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AN ARTICLE by Peter Scrafton FIRRV, FCIArb, MRSA(Hon) Solicitor (Non-Practising)

August 2014.

This is perhaps an unusual title for an article on the law. Some readers may associate it with a line of ladies’ underwear: I, however, take it from the title of Philip Larkin’s poem, written in contemplation of his own death. I apply the name to the rating system as it has been for four centuries, and to the impending death by a thousand cuts of the Valuation Office Agency (“VOA”).

There are some who take any criticism of VOA as a personal attack on themselves: in my case this could not be further from the truth, as I regard the time which I spent in what was then called the Solicitor’s Office, as in many ways the most satisfying part of my legal career. For my part, if I have brickbats to throw, they are aimed at the politicians and bureaucrats who have been wrecking the system, systematically, since 1990 with cut after cut, until the Agency has been almost exsanguinated, being patched up, periodically, by legislative and regulatory changes working against ratepayers and billing authorities, so as to enable the system to be said to be working perfectly, on a declining budget. I deplore, not the Agency itself, or the work which Parliament has set it to do, but the continuing series of cuts over nearly thirty years which has reduced it to its state as barely a shadow of its former self. Who would believe, looking at it now, that it was fiercely independent, and that, other than the security servies, it was the only part of the civil service which handled its own recruitment and promotions. It is now no more than an add-on branch of the tax inspectorate.

Of course, like the loyal civil servants which they are, members of VOA will insist that they can do anything any government wants them to do, as quickly and efficiently as their Whitehall and political masters require; but experience of what actually happens belies this optimism. I am put in mind of the film “Kind Hearts and Coronets” in which Dennis Price sets out to murder seven relatives (all played by Sir Alec Guinness) in order to inherit a dukedom. In fact, he only has to kill six, as the seventh, an admiral, following a collision with another vessel, elects to go down with his ship. Our final view of him shows him to be standing at attention, saluting stoically, as the water covers his head, leaving but his cap, floating on the surface. That, to me, is the real situation of the VOA in rating – although DV Services will survive, as it deals with valuation for tax purposes and the assessment of CPO compensation.

We all know that things are not what they were. While this might not be a bad thing, in some ways, in other ways (in my view, at least) it is. Starting with the 6% year-on-year budget cuts imposed on the first CEOs, with all of the office closures, the 27.3% budget cuts promised in the present spending round, and a coming staff cut by 1,000, I don’t see how the same service can be provided in rating as used to be the case. As long ago as 1995, at the time of the first quinquennial review, one of the members of the Commons’ Treasury Sub-Committee asked me why the Institute was asking for more money “… for the enemy”, to which I replied that private practice did not consider VOA to be an enemy and that appeals were most usually differences of professional opinion with both sides seeking the accurate answer, as required by s41 of the 1988 Act. The Sub-Committee reported, requesting more funding, but the government of the day refused. This attitude has intensified. VOs rarely inspect properties these days, relying on plans, and offices have been closed, right and left (who needs one in the City of London, anyway?) All of this shrinkage would surely constitute a material change of circumstances. As a further example I know of, certainly, one class of hereditament which should be valued on a receipts and expenditure basis but which VOA says it has not the resources to apply, and so they wish to value by reference to a percentage of gross receipts, which, in the past, they have derided, vigorously.

This shrinkage has led to a decline in service levels to, among others, billing authorities. Evicted from participation in valuation proceedings in 1990, but still having to budget for what they expected to receive and so what they could spend, they were (and to a large extent are) excluded from knowledge of the progress and likely outcomes of appeals. The Enterprise Act may change this, somewhat (we have yet to see); but, for the present, it seems that billing authorities are in the dark as to whether or not, and if so by how much, they should budget for a rate refund, in any particular case, let alone when they might expect to have to pay it over. The extension of “taxpayer confidentiality” to rating, which is a convenient fiction (as to which see below) means, of course, that there is quite a lot which councils semingly cannot be, or are not now told. Council budgets are set with an estimate as to what refunds might have to be made during the year in view. Some councils, at least, are concerned that the reserves wich they have to create for appeal action may be either excessive or, more probably, inadequate and, of course, if the latter, how large repayments might be funded.

My personal view (and here I will upset some in private practice, having already alienated some in the VOA) is that billing authorities should be readmitted into valuation proceedings, as, in that way, not only would they be able to make better-informed decisions as to the calculation of reserves against refunds, but they would also be rid of BARs and would operate as a constitutional check or balance agains the Agency which, increasingly, seems to be able to do whatever it will.

What is left? The Valuation Tribunal. Goodness knows they are so much better-trained than they used to be when I started in rating in the 1970’s; but the members (only two now as the VT cannot afford the expenses of three) do not have the local knowledge of the pre-1990 days and, as the last of the lay tribunals other than the magistracy which decides mainly cases of fact, they are called upon to adjudicate on complicated technical and legal matters: at least, in collection cases, the spread of professional District Judges within the magistracy has levelled that field, somewhat. And now, for the first time, as an additional discouragement to would-be appellants, a fee will be charged for an appeal, which will go, not to the Tribunal, but to the Treasury. The Tribunal for England has also been butchered, no matter how bravely the staff and the members work to deal with the volume of cases, and new jurisdictions. Had the service been merged with the First Tier Tribunal, as proposed, then VTE might have had more professionally-qualified (and paid) members. Even though I say that they, too, deserve far better than successive governments have given them, I suspect that here goes my last potential constituency of voters!

Returning to the theme of billing authority particupation as a counterweight in valuation proceedings to VOA, I consider BARs, by which billing authorities can ask VOA to bring something into assessment, but where they have difficulties if the Agency refuses to act. I give two examples. First, there was the former farm building which had been converted into a factory making potato crisps. VOA refused to assess it, holding that it was within the agricultural exemption. In my view, and in the view of that council’s retained surveyors, it most certainly was not. The second case is that of a levelled and surfaced area of land being used as a paying car park. There, the VOA refused to assess it on the ground that there were no spaces for disabled drivers individually marked out. It remained unassessed. Hmmmm….

One is driven to ask why the authority, which is to become the recipient of all rate income from within its bailiwick (except that from the Central List which seems to be going elsewhere) should not have any substantive right to participate in the raising of that income. This, of course, is a matter for the politicians who, inevitably, will be guided, with a greater or lesser degree of accuracy, by Sir Humphrey and his subordinates. The Agency, of course, must salute and obey, like Alec Guinness.

It was Sir Humphrey and his cohorts, aided to a greater or lesser extent by VOA, who came up with the brilliant scheme of CCA. Others have written on its manifestations, both here and in “Valuer”, so I will not comment directly on those, save in the context of the law surrounding what seems to be emerging When Sir Humphrey eventually gets round to releasing, under the Freedom of Information Act, the responses given to the consultation preceding CCA (he is delaying doing so, again and again) there are, apparently, some high-profile responses which disagree with the adopted outcome.

The object of the exercise is obviously to milk a revenue source which has perhaps not been tapped, of late. Raising revenue is extraneous to the statutory duty of VOA (see s41 LGFA and cases such as Society of Medical Officers v Hope). Such was never the duty of VOA or its predecessor, the Inland Revenue Valuation Office. Rating valuation was a local government responsibility until the Attlee government removed it, as the feeling had grown that there was an overconcentration of power in municipal hands, which then controlled valuation, the setting of the rate (multiplier) and collection, with elected members sitting as appeal tribunal members and as magistrates. Thus, rating valuation was brigaded with the District Valuer service, but the waters of rating valuation and estate duty did not mix, and the two duties were kept separate: the duty of the District Valuer was to value for tax purposes, while that of his alter ego, the Valuation Officer, was to make and then maintain the list entrusted him, in correct form. This duty was akin to that of a neutral boxing referee, holding the ring between the council and the ratepayer, and having no interest in collection. When the councils were taken out of the ring in 1990, the ratepayer had to fight the VO, while the role of referee passed to Whitehall, which proceeded to make up the rules as it went along, to suit itself. Thus, the independence of the VOA was compromised, possibly fatally.

That original duty remains, under s41; but it has been hedged around with transition certificates, by the new duty (formerly a heresy) of defending the list (see the Peachey case) and the concept of “proportional” response, which has not stood up well, in the Lands Chamber, at least, against applications for disclosure – for the Civil Procedure Rules apply there. This policy, it has been said, is, or was, justiciable by judicial review. Rating being a comparative task of valuation, it would seem that evidence of rents should be admissible in evidence and that VOA could not resist an application for disclosure within the appropriate CPR parameters. This policy has been challenged, successfully.

The Commissioners for Revenue and Customs Act 2005, painted Valuation Officers as already “officers of Revenue and Customs”. An examination of VO records would confirm the view, which I was obliged to enforce against individual VOs, was that PD information might be mentioned in general terms in negotiation over the table, but that under no circumstances could it be produced in a tribunal. Such information is properly regarded as “taxpayer confidential”, but information as to rents has never been so regarded. Any suggestion to the contrary in the Enterprise Act 2016 might be said to be misconceived – it would not be the first occasion on which, in the law of rating, the wish has become the father to the legislative thought; and this approach came unstuck, in Monk.

When the burden of repair of the hereditament was shifted to the tenant from the landlord in the 1988 Act, the point of state of repair was not addressed: the 1999 Rating Bill was meant to stop a lacuna, but it did not as drafted, and it was corrected by the Minister’s speech (the operative part of which I wrote, as it happens). The VOA and the professional bodies accepted this as correct, and this lasted, at least on paper, until the VOA’s skeleton argument in Monk in 2013. The Treasury’s lust for gold had persuaded (or forced) VOA to change its thinking and approach; and it took a visit to the Supreme Court to show that the new approach was wrong. How many ratepayers suffered as a result of this misconception? VOA seems to have succumbed to pressure from Whitehall, thereby broadcasting its subjugation to the Treasury.

And it is still citing the Princes Street, Ipswich case which obsesses the Agency as did King Charles’s head obsessed Mr Dick in Dickens’ “David Copperfield”; and it is constantly trotted out, even though President Bartlett of the Lands Chamber declared that he did not want VT decisions cited to him as they had no value as precedents. Will we have to go to the Supreme Court again, or Strasbourg, to have the next “head” expunged? Believe it or not, lawyers spend most of their time seeking to avoid litigation; but this is not always appropriate.

Now, in the current appeal regulations, we find the idea of a “reasonable” valuation. This conflicts with the duty laid down by s41 LGFA, which trumps it – so, quite apart from the other obfuscations and obstacles placed in a ratepayer’s path by CCA and software which, at the time of writing, does not work, we have a conflict between primary and secondary legislation. For many reasons, judicial review beckons!

To me, it is a tragedy to see the once proudly-independent Valuation Office, where I was so proud to work, reduced to this parlous state, which is now beyond denial. This is not the doing of VOA staff, whom I still regard as colleagues, in many ways, but of successive governments and of Sir Humphrey who, between them, have bled the organisation to its deathbed. A property tax will remain, because it is too profitable to government; but its nature has changed and is changing; and the body which serves it is beyond recovery in its present incarnation, as much as it may plead that it is fit and well.

I leave the last word to Philip Larkin

And so it stays just on the edge of vision,

A small unfocused blur, a standing chill

That slows each impulse down to indecision.

Most things may never happen: this one will,

……..Courage is no good:

It means not scaring others. Being brave

Lets no one off the grave.

Death is no different whined at than withstood.

Peter Scrafton

©J.P. Scrafton, 2014

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