Anderson v Assessor for Orkney and Shetland Valuation Joint Board

JurisdictionScotland
Judgment Date16 July 2019
Neutral Citation[2019] CSIH 39
Docket NumberNo 38
Date16 July 2019
CourtCourt of Session (Inner House)

[2019] CSIH 39

Extra Division

Valuation Appeal Committee

No 38
Anderson
and
Assessor for Orkney and Shetland Valuation Joint Board
Cases referred to:

Assessor for Lanarkshire Valuation Joint Board v Valuation Appeal Committee 2003 SC 249; 2003 SLT 329; [2004] RVR 33; [2003] RVR 6

Valuation — Subjects — Council tax — Alteration of valuation band — Material reduction to the valuation of a dwelling — Whether proposal made out of time — Council Tax (Alteration of Lists and Appeals) (Scotland) Regulations 1993 (SI 1993/355 (S 39))

Richard Anderson appealed against a decision of the Assessor for Orkney and Shetland Valuation Joint Board in respect of his refusal to alter the valuation list. Following a hearing, the valuation appeal committee refused the appeal and communicated its decision to him on 8 October 2018. Mr Anderson appealed to the Court of Session.

Section 87(10) of Local Government Finance Act 1992 (cap 14) defines “material reduction” in relation to the value of a dwelling as “any reduction which is caused (in whole or in part) by the demolition of any part of the dwelling, any change in the physical state of the dwelling's locality or any adaption of the dwelling to make it suitable for use by a physically disabled person.”

Regulation 2(1) of the Council Tax (Valuation of Dwellings) (Scotland) Regulations 1992 (SI 1992/1329 (S 126)) provides that the value of any dwelling shall be taken to be the amount which the dwelling might reasonably have been expected to realise if it had been sold in the open market by a willing seller on 1 April 1991, having applied certain assumptions set out in para (2). Regulation 2(2)(d) states that it is assumed “that the dwelling was in a state of reasonable repair”.

Regulation 4(1)(a)(ii) of the Council Tax (Alteration of Lists and Appeals) (Scotland) Regulations 1993 (SI 1993/355 (S 39)) (‘the 1993 Regulations’) permits the alteration of a valuation where there has been a material reduction in the value of the dwelling. Regulation 5(1) provides, “Subject to paragraphs (2), (7), (8) and (10), an interested person may at any time on or after 1st April 1993 make a proposal for alteration of the list so as to– … (c) change with effect from a particular date a valuation band which is or was shown on the list in respect of a dwelling.” Regulation 5(2) provides, “Where a dwelling is shown on the list as compiled, no proposal for alteration of the valuation band first shown in respect of the dwelling on the grounds that it is not the band which should have been so shown may be made after 30th November 1993 unless it is such a proposal as is described in paragraph (3), (4), (5) or (6).” Regulation 5(5) provides, “Where a person first becomes a taxpayer in respect of a dwelling after 31st May 1993, that person may … make a proposal in relation to that dwelling within 6 months of becoming a taxpayer.”

In 2014, the taxpayer became liable to pay the council tax in respect of the house known as ‘The Sea Chest’ in Shetland. In March 2018, he proposed to the assessor that the valuation list in respect of the Sea Chest be altered by substituting band D for band E as a result of a material reduction in value caused by damage from surface water draining from neighbouring properties. The assessor refused to alter the list, which decision was appealed to the valuation appeal committee. The committee refused the appeal on the basis that the taxpayer's proposal was made out of time and that the defects in the house were capable of being rectified.

On appeal to the Court of Session, the taxpayer argued that the defects were beyond his power to rectify where their cause was situated beyond the curtilage of the property.

The assessor argued that reg 5(5) of the 1993 Regulations applied to a proposal to change a valuation band on the ground of material reduction in value and therefore required to be brought within six months of the proposer becoming the taxpayer.

Held that: (1) a proposal under reg 4(1)(a)(ii) (material reduction in value) of the 1993 Regulations could be made at any time (paras 22–28); (2) whether the defects were capable of being rectified was irrelevant as the dwelling was assumed to be in a reasonable state of repair (paras 29–31); (3) the relevant question was whether there had been a material reduction in the value of the dwelling caused by a change in the physical state of the dwelling's locality, and there had been no findings by the committee to that effect (para 31); and appeal refused.

Assessor for Lanarkshire Valuation Joint Board v Valuation Appeal Committee 2003 SC 249 applied.

The cause called before an Extra Division, comprising Lord Brodie, Lord Drummond Young and Lord Malcolm, for a hearing on the summar roll, on 18 June 2019.

At advising, on 16 July 2019, the opinion of the Court was delivered by Lord Brodie—

Opinion of the Court—

Valuation for the purpose of council tax

[1] Section 70(1) of the Local Government Finance Act 1992 (cap 14) (‘the 1992 Act’), as amended, provides that in respect of the financial year 1993/94 and each subsequent financial year, each local authority in Scotland shall impose a tax which shall be known as the council tax of the council which set it, and shall be payable in respect of dwellings situated in that authority's area. The persons liable to pay council tax are identified in sec 75 of the 1992 Act. The amount of council tax payable by the person liable is dependent on the valuation band within which the dwelling house is listed, as provided by sec 74 of the 1992 Act. The valuation bands are designated by letters of the alphabet from A to H (1992 Act, sec 74(2)). The bands are relatively broad. The present appeal relates to a proposal for the alteration of the band within which a dwelling house is listed by substituting band D for band E. Valuation band D is for values exceeding £45,000 but not exceeding £58,000. Valuation band E is for values exceeding £58,000 but not exceeding £80,000.

[2] The responsibility for compiling and maintaining a valuation list of the dwelling houses in his area and allocating each dwelling its applicable valuation band is that of the assessor for the local authority (1992 Act, sec 84). In order to enable him to compile the list the assessor shall carry out a valuation of such of the dwellings in his area as he considers necessary or expedient, but where it appears to the assessor that a dwelling falls clearly within a particular valuation band, he need not carry out an individual valuation (sec 86(1), (3)). Any valuation shall be carried out by reference to 1 April 1991 and on such assumptions and in accordance with such principles as may be prescribed.

[3] Assumptions and principles for the valuation of dwellings are prescribed in reg 2 of the Council Tax (Valuation of Dwellings) (Scotland) Regulations 1992 (SI 1992/1329 (S 126)) (‘the 1992 Regulations’). Regulation 2, so far as relevant for present purposes, provides as follows:

‘Valuation of dwellings

2.–(1) For the purposes of valuations under section 86(2) of the Local Government Finance Act 1992 and valuations carried out in connection with proposals for the alteration of a valuation list, the value of any dwelling shall be taken to be the amount which the dwelling might reasonably have been expected to realise if it had been sold in the open market by a willing seller on 1st April 1991, having applied the assumptions mentioned in paragraph (2) below …

(2) The assumptions referred to in paragraph (1) above are–

  • (a) that the sale was with vacant possession;

  • (b) that the dwelling was sold free from any heritable security;

  • (c) that the size and layout of the dwelling, and the physical state of its locality, were the same as at the time when the valuation of the dwelling is made or, in the case of a valuation carried out in connection with a proposal for the alteration of a valuation list, as at the date from which that alteration would have effect;

  • (d) that the dwelling was in a state of reasonable repair …

(3) In determining what is “reasonable repair” in relation to a dwelling for the purposes of paragraph (2) above, the age and character of the dwelling and its locality shall be taken into account.’

[4] Section 87 of the 1992 Act empowers the assessor to alter the valuation list. The exercise of that power is governed by the Council Tax (Alteration of Lists and Appeals) (Scotland) Regulations 1993 (SI 1993/355 (S 39)) (‘the 1993 Regulations’). Among the circumstances in which the assessor may alter the valuation list is that ‘there has been a material reduction in the value of the dwelling’ (1993 Regulations, reg 4(1)(a)(ii)). ‘[M]aterial reduction in value’ has however a restricted meaning in this context. In terms of sec 87(10) of the 1992 Act ‘material reduction’ in relation to the value of a dwelling is defined as meaning:

‘[A]ny reduction which is caused (in whole or in part) by the demolition of any part of the dwelling, any change in the physical state of the dwelling's locality or any adaption of the dwelling to make it suitable for use by a physically disabled person.’

[5] In terms of reg 5(1)(c) of the 1993 Regulations, subject to...

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