Home Office Loses £16MILLION Tax Appeal Case

Thursday, September 21, 2017


The Home Office has lost a protracted 7 year battle over the level of property taxes it pays for its headquarters.

The Home Office moved into the purpose built 800,000 sq ft office block at 2 Marsham Street in the City of Westminster, on the site of the old Department of the Environment building, in 2005 paying a monthly charge for the building and services which will amount, over the 29-year life of the PFI project, to £311million.

The Department for Communities and Local Government, responsible for business rates policy, also moved into the building in 2014 as part of the work to reduce Government property costs.

But, in 2010, the Home Office challenged the rateable value of £24.96million assigned to the building by The Valuation Office Agency, an Executive Agency of HM Revenue & Customs. The rateable value determined the level of business rates bills from 1st April 2010 until 31st March 2017 and represented the open market rental value on 1st April 2008.

At the contested hearing before the Valuation Tribunal, the Home Office sought a reduction in rateable value by almost a fifth by £5.87million to £19.09million. The appeal was dismissed.

We know that had the appeal succeeded, the Home Office would have received a £15.75million business rates rebate.

In April, Theresa May's Government changed the law surrounding business rate appeals introducing the controversial ‘Check. Challenge. Appeal.’ regulations but there have been complaints from businesses that the new system is a bureaucratic nightmare, replete with red tape and an online portal that is not fit for purpose.

Last week, in the House of Lords, Parliamentary under Secretary of State Lord Bourne of Aberystwyth defending the new regulations, which the Federation of Small Business have described as "shambolic", saying;

"It clearly cannot be right that a significant number of appeals began with entirely spurious claims that the valuation of a property should be reduced to £1."

But, embarrassingly, the Home Office when filing its appeal in 2010 pleaded "The RV is incorrect, and bad in law and should be reduced to £1 with effect from 1st April 2010." according to the Tribunal's decision.

Our Chief Executive, Mark Rigby, commented on the matter;

"The Government's entire justification for the new regulations have been completely undone by the actions of one of its own departments but was entirely misplaced in any event as ratepayers' simply sought to protect their position in law by not being bound to a proposal should new evidence come to light."

Last month The Valuation Office Agency confirmed that 29% of all appeals, almost 1 in 3, resulted in tax rebates back to business with 256,760 having successfully challenged their 2010 property valuation which has determined property tax bills for the last 7 years.

Rigby added:

"The reality is that the number of successful appeals are hugely underestimated as it has been routine practice for the Valuation Office Agency to correct assessments outside of the appeal procedure by way of serving their own notice to reduce property values that have been the subject of an appeal or in respect of similar properties that benefit from a successful appeal."

The Government has earmarked £1.3billion for tax rebates this financial year against the new property valuations which came into force in April under the revaluation according to DCLG.