On 29 July 2015, the Supreme Court gave a judgement that will undoubtedly prescribe future business rates levels for companies occupying more than one floor in a building.
Where different parts of an office building are occupied by the same occupier, the ordinary practice of the valuer is to enter them as a single unit if they are connecting, but as separate units if they are not.
The case concerned Tower Bridge House – an eight storey office block in London. Mazars, a firm of chartered accountants, occupied the second and sixth floors under separate leases. These floors were separated by common areas in the building and were entered into the 2005 rating list as separate units. Mazars applied to the Valuation Tribunal for England (VTE) to merge the two entries in the rating list to form a single unit. They were successful in their claim both at this level and at the level of the Upper Tribunal. The Supreme Court however reversed the decision stating that the two floors were to be regarded as two separate units and therefore should be rated separately.
The Supreme Court declared that there are three broad principles that need to be applied when deciding how different storeys/ units under common occupation in the same block are to be entered into in the rating list for non-domestic property. The principles relate to geographic, functionality and enjoyment tests.
The effect of the decision is that where a Tenant occupies more than one floor in a building and has to gain access to another floor via common areas, these would be treated as separate units for the purposes of business rates.
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