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

September 2017.

It is an old truism that a lot of the really nasty stuff which Whitehall doesn’t want any fuss about, just happens to emerge as the parliamentary session is coming to an end, the politicians are looking out their buckets and spades, children out of school are causing mayhem at home, and the press are sinking into what even they call “the silly season”. All of these are good distractions; and so I thought that, this time, I would have a look at what has been happening over the past few weeks (this is being written in July and early August) and perhaps look forward to the debate on the Motion of Regret tabled by the Earl of Lytton in relation to the new regulations said govern the rating system, now, which debate is at present expected to be held on 11 th September.

For comic relief as this piece is being read, I would recommend judicious reading of the new VOA Business Plan. I warn you that some parts of it may cause strong feelings of irritation as well as of laughter. Many interesting claims are made by a body which wants to be loved and trusted, even though it cannot spell “rating”. It claims that it delivered the 2017 revaluation, which it did. But it also claims to have delivered Check Challenge Appeal, which claim may perhaps be debated. It also tells us that there are only 48,000 2010 list appeals outstanding, though others claim that the true figure is more than four times greater than that. Do we love and trust them, then? Do we have confidence in their valuations? Individuals we may like and respect; but it is difficult to respect their valuations when the basis of these is now a shrouded secret, and countering them is being made deliberately more difficult.

The truth of the matter seems to be that ratepayers are steadily being edited out of the rating system, save as sources of revenue. The latest round of suppression really started with the Enterprise Act 2016 with the revelation that all information in the Agency’s possession used for rating appeals is now “taxpayer confidential” and may not be disclosed. This is nothing less than a gagging move.

When rating valuation was removed from the control of local government in the late 1940s, rating valuers who transferred from local government to the Inland Revenue Valuation Office worked in parallel with the District Valuer service, created to deal with Estate Duty prior to the First World War. The head of a local office was styled the District Valuer and Valuation Officer, a style which lasted until agency status came along and, like the waters of equity, the two tasks flowed in the same channel but did not mix. The Board of Inland Revenue appointed a DV/VO and, for taxation purposes, the office reported to the Board; but the client department for rating was what has become DCLG.

Information given to the Valuation Office for capital taxation purposes was always regarded as confidential and was to be treated as such, in the same way as information given to an Inspector of Taxes. This issue of confidentiality was debated at the highest level in the Valuation Office and a guidance note was issued, in (I believe) the nearly 1980’s, in the Chapter Instructions (the equivalent of the Rating Manual) that information received by the office on a Particulars Delivered form could be used in negotiation “over the desk” but could not be used in rating valuation proceedings, unless the capital transaction was disclosed, separately, on a Form of Return for rating purposes.

I was instructed by the Chief Valuer’s Office, when I was in the Revenue, to prevent local offices from ignoring this guidance – and I did this on more than one occasion. This is the only restriction on disclosure of which I, and others who worked within the Valuation Office at the time, am aware, and no doubt the VO Circular is available and discoverable in VOA records under the Freedom of Information Act.

DCLG was invited to adduce evidence in support of this claim of confidentiality, but declined to do so. Down came the parliamentary rubber stamp; and the valuation evidence was locked away. The Registrar of the Valuation Tribunal for England has commented, apparently, on a public platform, that (and these are my words and not his) the Tribunal will be monitoring the situation carefully, and the way in which VOA seeks to apply it. It will be interesting, also, to see how the Lands Chamber, which applies the Civil Procedure Rules, treats this. For my part, I see a cynical device to sustain the revenue base, while cutting the cost of valuation still further, resulting in a ready road to denials of natural justice (justiciable by judicial review). Human rights questions may be another concern.

There may well be shoals of appeals once Check Challenge Appeal is working (if ever it does) by those seeking to find information to verify or challenge a rating assessment. Litigants have a fundamental entitlement to know what case they have to meet, and the proposals deny this right so that ratepayers are, in effect, all guilty until proved innocent, and VOA cannot discharge the duty imposed on it by s41 Local Government Finance Act to make and maintain accurate lists of rating assessments. These proposals in effect render s41 nugatory.

The status of s41 is itself another potential issue. When (with Lord Lytton and Jerry Schurder of Gerald Eve) I went to see the Minister, Lord Bourne, about the new regulations, it seemed that the Minister’s acolytes knew nothing of s41 and the statutory obligation to make and maintain accurate rating lists, at prescribed intervals. These officials seemed to have been thinking that secondary legislation overrides primary legislation (a view which has since been expressed by the VOA) litigation team.

Such a proposal conflicts with the hierarchy of legislation as it was taught to me (and assuredly, also, to Lord Bourne) at law school. It is, I believe, technically possible for a secondary instrument to o’erleap a primary statute; but it takes parliamentary action to do it – and no such action has been taken, here.

During the same discussion with the Minister, the subject of “reasonable valuations” came up. Valuation is a matter of opinion and not one of fact, and assessments are either agreed by negotiation or determined by a tribunal or one of the higher courts. Paragraph 2 of Schedule 6 to the 1988 Act provides that:-

The rateable value of a non-domestic hereditament shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year……

On this basis, it is rather difficult to see how a valuation agreed between opposing valuers or determined by an independent tribunal is likely to be anything other than “reasonable”. We have no indication why the words have been added; and it seems to not a few as though the addition of apparently meaningless words will distract lay Valuation Tribunal members; and we may find ourselves back in the same sort of area as that of the “…state of reasonable repair…” wished on us by the 1999 Bill and explained by Baroness Farrington, the then Minister in Committee (the unfortunate draftsmanship having been exposed by your humble servant when it was too late to amend the Bill) and which eventually reached the Supreme Court in the Monk case. Lawyers get paid for defending the citizen against the state, although we should (and do) try to reconcile views: however, VOA views at this level are not infrequently afflicted with intransigence; and so the merry-go- round will set off in a blind search for more revenue, once again, as I warned Lord Bourne.

About Check Challenge Appeal I will (and need) say nothing, here. It is a mess, although efforts are being made to bring it to some sort of life. The press has not been enamoured of what is going on and the forthcoming debate in the Lords about the new regulations will no doubt spread more blood on the carpet.

This brings me to the matter of maintenance of rating lists being part of the s41 duty. VOA has let it be known that it no longer has the resources to make correctional list alterations, and that it will now be leaving it to ratepayers to make their own proposals (very difficult for the represented let alone the unrepresented). We need fear nothing, however, as the revenue will continue to roll in, regardless, while VOA sleeps. By the same token, VOA is expecting billing authorities, whose valuation resources atrophied rapidly from 1990 onwards, to do that job for them. The motto seems to be “No Action”.

Meanwhile, further changes rumble towards us. VOA is still closing offices, and the latest advertisement for an HEO Assistant Private Secretary to senior staff, adding that the postholder might attach themselves to a local office until it is closed; and it gives a list of the eventual VO locations - which I don't believe I have seen anywhere else - yet. I hope that serving members of the Agency are keeping an eye on things like this, in the interest of their own job security.

Then, the Chancellor himself has burst into print, saying that he is looking at triennial valuations, while, simultaneously, the Agency is advertising for a Chief Transformation Officer. Are we looking at privatisation, here? I think we should be told…

I have to reiterate that, in all my criticisms of the goings-on, it remains that the villains of the piece are not the VOA staff, but those who have so systematically reduced the once-proud, independent office with which I was so proud to serve, to its present level. They used to be known as valuers: now they are caseworkers, suggesting that valuation is increasingly a thing of the past. Their independence gone, how long will it be before they are named Property Tax Inspectors?

Still there is perhaps one piece of cheering news in this Gotterdammerung – the new head of the office, who herself joined HMRC as a trainee tax inspector is someone who, we read, enjoys not only travel but nice lunches. If this is true, then there will be one last sliver of twilight to gladden the hearts of valuers and revenues people of my vintage, who settled so many appeals over lunch or in the pub. Cling to that memory, people – it is all which is left!

Peter Scrafton

©J.P. Scrafton, 2017

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