunker fuel. Offices, toilets and other facilities are available throughout the base. There is a private road system. A security fence with a controlled entry point protects the base.
 Two large areas of the Invergordon Service Base are let out by the appellants to third party companies. These areas have separate entries in the Valuation Roll and do not form part of the appeal subjects.
 The appellants also operate Saltburn Pier at Invergordon, originally constructed by Alcan and also now held by the appellants on lease from the Crown. This comprises a T-jetty with roadway causeway. Its primary function is the import and export of cargo, the quayside crane being hired to an operator. Stevedoring services are hired by the vessel operators and not provided by the appellants.
 The appellants also occupy the Port Office, a three storey modern building located in Invergordon, also part of the appeal subjects.
 The appellants market the marine and industrial facilities at the Firth as a whole. These include, in addition to the facilities operated by the appellants, in summary: the Nigg Yard, originally an oil rig fabrication yard and now substantially closed, although an oil terminal remains operational and a large dry dock remains; the Admiralty Pier at Invergordon, which was previously connected to a large tank farm located in higher land above the village and used to refuel naval ships; and an area of general industrial development called “Highland Deephaven” on the site of the former aluminium smelter close to the village of Evanton. None of these other facilities is occupied by the appellants or part of the appeal subjects.
 There are no leases or formal agreements between the appellants and the Crown Estates Commissioners (“CEC”) in relation to any areas of sea bed in the Firth (other than reclaimed land forming parts of the appellants’ marine facilities described above), the appellants’ position being regulated by the Order.
 The Firth is regarded as a convenient and safe locality for oil rigs either laid up between contracts or when requiring to be located close to shore facilities for repair or overhaul. Rigs can either be of the ‘jack-up’ type, where the legs are wound down to rest on the seabed, or floating and secured by several mooring ropes to anchors in the seabed. They may be in the Firth for short or long durations, being generally moored or sitting on the sea bed south of the deep channel between the line of the Nigg Yard and the Invergordon Service Base. The Queen’s Dock can also accommodate oil rigs which are then tied up alongside the eastern quay of the dock. When there is a larger volume of on-shore work required a rig can be positioned further into the Firth, west of the service base.
 The Firth is visited by a variety of vessels, including cargo ships, tankers, cruise ships and pipe laying vessels as well as oil rigs. Various charges are made by the appellants, exercising their powers under the Order. The charges are published and subject to review from time to time.
 There are 5 main categories of charges. Harbour Dues are levied on all vessels arriving in the Firth. These dues are calculated on a rate applied to the registered gross tonnage of the vessel and are raised on all vessels whether going to facilities operated by the appellants or to any of the facilities operated by others. A higher rate applies to tankers. There is a separate rate for small vessels. Berth Dues are also levied on the gross tonnage of the individual vessel but apply only to vessels which tie up at the facilities operated by the appellants. Anchorage Dues are also levied on vessel tonnage but in the case of oil rigs on a daily basis (with a differential rate applied to jack-up rigs). They are described as applying, variously, to vessels occupying “anchorages” or “an anchorage location within the Firth” or “an anchorage location”. Passenger Dues are applied as a rate per passenger either embarking or disembarking. Goods Dues are applied as a charge per tonne of cargo to goods passing over the facilities operated by the appellants. The rate varies depending on the type of material. The appellants’ statement of charges from January 2003 stated that a full rebate was given in respect of goods dues from piers outwith the control of the appellants, apparently implying a right to levy such dues although such charging was not then being applied.
 An extensive range of further levies, dues, etc. includes charges for such miscellaneous services as mooring gangs, security guards, gangways, craneage, etc., as well as sale of potable water, fuel, etc.
 No charge is made by CEC for any vessel passing through the waters of the Cromarty Firth. Where, however, an oil rig remains for 90 days, CEC levies a charge, in addition to the appellants’ charges, at a very much lower rate. This is collected on CEC’s behalf by the appellants and remitted to CEC.
 The appellants provide a pilotage service which is obligatory for vessels above a certain tonnage. A separate charge is made for this. The pilotage income approximately balances the costs incurred by the appellants in providing the service.
 “Conservancy”, for which the appellants have responsibility under the Order, is an acknowledged term in the context of marine activities. It encompasses the provision of safe navigation, the maintenance of water depths, the marking of any channel and any obstructions, the carrying out of sea bed and other marine related surveys, the provision of a response facility for marine incidents, the regulation of marine traffic and, overall, the provision of a safe passage from sea to berth.
 There is no separate charge for conservancy in the appellants’ schedule of charges, nor are either the costs of conservancy or any income deemed to be secured from it shown separately in the appellants’ published accounts or in their management accounts.
 Trust ports are the subject of government guidance as to their performance. This recommends the establishment of a performance measurement regime which identifies the “stakeholder dividend”. It is envisaged that ports should earn a return currently of 3.5% in real terms, previously 6% to 8% nominal, based on the weighted average cost of capital.
 Since 2000, CFPA’s Board has required the Port Manager to achieve a return of at least 8% on all capital investment. This target has always been exceeded, with actual returns of between 10% and 14%. In deciding on investment, CFPA balances the predicted return with the risk associated. Risk factors include the fluctuation of North Sea oil-related activity, environmental risks, economic downturns, marine accidents, etc.
 CFPA’s audited accounts for the years to 31 December 2002 (including comparison figures with 2001), 31 December 2003 and 31 December 2004 were available. The adjusted figures for income (excluding pilotage income and rents for the separately occupied parts) and expenditure (including rates; excluding grants and depreciation) were:-
 In the year ended December 2003, heritable and leasehold property was depreciated in the appellants’ accounts at rates between 1% and 10%, showing a value of £9,622,094; equipment and floating plant, between 10% and 20% (£583,594); craft and navigation aids, between 10% and 15% (£7065); and IT equipment (apparently included in iother items, 33%. These rates were unchanged from the previous year.
 On 31 March 2003 the official Bank of England base rate was reduced from its previous level of 4% to 3.85%. This was part of a generally downward trend from 2000 until 2004 when it started gradually to increase.
 Assessor’s valuation
|Depn. on tenant’s plant||£60,000|
|Interest on working capital, 33.33% of £1,700,000||£29,000|
|Interest on tenant’s plant||£30,000|
|Deduct 20% of remainder||£96,200|
 Appellants’ valuation, excluding pilotage
|Income, ex rent and storage and pilotage||£2,262,002|
|Expenditure, ex. pilotage||£1,731,979|
|Gross profit (EBITDA)||£530,023|
|Allow depn. (less amortisation)||£256,931|
|Profit Net of Depreciation (Divisible Balance)||£273,092|
|Tenant’s floating capital 33.33% of total expenditure of £1,731,979 @ 8%||£46,186|
|Tenant’s Plant (floating craft & plant) @ 8%||£80,000||£126,186|
|Tenant’s share @ say 40%||£58,762|
|Landlord’s share @ say 60%||£88,144|
Appellants’ valuation, excluding pilotage and conservancy
|Income, ex rent, storage and conservancy||£1,721,819|
|Expenditure, ex pilotage and conservancy||£1,112,399|
|Gross profit (EBITDA)||-£89,557|
|Depreciation less amortisation||£256,931|
|Profit Net of Depreciation (Divisible balance)||-£346,488|
|Tenant’s floating capital 33.33% of total expenditure @ 8%||£29,664|
|Tenants’ Plant (Floating craft & plant) @ 8%||£80,000||£109,664|
|Tenants’ share at say 40%||-£182,461|
|Landlord’s share @ 60%||-£273,691|
 Mr McKenna did not provide any report or precognition of his evidence.
 In relation to ‘conservancy’ and the extent of the subjects, Mr McKenna accepted that this matter had not been raised before a meeting with the Assessor in June 2010, because, he said, of a difficulty in arranging meetings. He had been given the figures claimed but had not checked them. He had estimated conservancy expenditure at 50%. He agreed that conservancy income and expenditure were not shown separately in the appellants’ accounts, but maintained that ‘mooring dues’ were conservancy income because the moorings had to be maintained. The appellants were not rateable occupiers of the Firth. He agreed that the appellants could dispose of their physical assets and still charge harbour dues. He suggested that if there had to be a positive valuation figure, this might be 5%.
 Mr McKenna said that he had been involved in three other port valuations, at Stranraer (Stena Lines), Ullapool and Mallaig, but these were different types of port. Not all ports were conservancy ports. In the settlements of these appeals there had been no analysis of the valuations, merely negotiation on the figures.
 Mr McKenna thought that rates had been included in the expenditure. He also accepted that rent had been included.
 In Mr McKenna’s opinion, depreciation of all the appellants’ assets should be allowed. He agreed that it would normally be depreciation of only tenants’ assets, but the other assets “come back to the clients at the end of the day”.
 Mr McKenna initially said that the 8% figure which he put on tenant’s capital was a rate of return on investment. On being pressed in cross-examination as to whether this meant he was allowing investment return twice, he suggested the 8% was an interest rate. He did not produce any borrowing or lending rates. As to the amount of tenants’ plant, he initially said that he considered that the figure of £1,000,000 which he had just accepted as a “sensible” figure should be increased to the undepreciated figure of around £2,000,000. In cross-examination, however, he agreed that it should be £569,983, a depreciated figure in the accounts (compared to the Assessor’s £600,000).
 Mr McKenna considered that the tenant’s share of the divisible balance should be 40%, compared, he said, with 32% at Southampton, 53% in the Cairngorm case, and ranging between 20% and 70% in other cases. Southampton was very well located. 20% would be too low in comparison. Another way of looking at the division was available if the occupier’s expected or achieved rate of return on investment was known.
 Mr McKenna said that his analysis followed the approach of the Central Assessor who had provisionally valued the subjects at £133,000 before the assessment became Mr Gillespie’s responsibility. Mr Gillespie’s initial valuation of £375,000 appeared to follow a ‘shortened method’ of taking 17% of receipts under the RICS joint guidance, but the percentage was not laid down.
 Mr Gillespie spoke to a helpful and thorough precognition. He had considered the appellants’ character as ‘trust port’ undertakers, along with guidance about their governance and objectives. He accepted that they operated on a commercial basis, but also pointed to recognition of the ‘stakeholder’ dimension involving some non-commercial element, although they were, he said, encouraged to try to make higher returns. A return on investment of between 6% and 8% nominal, subsequently amended to 3.5% in real terms, had been envisaged. The financial performance of the large trust ports was below the benchmark of the largest port company PLCs. So they were a commercial organisation with a less pressing view to profit. The Cromarty Firth might attract commercial interest, but would be at the bottom of the size range for that. A trust was the likeliest hypothetical tenant. A trust would take a lower return. In cross-examination, Mr Gillespie said that it was a difficult question whether there was any need to adjust the accounts of a non-commercial occupier in order to get to the hypothetical occupier, but that he had not done that in this case.
 Mr Gillespie considered that he was valuing a harbour – in a wide sense, a haven for ships – and the associated piers, quays, etc. He would include in the revenue of the harbour any income derived from the rectangular area in the Moray Firth and was not aware of any apportionment of such income. The essence of the revenue principle was to derive the relevant or adjusted income, deduct relevant costs, deduct a further amount for depreciation on tenant’s plant, and thereafter allow reward to the tenant for the use of capital and for risk and endeavour, the residue being the rent or NAV. Reviewing the component stages, Mr Gillespie said that financing costs associated with creation of the subject or accumulated debt or repayment of capital were ignored. He acknowledged the practice of deducting pilotage income and expenditure, which generally balanced out, although it was not altogether clear that this adjustment was correct, as pilotage was derived from the port authority’s operation of the harbour. The aim was to establish “EBITDA”. Depreciation allowed in the accounts in respect of tangible assets such as the port structures and buildings had to be added back, because the tenant was only to be allowed depreciation on non-rateable plant. The tenant was to be allowed such amount from the resultant balance as to justify him taking up the tenancy but no more than was required to do so. Mr Gillespie listed five ways of arriving at the appropriate sum. There was scope for confusion about what was meant by the ‘divisible balance’ and a danger of missing items or double counting. The total amount of reward to the tenant could be arrived at in one way and expressed or presented in another. Derived figures would not necessarily transport from one subject to another. In cross-examination, Mr Gillespie acknowledged that it was an arcane area.
 He accepted that this case involved the accounts of an owner-occupier, and accepted that it was difficult when the owner-occupier had expended huge amounts in comparison with the investment of the hypothetical tenant. He was aware that the Central Assessor had taken depreciation across all classes of assets but thought that wrong: it was difficult to see a landlord giving the tenant this further sum of money. He did not accept the suggestion that the hypothetical landlord might be getting something for which he had not paid. He did not regard depreciation as an outlay. The situation of a non-profitmaking undertaking did not apply here.
 Mr Gillespie said that he had followed the same approach as was apparent in the Cairngorm case and analysed the decision in that case in two ways. It was important not to confuse these. He had adopted 5% instead of the 8% interest used in that case because the general level of interest rates at the relevant date (1.4.2003) was lower. There was no reason to disparage the standard approach of allowing 20% of the balance to the tenant, but he had also taken note of the percentage rate of return on the tenant’s working capital and plant. That rate could then be compared with the appellants’ target rate of return, the Trust Ports guidance advice of 6% to 8% and the Southampton decision.
 Turning to the particular valuation, Mr Gillespie considered that it was correct to look at a number of years, although one year might happen to be truly representative. He had not taken a 5 year average because there appeared to have been some sort of depression in the late 90s and early 2000s. On the evidence, his figure for EBITDA of £600,000 was more representative than the appellants’ £530,023. He allowed £60,000 for depreciation on tenant’s plant taken as an average from the accounts. £70,000 might be regarded as fairer, but there was a question whether there was some amortization. His figure of £600,000 for tenant’s plant was a representative figure from the accounts. He had initially followed the traditional approach, with 5% interest on tenant’s capital. This was a ‘bank rate’, because money was being used, and followed what was done in the Cairngorm case. He then allowed the tenant a further 20% of the remaining balance. That provided a return to the tenant of £155,200 on investment of £1,166,666 or 13.3%. Given the evidence about the target rate of return, Mr Gillespie thought that was reasonable and also covered the additional dimension of the possible purely commercial operator. The 20% was the same broad rate applied at the start of the Cairngorm case but adjusted upward in that instance because of the character of the business and the risks involved. Expressing the Cairngorm result differently, as allowing the tenant a return of 18%, implied a share of the balance for risk of 10% on the interest rate approach. There would be cases where it would be best to proceed by application of a return on tenant’s capital, principally where there was a substantial amount of capital involved. However, the amount of tenant’s capital could be very small, as at some small trust ports, where that approach might suggest too low a reward. His approach was to be fully aware of what rate of return was being awarded via the application of the ‘template’ approach. Recent cases had simply looked at the return. His figures reflected removal of the risky element, and he did not consider that activity would fall below the embedded level. In Mr Gillespie’s view, the features of this case were the scale, the unique nature of the facility and the range of business: it was “a good-going port”.
 Mr Gillespie said that the appellants’ approach was superficially the same, but introduced a rate of return in place of interest on tenant’s capital, thus allowing a rate of return more than once. They could not therefore draw conclusions from the percentage tenants’ shares in the Cairngorm and Southampton cases, which were on different bases, and they were erroneously allowing a return of 8% on capital plus 40% of the balance arrived at after allowing that return. There was an additional hidden aspect as regards comparison with Southampton, where a real and not a nominal rate of return had been taken. Further, the rate of return for a large port in the commercial sector would be higher than that for trust ports. The Southampton nominal rate was about 12%. A 13.3% rate of return for the Cromarty Firth subjects, resulting in the valuation of £375,000, was more than enough.
 Finally, said Mr Gillespie, his valuation might be slightly understated because the expenditure taken had included rent, possibly around £60,000, which should be added back.
 Mr Gillespie then addressed the very recently intimated ‘conservancy’ argument. He acknowledged that this had been mentioned in a range of sources as a deduction but, as with pilotage, he had always thought of it as a balancing adjustment. In his opinion, it was not correct to adjust for this. The grant by Parliament giving the harbour into the hands of the authority also gave them the largely unrestricted power to raise revenue made up as the authority thought fit subject to certain rights of appeal. ‘Conservancy’ as such was not charged. There appeared to be no necessary connection between charges for, in particular, anchoring, a perfect use of the harbour, and expenditure. Mr Gillespie could see no reason for ignoring income or expenditure arising from such use of the harbour. There was no logic to an approach conceding that harbour dues were rateable but maintaining that not all harbour dues under the same scheme were rateable. The occupier of the harbour had optimized his charging possibilities to provide as large a balance of income over expenditure in relation to this item as he could achieve. There was no valid reason for ignoring that profit and deciding that there was at the subjects no balance of income over expenditure. The position in England, where ‘hereditaments’ had to be within the billing authority area, was different. In Scotland, assessors had entered subjects extending out to sea, not just where there was an actual connection with the land, and some exclusions by legislation tended to support that position.
 Mr Haddow’s argument about the extent of the subjects was based substantially on a decision in 1863 at one stage of a long-running litigation, Adamson v Clyde Navigation Trustees. In order to avoid repetition, we find it convenient to summarise his and Mr Clarke’s submissions about this decision and some subsequent cases touching on its status, when recording the Tribunal’s consideration of this issue.
 Mr Haddow started by outlining the difference between the parties on the extent of the subjects and explaining that the consequence of the appellants’ argument succeeding would be that the surplus of the ‘harbour dues’ payable by vessels proceeding to non-CFPA subjects, and the mooring dues, over the costs of conservancy, in accordance with the exercise carried out by Mr Fea, would be removed from the revenue calculation. It was, he said, much easier to consider the statutory hypothesis if the ‘pink’ area was excluded so that the hypothetical tenant would clearly be the operator of the subjects. The Assessor had erroneously equiparated the appellants’ rights under the Crown Estates leases with the supervisory and other statutory obligations. This was not a harbour but merely a stretch of water, analogous perhaps to a street, and those obligations did not make the appellants rateable occupiers. The courts, he argued, had not approved of such equiparation of supervisory charging to use public waters with occupation. He reviewed passages in Armour, 1-07 to 1-12, in relation to various subjects around or on water. Water intra fauces terrae was the property of the Crown but not necessarily within local authority areas and rateable, the examples of that mostly being connected in some way with the land. Pilotage dues were accepted by all to be excluded. The mere fact of entitlement to charge dues (which were open to statutory challenge) did not create rateable occupancy.
 Mr Haddow explained the need to look at the historical position because subjects like this had for many years been valued by formula and outwith the normal scheme. He then reviewed the historical position, referring to Armour at 6-30 (“piers”) and 6-33 onwards (“harbours, quays, wharfs, docks”) and to Adamson v Clyde Navigation Trustees (1863), particularly at 975, 981-2, 984, 985 and 987; Burghead Harbour Co Ltd v George, particularly at 982 and 995-8; Mersey Docks and Harbour Board Trustees (as noted in Adamson v Clyde Navigation Trustees (1865) at 103); and Leith Dock Commissioners v Miles, at 16. The appellants were not in rateable occupation and their entitlement to charge and make a surplus on dues other than relating to the landward assets did not arise from their rateable occupation. They did not have a ius incorporale. Their position was consistent with the joint guidance on The Receipts and Expenditure Method, the SAA scheme and the VOA Practice Notes on Docks and Harbours. Reference was also made to Armour at 6-28, 29 (“ferries”).
 Asked by the Tribunal about the extent of the appellants’ powers, Mr Haddow acknowledged the possibility that they could prevent any other activity in the red area, and in particular might be able to prevent the Crown from granting leases for, e.g. fish farms, if that interfered with or jeopardized the safety of their harbour operations.
 Mr Clarke submitted that the whole of the pink area on the Order plan is, on the evidence, a harbour (or part of a harbour) and that the appellants are occupiers. “Harbours” were included in the definition of “lands and heritages” in the Lands Valuation (Scotland) Act 1854. Roads were not included, so that analogy with roads did not assist the appellants. In considering the extent of the harbour, Mr Clarke referred to Armour at 1-07, 1-09 to 1-12. This was not an opus manufactum but a ius incorporale extending from the high water mark beyond the low water mark, although it might require to be intra fauces terrae which would admittedly raise an issue about the rectangular area outside this firth. The extent of the harbour was a matter of facts and circumstances and the crucial facts were the extent of the appellants’ jurisdiction, level of control and right to levy charges.
 Mr Clarke also reviewed the authorities, pointing out in particular that the Poor Law Acts did not include harbours in the definition of lands and heritages. He referred to Adamson v Clyde Navigation Trustees (1860), and (1863) at 980, 982, 985, 987 to 989, 990, 991; Gardiner v Leith Dock Commissioners at 1239, 1241, 1242, 1245; Adamson (1865, in Lords), at 102, Leith Dock Commissioners v Miles at 16-18; Lanarkshire Assessor v Clyde Navigation Trustees at 626.
 The right of harbour, said Mr Clarke, could be granted by Act of Parliament (Burghead supra, at 996). He reviewed the Order’s provisions, particularly the preamble, the sections conferring powers and Section 55 conferring the power, qua port authority, to levy charges. There was nothing left which the Crown could convey. The appellants could be and were the only occupiers, who could prevent the Crown from granting further rights. There must have been rights of harbour which were subsumed by the Order’s provisions. Accordingly, the Order transferred the right of harbour. Reference was made to The Law of Harbours, Coasts and Pilotage, at paras 3.16 and 5.21-27. The conservancy duty arose ex officio and was a duty of care. There had, in the Assessor’s view, been muddled thinking about both pilotage and conservancy.
 Mr Clarke also submitted that if the appellants’ submission was accepted, a means of tax avoidance would be created, although he accepted that the appellants’ structure of charging was entirely genuine and legitimate.
 Mr Haddow had a number of submissions in support of the appellants’ valuation of £88,100 in the event of their argument about the extent of the subjects failing.
 He first explained why the appellants had only taken the figures for one year, 2003. This had been more practical where detailed calculations of some items were required, and had also followed the practice of others, e.g. the Central Assessor who had initially been the responsible Assessor.
 Mr Haddow accepted that the accounts included some expenditure on rent. There was, also, he said, an issue about rates: if a rateable value of £375,000 were fixed, the figure for rates in 2005/06 would be 46.1% of that figure.
 Mr Haddow moved on to the significant differences between the parties. On the claimed deduction for depreciation of landlord’s, i.e. heritable, assets as well as of tenant’s plant, he accepted that the practice guidance and the Cairngorm and Southampton cases were against this but pointed to passages in Armour at 19-68, Edinburgh Parish Council v Assessor for Edinburgh, as well as two cases on sinking fund payments (which he said had the same result as depreciation), Underdown (VO) v Clacton UDC and Brighton Marine Palace and Pier Co v Rees (VO), in which the reference was to renewal of all the assets.
 In the Cairngorm case, Mr Haddow said, there had been comparison between the total return to the tenant and the return on landlord’s capital, but the landlord in the different hypothetical situation had not paid although the business model depended on the fact that the owner-occupier alone was involved. That was significant where, as in the present case, there was imbalance between landlord’s and tenant’s capital. The problem of taking a particular mathematical approach was demonstrated by the Hong Kong Tribunal’s consideration of the argument for a prior allocation of 25% of the divisible balance to the tenant (Hong Kong Electric Co Ltd v Commissioner of Rating and Valuation, at paras.153 to 159). Under the traditional Scottish approach, depreciation of tenant’s plant then interest on floating capital and on tenant’s capital were deducted, but the latter two might simply be deducted from the tenant’s share if they were an indication of the return which was being given up. There had been evidence about the return obtained by the appellants on investment, at 6% to 8% or better. There had been no mention of allocation of the ‘divisible balance’ on the basis of the overall return. A very flexible approach was called for – small differences in percentage returns could produce large differences in the result. The Tribunal should substitute a value of £88,000 or alternatively provide means of calculating the value.
 Mr Clarke referred to the treatment of the revenue principle in Armour at 19-60 to 74. He submitted that it must at least be legitimate to look at more than one year’s accounts, as the Assessor had done. It was better to analyse several years.
 The treatment of rates as an expense was not simple: there was some circularity, and also the complication of transitional relief. If further consideration of this were directed, the Assessor could supply evidence on it.
 Mr Clarke criticised the adoption of a rate of 8% on working capital and tenants’ plant, on the basis of what the tenants would have realised on their investment, as inconsistent with Mr McKenna’s evidence.
 Depreciation, said Mr Clarke, was a valuation matter to be decided on expert evidence rather than Mr Haddow’s submission which was in effect a re-writing of the evidence. Prima facie valuation of the tenant’s estate should only include depreciation on that part. Consideration in Armour at 19-62 to 64 concerned undertakings which were forbidden to make profit. Depreciation was not the same as a sinking fund: one was an accounting exercise, the other actual expenditure. There was no evidential basis in this case, as there had been in the cases referred to by Mr Haddow, for similar treatment.
 Mr Clarke then referred to the Cairngorm case, at 41F-H, and then, in relation to returns on capital, at 44. The tenant’s share of the divisible balance had been 52.6% but adding back the interest of 8% on tenant’s plant, the total return on tenant’s capital was 18%, compared to the 13.3% on the Assessor’s valuation in this case. Given that the chairlift was a more risky undertaking, the comparison was reasonable. Mr Clarke commended Mr Gillespie’s evidence as following standard guidance on the revenue principle and also carrying out appropriate checks and balances.
 Mr Haddow replied briefly. He did not accept that a sinking fund involved payment into an actual fund. In any event, the sinking fund would remain an asset of the tenant.
 Mr Haddow accepted that transitional relief would have an effect on rates: precise adjustment was not proposed, rather, that this should be borne in mind as a factor.
 We have reached the view that we are not bound to reach the same decision on this issue as was reached in Adamson v Clyde Navigation Trustees; and, further, that, on the evidence in this case, the appellants are in rateable occupation of the red area.
 Although he referred to it as merely “a stretch of water” which might be likened to a street, Mr Haddow accepted that the red area could be an assessable subject. It might therefore seem unnecessary to decide whether the whole subjects entered by the Assessor, including the red area, comprise a harbour within the meaning of the 1854 Act, as the Assessor considered. It seems appropriate, however, to express our view that the whole subjects can properly be regarded as a harbour. The normal view of a harbour is no doubt as a structure built out into the sea or loch to provide a haven of calm water within, or perhaps around, which to berth, moor or anchor. However, we see no difficulty with the idea of a natural harbour. Further it seems to us permissible to consider larger port areas, whether man-made or natural, as also being harbours even although they may include a number of piers, wharves or even small harbours, all of which are to be found at Cromarty Firth. Nor does the fact that not all of these facilities on the land (or built out over the water) are in the same occupation in our view change the nature of the area. We have noted that the red area does not include the whole of the Cromarty Firth, which becomes more of a river, it being natural enough in our view to regard only the outer area of the Firth as the harbour. In this sense, ‘harbour’ may, we think, be used interchangeably with ‘port’. There might be more doubt about the rectangular area outside the entrance, but it may be natural enough to include an area outside the entrance to a harbour as being part of the harbour area and in any event, so far as the submissions before us went, we do not think it is necessary for us to decide on this specific area.
 The evidence, as well as our own impression, seems to fit this view. Captain Gray described himself, no doubt correctly, as “Port Manager/Harbour Master” and also used the expression “Harbour Master and Executive Officer”. Section 4 of the Order provides that for the purposes of the Harbours, Docks and Piers Clauses Act, the expression “the harbour, dock or pier” means “the Port”, i.e. the red area, and the expression “the harbour master” means “the port manager”. The Firth was previously a ‘Queen’s Harbour’.
 It seems to us that a ‘right of harbour’ might well be conferred in relation to the red area, although of course we accept that the issue raised, and to which we now turn, is whether the appellants have such a right of occupation as properly to be held in rateable occupation.
 Adamson v Clyde Navigation Trustees was one of a series of litigations, around the same period, involving the Clyde, i.e. the harbour of Glasgow and the River Clyde, Leith, and Merseyside. There appear broadly to have been three issues. Firstly, there was a question whether the fact that property was occupied for public purposes (or perhaps that the occupiers were bound to apply the proceeds to certain purposes) entitled the occupiers to exemption from assessment for the poor. Secondly, there was a question whether a harbour was an assessable subject. Thirdly, there was a question whether, even although dues were collected for use of the waterway, a grant of the right of harbour was necessary before subjects could be assessed. The first question was ultimately answered clearly in the negative and does not arise in this case. Some of the subsequent reported cases reveal a degree of confusion between the second and third questions. Mr Haddow, however, was clear that the outcome of Adamson and other cases was, and is, that a harbour is an assessable subject but that a grant of the right of harbour is necessary. This is the position set out in Armour (reproducing the work of earlier distinguished editors) at 6-35, following a review of the cases. (If the harbour is not itself assessed, some apportionment of dues, reflecting the possibility that some dues levied on ships passing through the water may actually be seen as income of the landward subjects, may be required.)
 Mr Haddow analysed the 1863 decision in Adamson. He drew attention to the statutory provisions reproduced in the report, and then to the Lord Ordinary’s opinion, at 981-2, that the powers conferred by the statutes, though extensive, did not amount to a right of property which had denuded the Crown of its right to the alveus of the Clyde as a navigable river. This, said Mr Haddow, applied as much to questions of leasehold interest as to ownership. In the Inner House, the Lord Justice-Clerk, at 987, had been clear, both in relation to the river and in relation to the “port or harbour” of Glasgow:-
“To say that the trustees are, in any sense of the term, owners and occupants of the river Clyde – a public navigable river – appears to me to be preposterous; and to propose to assess them upon dues which are levied merely for the privilege of navigating a public river, is a proposal to which your Lordships, I presume, never could listen under the clauses of the Poor Law Act, which direct that this assessment shall be laid upon owners and occupiers, in respect of the annual value of the lands and heritages owned and occupied by them. Then, with regard to the proposal to assess the defenders as proprietors of the port or harbour of Glasgow, as something separate and distinct from the wharfs, and quays, and other accommodations, of which physically that harbour consists, that, I think, is also inconsistent with the evidence before us and with the Acts of Parliament. It does not appear to me that under these Acts of Parliament there is any jus incorporale vested in the defenders by which they can be said to be, in the common law sense of the term, the proprietors of the right of harbour.”
 Mr Clarke had a number of points to make about the Adamson decision. He suggested, on the basis of the Lord Ordinary’s Note at 980, that consideration of the river dues had been academic in that case. Further, it had been significant that the Poor Law Acts had not expressly included harbours (by contrast with ferries). There had been a pleading point, mentioned by Lord Cowan at 989, in relation to reference to a right of harbour. The later cases to which he referred suggested that there was some oddity in the law.
 Both counsel also referred to a discussion of the issue by Lord Kinnear (Lord President Dunedin and Lord McLaren concurring) in Burghead Harbour Co Limited v George, at 996 onwards. His Lordship considered a submission about the right of harbour:-
“If it means that a harbour is not res corporalis, so that it is not included in the category of rights which are summed up by “lands and heritages”, I must respectfully dissent from that proposition altogether. I think the right of harbour is perfectly well known to the law of Scotland as a heritable right, and that the subject, or rather object, of the right is a physical thing. The general rule of course is that harbours are vested in the Crown, by whom alone they can be erected or held, but then it is very familiar law that the right may be granted either by charter followed by infeftment, or by Act of Parliament, in favour of individuals or public bodies. With both these kinds of right we are perfectly familiar; and when that right has been so created in the subject, there is no question, so far as I understand the law, as to what it embraces. It comprehends according to the statement in Bell’s Principles, in the first place, the natural access which makes safe a landing-place, and of course includes piers, wharfs, and all physical structures which were erected for the purpose of making the landing-place convenient and safe. Secondly, it includes artificial operations by which the harbour is improved for the convenience of navigation, and the power and privilege of monopoly within the bounds of the harbour; and third, it includes the right to levy duties for the maintenance of the harbour … it does not appear to me doubtful that that kind of subject is res corporalis, an heritable subject perfectly well known to the law, and that the right to levy duties, which is attached to it, is an incident attached to that right which gives it its value.”
 Lord Kinnear went on to say that the position of a harbour was even clearer because it had been included in the Valuation Act definition. After reviewing Adamson and also Gardiner v Leith Docks Commissioners, he continued:-
“Now, what was added by the case which he calls “this case” to the decision in Adamson’s case except that liability extended not only to the harbour, wharfs, and similar structures on shore, but extended also to whatever dues might be shewn to be attachable to the use of the harbour so far as it was occupied by sea or extended below low-water mark? Therefore, I think it is finally decided by authorities which cannot be called in question that harbours as such are lands and heritages assessable for poor-rates … A harbour is a complex heritable subject, and the attempt to analyse it so as to distinguish between its corporeal and incorporeal elements seems to me a logical exercise which for the present purposes is not very profitable. It is an heritable subject known to the law. It is the property, the complainers aver and the respondent does not deny, of the Burghead Harbour Company, and therefore they are owners and occupiers of this complex heritable subject.”
 In the present case, of course, the appellants deny that they are either owners or occupiers of this subject. They argue, on the basis of the decision in Adamson (an authority not affected by later decisions and supported by the learned editors of Armour), that their statutory position, under the Order, does not involve any right of harbour, so that income and expenditure referable only to the area of water which is the red area fall to be excluded.
 Mr Clarke faintly pressed the idea that the opinions in Adamson relied on by the appellants may have been obiter. Before the Lord Ordinary the pursuer (the Assessor) was not insisting on assessment of “the mere river dues” of navigation over the river, but it seems clear from the arguments recorded in the report at 982 to 984 that the river as well as the harbour was under consideration and the passage which we have quoted above makes clear that the Lord Justice-Clerk was considering both and that he did not consider that the trustees were “proprietors of the right of harbour”.
 Further, as Lord Kinnear’s opinion helps to show, the specific addition of ‘harbour’ to the definition of ‘lands and heritages’ may strengthen the Assessor’s position but it does not show that Adamson was decided on the basis of its absence from the Poor Law Act definition. Lord Cowan did introduce this point at 989, linking it to a pleading point, but he described it as “irrespective of the question to which your Lordship addressed yourself”. That may be slightly equivocal, but the other judges concurred with the Lord Justice-Clerk. Mr Clarke pointed to the treatment of the ferry, at 988, under reference to its inclusion in the Poor Law Act definition, but the Lord Justice-Clerk was, we think, there simply pointing out that there was no issue about the ferry, which the trustees accepted as assessable.
 Mr Clarke also pointed to observations of Lord Low in Assessor for Lanarkshire v Clyde Navigation Trustees, negativing the suggestion that the decision in Adamson on which the appellants placed reliance, might have been overruled by the House of Lords in Leith Dock Commissioners v Miles. Mr Clarke described the law as it had stood since these cases as “an oddity”. However, we accept on the authority of Adamson that it is not sufficient that a harbour is an assessable subject: for rateable occupation, there must be possession of an appropriate character, which, in the case of an area of water covering seabed in the ownership of the Crown, involves consideration of the legal right.
 However, Mr Haddow’s argument in our opinion involves an unduly restrictive requirement, in a question of rateable occupation, of a right of harbour. He may be correct in his suggestion that the issue might be the same in a question of leasehold rather than an ownership right, but it seems to us that the approach in Adamson was one of looking for a heritable right. The Lord Ordinary’s analysis at 982 seems to have been directed at the question whether there was a right of property; the pursuer was arguing, at 984, that the trustees were “proprietors, or at least owners and occupants” of the river and had “come in the place of the Crown as regards the alveus of the Clyde”, etc.; the defenders argued, at 985, that they “were not proprietors of the alveus of the river Clyde, nor of the port and harbour of Glasgow”; and the Lord Justice-Clerk’s opinion, both in relation to the river and in relation to the harbour, appears to be addressing proprietorship or ownership, although occupation is also mentioned.
 It seems to us that in a modern question as to rateable occupation we are not required to look for the precise form of property title which was in issue in Adamson.
 Further and in any event, we think that we must look at the evidence in the present case and cannot assume that it is materially the same as the fairly limited picture noted in the report and opinions in Adamson. The more relevant part of the passage quoted above from the Lord Justice-Clerk may be the second part, considering the “port or harbour” of Glasgow, and we note his reference to “the evidence before us”. The primary evidence before us in relation to the nature of the appellants’ presence in the red area is of course the Order, but we have also heard how it is operated. It was “preposterous” to think of the Clyde trustees as “owners and occupants” because they levied dues “merely for the privilege of navigating a public river”, but we think that the operation carried on by the appellants in the exercise of their powers under the Order is of a different nature. They clearly raise substantial revenue from vessels, in particular oil rigs and the like, mooring. The red area might be seen as like a car park as well as a highway. As we see it, the Order confers the right to carry on an undertaking, and the appellants do carry on an undertaking, which goes well beyond mere supervision and regulation of navigation across their jurisdictional area. They are developing, exploiting and managing the area, to the exclusion of others. Despite the right of the Clyde trustees to levy the charges laid down in the statute, we do not think that the report in that case reveals that in a test of rateable occupation the position in the port of Glasgow and on the Clyde in 1863 was materially similar.
 In the present case, therefore, we accept Mr Clarke’s submission that the Order has created a right of harbour. Even if there were not such a technical legal right, we would conclude that the appellants are correctly entered on the Roll as being in occupation of the red area. Conservancy expenditure in the red area is correctly in the valuation (c.f. Burghead Harbour Co, supra, at 995). So, in our view, are the sums identified by the appellants as ‘conservancy income’ and the mooring dues.
 We should mention that in reaching this view we gave no weight to Scottish Assessors’ Association guidance on the valuation of docks and harbours, to the effect that income shown as conservancy income, and expenditure on conservancy, should be excluded. No reason for this was given, and it should be borne in mind that there could not have been any established practice on this, at least in recent times, such subjects having been valued on the formula basis until 2005. Nor did we regard guidance by the Valuation Office Agency in England and Wales of any assistance on this issue.
 We also gave no weight to Mr Clarke’s point that if the appellants’ argument on the extent of the subjects was upheld, they would be in a position, whether intentionally or otherwise, to ‘skew’ the valuation when fixing the amounts of the different dues. The short answer is that it would be open to the Assessor to argue for inclusion of dues referable, or partly referable, to the shore facilities; and indeed the converse might apply to conservancy expenditure. But for the parties’ agreement on the valuation, we might have required to look more closely at the items claimed by the appellants as conservancy income and expenditure if their first argument succeeded. However, the parties’ agreement on the value on this basis apparently reflects the view expressed at Para 6.5 in the V.O.A. Scheme that loss-making ports which produce a zero or negative valuation under the revenue principle nevertheless have a substantial value, with the result that there might be no reason in that situation to consider the apportionment of income claimed as ‘conservancy’ income.
 As noted, there are no valuation issues if the appellants’ first argument succeeds.
 On the basis, however, that that argument is unsuccessful, there are a number of issues on the revenue principle valuation of these subjects. The issues should not be seen as completely separate. The issue of interest on tenant’s working capital and plant appears to us to be bound up with the issue of the approach to determining the ‘tenant’s share’, and we consider these together. Given the somewhat imprecise nature of the exercise, at least on the evidence and submissions in this particular case, we should, we think, not lose sight of our consideration of the earlier issues when we come to reach final figures for the tenant’s and landlord’s shares.
 Firstly, we are of the clear view that it is preferable to consider the income and expenditure over a number of years and not simply the one year closest to the valuation date. Property taxation may require valuation – whether capital or rental – on a set date in order to produce fairness. Under the revenue principle, however, the hypothetical rent is arrived at on a consideration of income and expenditure over a period. Unless adjustment is to be made each year – as it was under formula valuation – a fair view of the level of rent is not arrived at by taking only one year. Revenue principle valuations have always been arrived at by looking at a number of years. Under quinquennial revaluation a fairly strict approach of taking the full five years and simply allowing fluctuations to be fully reflected eventually was initially the general rule. A more relaxed view appears to have been taken more recently. The Assessor here regarded the figures for earlier years, including 2001, as unrepresentatively high. This actually only left him with two years, 2002 and 2003, of which account should properly be taken, but as it happens 2004 provided support for his levels of income and expenditure. The appellants’ figures, from only 2003, produce slightly lower income and slightly higher expenditure. Neither party suggested that the results for 2003 should be excluded because they include a period after the valuation date (1st April 2003). We prefer the Assessor’s figures which we find more representative of the level of income and expenditure on which the hypothetical landlord and tenant would proceed. The Cairngorm case provides an example of the approach to large year-to-year fluctuations in conditions and results. In the present case we are satisfied that the Assessor’s treatment of this matter by omitting the earlier years gives adequate consideration to fluctuations in trading conditions – in this case, related to levels of North Sea oil activity. We would just mention that there was some – very unspecific – mention of the trading position and results in some subsequent years, but we have taken no account of that.
 The Assessor did not in this case argue for any indexation, as he did without success in the Cairngorm case.
 It was a matter of agreement that the expenditure figures included rent payable by the appellants under their leases from the Crown. This should obviously have been deducted since the object of the exercise is to determine the rent. There was a suggestion that the figure might be of the order of £60,000 but that some of this might relate to areas separately let out. It would seem to us that all of that rent should be excluded, just as the rental income from the let-outs was excluded. No definite figure was put to us in this regard, and Mr Haddow simply suggested that we bear in mind the position about rent and rates as a factor, but prima facie both sides’ figures for expenditure are over-stated by around £60,000.
 As to rates, again, some adjustment might well be required to reflect the higher rates payable in the event of an increased assessment. How exactly this should be done (there being complications such as transitional relief) was not explored, nor were any figures provided, although an offer was made on behalf of the Assessor towards the end of the hearing to provide more detailed figures on this. If, as we were told, the rate per pound was 40p in 2005/6, the year in which any increased valuation would take effect, an increase in rateable value up to £150,000 might offset the £60,000 which should have been deducted on account of rent. The actual rateable value for 2004/5 (based, under the year-to-year formula valuation, on the 2003 accounts: we were not provided with the corresponding figures for earlier years) was apparently £98,722. Bearing also in mind the complication of transitional relief, which would reduce the amount actually paid, and also the absence of precise figures, we consider it appropriate simply to allow these two matters, rent and rates, to cancel each other out.
 On the basis of taking the Assessor’s figures and that there is no other issue about income or expenditure, we therefore have a balance of income before depreciation of £600,000 (compared to the appellants’ £530,023).
 The appellants seek a deduction of £256,931, a figure for depreciation of all the appellants’ assets, less amortization. The Assessor did not contest the actual figure, which was derived from the 2003 accounts, but maintained that depreciation of only tenant’s plant should be deducted. His corresponding figure is £60,000, again a round figure based on approximate averaging from the accounts to which he referred.
 We can see no justification for applying the depreciation deduction to the whole of the assets. The hypothetical tenant is leasing the heritable assets. The statutory hypothesis requires him to repair them but there is nothing to suggest any requirement for him to pay for any diminution in the capital worth of the asset. The landlord benefits from capital appreciation and suffers from any capital loss. Movements in capital value of the let subjects should not affect what a tenant would pay in rent. The tenant does require to supply non-rateable equipment and moveable items needed to make the operation work and produce the income on which the rent is based, so depreciation of those assets, but only those, is appropriately deducted.
 This approach does not appear to have been questioned in recent cases (Cairngorm, Southampton and Hong Kong cases) and also appears clear in current guidance (SAA Practice Note, VOA Scheme and Rating Forum) on the revenue principle. We cannot find support in the passages in Armour and Edinburgh Parish Council v Assessor for Edinburgh referred to by Mr Haddow for any other view. Mr Haddow did, however, refer us to two decisions of the Lands Tribunal for England and Wales in 1958 and 1959 in relation to ‘profits basis’ valuations of seaside piers. In each case, there was consideration of the amount of deductions in respect of sinking funds (in addition to the cost of repairs) for the structure and buildings, but without, so far as we can see, any discussion as to why these deductions were appropriate. It seems to have been accepted in each case that these payments apparently actually made by the appellants would require to be made by the hypothetical tenant.
 We are inclined to agree with Mr Haddow that depreciation, which is in effect an accounting convention to show the annual cost of deterioration of an asset, is the equivalent of making actual payments to a fund for replacement, but in the absence of any reason why the hypothetical tenant would have to make this payment in respect of landlord’s assets (in addition to having to repair them) we cannot accept these decisions as requiring us to depart from accepted modern practice which appears correct in principle. We accordingly do not accept the deduction of £256,931 at this stage of the valuation.
 Mr Gillespie referred to the possibility that his figure of £60,000 for depreciation of the tenant’s assets might be too low, but it was not challenged. So far as we can tell from the accounts, which do not identify tenant’s plant as such or itemize amortization figures, the figure appears to be in the right range and we shall adopt it. We accordingly move to the final stages of the valuation on the basis, again, of the Assessor’s figure of £540,000 as the income after depreciation.
 The question of interest on tenant’s working capital and plant is closely linked to the issue as to the tenant’s share of the net profit after depreciation.
 The theory of the revenue principle of valuation is that the hypothetical rent is the amount which the tenant could afford to give, which is ascertained by deciding how much is required to induce the tenant to take on the business, with the balance of the anticipated profit being available for rent. Whatever working method is used – and there are a number of possible methods – that is what has to be determined.
 The traditional method of working through the valuation at this stage involves allowing interest on tenant’s capital, apparently on a borrowing basis, in effect allowing this as a cost ‘above the line’, and thereafter, as a final separate stage, allowing the tenant a share of the resulting balance of profit which may be rationalised as reflecting the tenant’s risk and rewarding him for his endeavours (more colloquially described as “what it would take to get the tenant out of his bed”). More recently, the approach has been to determine an appropriate rate of return on the tenant’s capital without dividing the process into two stages. This approach or method can be seen in each of the Cairngorm, Southampton and Hong Kong cases to which we were referred. The return under consideration may embrace both the cost of capital and the reward required for undertaking the venture, and there can still be dispute as to whether the basis is the cost of capital, appropriately adjusted or weighted, or the return on capital, or perhaps both.
 Whatever method is used, it seems to us necessary to look at relevant available evidence about the cost of capital and also the return on capital. In strict theory, the return on the landlord’s capital may be seen as irrelevant: the question is simply how much a tenant would pay. This focus on the tenant’s position, as opposed to the landlord’s, also reflects the position that usually there is a monopoly or quasi-monopoly. The subjects are often capital-intensive, but focussing on the tenants’ position reflects trading conditions at the valuation date and avoids any consideration of redundancy or over-provision of landlords’ assets. Certainly, any consideration of return on capital from the landlord’s viewpoint is very different from that of the tenant who (hypothetically) incurs the risk of running the business using his depreciating assets, from an asset which will revert and be available to the landlord in the long term. To the extent, however, that the landlord, some of whose assets may also be liable to depreciation, could reasonably expect an appropriate return on his assets, there can be some relevance in consideration of his return in comparison with the tenant’s return, as was done in the Cairngorm case. It can perhaps be said that the less evidence there is about the cost of capital and returns on capital, the more it is necessary to stand back and make judgments based on the nature of the hypothetical tenant, the degree of risk in the business and reward for endeavour.
 In this case, each side apparently uses the traditional template, i.e. allowing a percentage on tenant’s capital and then separately assessing the ‘tenant’s share’. Working capital is agreed to be one third of annual expenditure, i.e. £566,000 on the Assessor’s figures, which we have accepted. Although the appellants did not formally alter their valuation of £88,100, which incorporated a figure of £1,000,000 for tenant’s plant, Mr McKenna did depart from that figure in cross-examination and we did not understand the Assessor’s figure of approximately £600,000 to remain in dispute. That gives a common figure for tenant’s capital of £1,166,000. The appellants seek an allowance of 8% of that figure, bringing their ‘divisible balance’ (after incorporation of the agreed figure for plant) down to £178,906. They then argued that the tenant should receive 40%, leaving the remaining 60% (which would now be £107,346 in place of the original £88,100) as the rent payable to the landlord.
 The Assessor allows only 5% of working capital and tenant’s plant, based on the cost of borrowing at the valuation date, bringing his divisible balance down to £481,000, of which he allocates 20% to the tenant and 80% to the landlord (£384,800, say £375,000).
 Strangely, perhaps, the parties do not differ much on the actual returns allowed to the tenant. The appellants did not calculate (or apparently address at all) the resultant overall returns on capital, but we calculate that they have allowed the tenant a total return of £165,750, or approximately 14.2% on their investment of £1,166,000 [46186 + 48000 + 71564] . The Assessor’s figure (based on a much higher balance of profit after depreciation), is £155,200, or approximately 13.3% [29,000 + 30,000 + 96,200] . The parties are thus not far apart on the tenant’s share, their differences having worked through to the landlord’s share. If the landlord’s capital is taken as approximately £10,000,000, i.e. the depreciated value of land and buildings, etc., including leasehold interests, in the 2003 accounts, the appellants allow the landlord a return on capital of 1.07% and the Assessor 3.75%.
 This also means that the parties are not nearly so far apart on the tenant’s percentage return on gross profit (EBITDA) as they are on the resultant rental valuation: the appellants had £165,750 from gross profit of £530,000; the Assessor, £155,200 from £600,000.
 When the appellants’ percentages of 8% on working capital and plant, and 40% on the residue, are applied to income after depreciation of £540,000, a figure of approximately £265,000 for the landlord’s share or rent is obtained. This would provide the tenant with a return on capital of approximately 25%. Again, if the Assessor’s 5% interest on capital is substituted for the appellants’ 8%, the appellants’ 40% tenant’s share gives a rent of approximately £288,600 and a return on tenant’s capital of approximately 21.5%.
 We cannot see any sound basis (other than superficial comparisons which are open to the criticism that like is not being compared with like) for either of the appellants’ figures of 8% or 40%.
 The Assessor, it may be said, has used the same traditional working method, but has firstly appreciated that that method starts by applying a borrowing cost to the tenant’s capital and produced evidence of bank borrowing. Our own look at those figures in fact suggests to us a slightly higher borrowing rate for the hypothetical tenant of these subjects, who will be the appellants or a similar body, of 5.5% . His 20% is admittedly simply the traditional conventional figure for which there is really no evidential basis other than past practice.
 Crucially, however, the Assessor has also tested the result against the return on tenant’s capital. This brings us to consider the evidence of returns on capital. By contrast with the three other modern decisions to which we were referred, such evidence in this case is limited. Firstly, there was governmental guidance to the effect that ports would wish to set their own targets but would be expected to produce, in 2007, a real rate of return of 3.5% (a figure which had been amended, at some unspecified date, from the previous 6% to 8% actual return, that range being intended to reflect differences between the public sector and a commercial basis). Secondly, Captain Gray gave evidence, which we entirely accept, that the appellants’ policy was to require a minimum 8% return on capital, that everything they did was on a commercial basis and that they in fact always achieved more than 8%, between 10% and 14%.
 It is clear that the appellants have a wider role than purely commercial operators, as they have a responsibility to the wider local community. It seems that, at least at the Invergordon service base, they perform something of an ‘enabling’ operation, i.e. providing the port infrastructure and enabling actual port activities to be carried on, to a large extent, by others. Our impression, however, coincides with Captain Gray’s evidence that they operate the port on a commercial basis. There might be consideration whether a purely commercial operator, such as ABP or Forth Ports, might come in and achieve a higher rate of return (which would tend to put the hypothetical tenant’s share up and the rent down). Mr Gillespie had clearly addressed that possibility. His view was that this port, although one of the larger trust ports, is at the bottom end of the size range which might be privatised in that way and that the most likely hypothetical tenant was a trust port operator such as the appellants. We did not understand the appellants to be of any different view. We also bear in mind that the relevant date is 1 April 2003 (or, possibly arguably, 1 January 2005). In our view there is no evidence on which it could be concluded that a different type of tenant was at that date likely. Nor was there any suggestion or evidence that any commercial operator would be able to secure any higher level of charges or financial return.
 We can therefore conclude that a minimum rate of return at the subjects would be 8%, the actual return around 12%, and the highest ‘aspirational’ return around 14%.
 This is not primarily a comparative exercise, but we have also considered what assistance we can derive in relation to the rate of return from the other modern cases. We note that at Southampton, where the subjects comprised a container terminal operated on a purely commercial basis, both parties were using the more direct, one stage, method of applying a rate of return on the tenant’s capital. The Tribunal accepted the Valuation Officer’s proposed 9% in preference to the appellants’ proposed 15%, apparently on the basis of accepting the view that the hereditament would be viewed as a relatively low risk venture in relation to which a weighted average cost of capital (WACC) approach which gave a figure of 8.59% was appropriate. This was a real rate of return, which might translate to an actual return of around 11%.
 In the Cairngorm case, where the Tribunal also reasoned on that direct approach, and where the business clearly carried a substantial risk of seasonal weather fluctuations, a rate of 18% (actual) was fixed. As far as the level of risk at the subjects of this appeal is concerned, again, the evidence before us is not precise. There is certainly a picture of fluctuation along with the fortunes of the oil industry, although the Assessor dealt with this in the profit figure which we have accepted by discarding more profitable years. In the Cairngorm case, the Tribunal arrived at 18% on the basis of evidence of a long term pattern of two poor years in five, the five years used in the calculation of income all being good (and, by contrast with the Assessor’s treatment of fluctuation in this case, not adjusted) and a resultant legitimate expectation by a hypothetical tenant of a higher risk of poor years in the next five. We do not have such evidence in this case, and simply have to take a more general view. We can accept that there would be a probability of fluctuation, perhaps quite considerable, of the level of profit at the subjects, but there is no indication of any likelihood of actual losses (which had occurred in the past in the Cairngorm case).
 As we indicated earlier, the appellants’ valuation (as we have adjusted it on the basis of the concession about tenant’s plant) allows the landlord a return of 1.07% on his assets shown, after depreciation, in the accounts at around £10,000,000; the Assessor’s, 3.75%. Most of those assets are shown as leasehold, which we were told represented the depreciated cost of land reclamation. We would expect the figure to include the let-out assets. The appellants’ office was also included. These percentages may therefore not be very accurate. We doubt whether much assistance can be gained from these figures, but do note that the Assessor’s figure comes much closer to a borrowing rate than the appellants’.
 On the very limited evidence which we have as to returns on capital, it seems to us that the Assessor’s figure of 13.3%, towards the top end of the appellants’ range of actual returns and on an approximate basis slightly over the average of 12%, is difficult to fault. If the interest on working capital and tenant’s plant were increased to 5.5% and the tenant’s share retained at 20%, we calculate that the landlord’s share would, at around £380,000, still be above the rounded figure entered on the roll and contended for.
 In the Hong Kong Electric Co Ltd case, the Tribunal accepted the appellants’ argument for a return equivalent to the maximum permitted return on fixed assets under the statutory scheme of control. Such an approach might perhaps appear to support a direct assessment of the tenant’s share here at the appellants’ ‘aspirational rate’ of 14%. However, we were not asked to follow such an approach, and indeed Mr Haddow referred to a possible appeal of that decision on that point; it may be that the figures do not compare in that way; and in any event, application of a 14% rate would still not reduce the rounded valuation of £375,000 to any significant degree.
 We might reasonably have expected some more focussed evidence, as in other cases, on the approach which a business would take to the return on capital investment. We have been required to make a judgment from inferences and indirect evidence from the appellants’ officials, and from earlier authorities. The figures we have used are likely to have little, if any at all, relevance to any other case. What is clear to us is that there is no evidential basis for any valuation which involves a return to the hypothetical tenant of more than 14%. We see no reason to disturb the Assessor’s treatment of interest on tenant’s working capital and tenant’s share.
 For these reasons, our consideration of the various issues argued, both in relation to the extent of the subjects and in relation to the revenue principle of valuation, does not lead to any alteration of the Assessor’s proposed valuation.
 We have accordingly refused this appeal.