Cases involving multiple occupants of a single property have the potential to create major headaches for local authorities tasked with identifying who they should bill for business rates.

In determining business rates liability, the Court will firstly assess whether any party is in rateable occupation pursuant to section 43 of the Local Government Finance Act 1988 (“the 1988 Act”). 

In the absence of rateable occupation, the liable party will be the “owner” pursuant to section 45 of the 1988 Act.

Billing authorities will be familiar with the four elements that need to be shown in order to establish rateable occupation, namely the occupation must be actual, not too transient, exclusive for the purpose of the occupier, and of value to the occupier.  

However, significant uncertainty may be faced in a scenario whereby multiple parties claim (or are claimed by the owner) to be in simultaneous occupation of parts of the hereditament.

Three Potential Scenarios

In Atos IT Services Ltd v Fylde BC [2020] EWHC 647 (QB), the High Court identified three potential scenarios when considering multiple occupiers of a single hereditament.

Firstly, where a ratepayer occupies part of a hereditament but not the whole, they are nonetheless liable to pay the rate for the whole on an occupied basis where those parts not occupied by them are otherwise vacant.

Secondly, a hereditament can be occupied jointly by multiple ratepayers.  It is clear from the Non-Domestic Rating (Collection and Enforcement) (Miscellaneous Provisions) Regulations 1990 that it is possible for there to be joint ratepayers from which joint and several liability arises. It is a question of fact as to whether a potential ratepayer is one of a number of joint occupiers, or alternatively whether each is a separate occupier. Where the multiple occupiers cannot be said to be “jointly” occupying in the strict sense of a partnership or joint venture, the issue is one of paramountcy as to which becomes rateable (Westminster City Council and Kent Valuation Committee v The Southern Railway Company & Ors [1936] AC 511).  The Court will assess the degree of control exercised by the owner over the other occupants, and any commonality of purpose.

Thirdly, the hereditament may be occupied, not jointly, but separately by multiple ratepayers.  In this event, no single party can be considered in rateable occupation.  Occupation of part of a hereditament when other parts are occupied by other parties does not give rise to rateable occupation of the hereditament, leaving it to be treated as unoccupied.  The caselaw makes it clear that a hereditament cannot be ownerless under the 1988 Act, such that the owner will be liable in this scenario.

Moving Forward

Identifying which of these three categories is applicable will require a careful examination of the situation on the ground, as well as any documents tendered to support the asserted occupation.  Accurate site visit reports, with detailed notes and photographs, coupled with a site plan, will be invaluable.  

A bill payer may also assert that the rating list does not reflect the reality of the occupation. Where a ratepayer disagrees with the list, their recourse is to the Valuation Office Agency.

Billing authorities should therefore keep in mind that section 55 of the 1988 Act and Regulation 23 of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 bars the ratepayer from raising, in proceedings for a liability order, any matter which could be the subject of an appeal to the Valuation Tribunal.  

Local Authorities are therefore entitled to bill in accordance with the rating list as it stands (and indeed it is their statutory obligation to do so).  Whilst a ratepayer is entitled to request that the VOA reviews potential amendments to the list, such a request will not provide either a defence to an existing summons, or justify a stay of any summons proceedings.

Aidan Thomas