The Tribunal has ruled that individual rooms within Pump Court Tax Chambers do not constitute separate hereditaments for ratings purposes.
In 2017, a Valuation Officer recorded Pump Court Tax Chambers (Pump Court) as a single hereditament in the local non-domestic rating list, with a rateable value of £152,000.
Mr Prosser KC (on behalf of Pump Court) subsequently challenged the assessment on the basis that the premises are split into distinct rooms occupied by individual barristers as separate hereditaments. If successful, the individual hereditaments at Pump Court would then potentially benefit from small business rates relief, whereby a taxpayer occupying a hereditament with a rateable value of less than £12,000 can be eligible for a 100% reduction in their rates bill.
The Tribunal acknowledged that whether a property comprises a single or multiple hereditament(s) depends on the facts on the ground.
The primary test is a geographical one, namely whether the individual hereditaments would constitute a single unit on a plan. It was common ground in the case that the barristers' rooms satisfied this test but in order to win its appeal Pump Court also needed to show that it was the individual barristers themselves who were in paramount occupation of their rooms. In determining this point, the Tribunal looked at the position and rights of both the individual barristers and of Pump Court in relation to the rooms.
Pump Court argued that it was the individual barristers who were the only ones in actual occupation, there was nothing in Pump Court's constitution that dictated how a member's room could be used and the barristers decorated and furnished them and locked them as they wished.
However, the Tribunal noted that:
- The individual barristers were more akin to being lodgers on the basis that:
(i) they only contribute to the cost of their own rooms whilst they were actively working and Pump Court collectively covers the charge if they are on parental or long term sick leave,
(ii) new members are not obliged to cover room costs for the first year after pupillage and again Pump Court covers the costs;
(iii) senior barristers are encouraged to take larger rooms on them becoming vacant so that smaller rooms can be offered to new members indicating that the needs of Pump Court as a whole took precedence; and
(iv) barristers' entitlement to a room ceases when they are no longer a member of Pump Court;
- None of the barristers truly operate independently from Pump Court as a whole. They are reliant on shared clerk and administrative support from Pump Court and they attend seminars and conferences representing Pump Court rather than themselves; and
- If there was ever a dispute with the landlord/freeholder of the building, that would need to be brought by Pump Court via the trustee barristers who are the legal tenant (and who hold the property on trust for all members of Pump Court).
This led the Tribunal to conclude that the individual rooms occupied by barristers were complementary to the business of Pump Court whose occupation was found to be paramount and so Pump Court's challenge was thrown out.
Given the incentive of rates relief it is easy to see why Pump Court pursued its appeal which provides useful guidance on how the make up of a property and the business conducted there will be assessed for ratings purposes.
