Supreme Court Reverses Landmark Business Rates Decision In Woolway -V- Mazars Case

Property Lawyer Comments On High Profile Case


David Shirt, Press Officer | 0161 838 3094

The Supreme Court has today given its judgment in a property dispute which will dictate future business rates levels for companies occupying multiple but unconnected floors in a building.

The case relates to offices occupied by Mazars on the second and sixth floors in the eight-storey Tower Bridge House in London with a rateable value of c.£1m.

In both the Valuation Tribunal and the Upper Tribunal accountancy firm Mazars successfully claimed that together the two floors constituted a single hereditament for the purposes of setting business rates.

However in today’s unanimous judgment the Supreme Court reversed those decisions and agreed with the Valuation Officer that the two floors should be treated as two separate hereditaments and therefore rated separately. The effect of which, in certain circumstances, will prevent rate payers seeking a discount on the amount of rates paid.

Handing down its ruling today, the Supreme Court declared three broad principles to determine the question of whether distinct spaces under common ownership could form a single hereditament for the purpose of business rates. The broad principles set out by the court look at geographic, functionality and enjoyment tests with the President of the Supreme court commenting that “where premises consist of two self-contained pieces of property, it would, in my view, require relatively exceptional facts before they could be treated as a single hereditament.”

Expert Opinion
“In the modern office world it is not uncommon for one tenant to occupy separate and non-contiguous floors within a large office building. A number of our clients were eagerly awaiting this decision in the faint hope of the possibility of being able to argue for a reduction on the business rates that they pay. Whilst the decision is disappointing for those clients, the Supreme Court has adopted a common sense approach in that where separate floors are capable of separate occupation and require the tenant to leave one floor and travel over common areas before entering another floor those should be treated separately for the purpose of business rates.”
Christopher Perrin, Partner