News archive

Case concerning five linked appeals in the Land Valuation Appeal Court of the Court of Session.  The appeals related to entries in the 2010 Valuation Roll for five large industrial buildings in Inchinnan (ranging from 5,311 sq. m to 52,393 sq. m).

The valuation of the subjects had been difficult due to a lack of comparable rental evidence.Instead of using a revaluation scheme by the Scottish Assessor’s Association (SAA), the assessor had used local rental evidence to devise his own scheme. The first step was to derive a basic rate from rental evidence of smaller units in the area then to make a quantum adjustment to reflect the fact that the unit rate deceases as size increases.  The principle issue in this case was the size of the quantum adjustment applied.

The assessor’s approach was accepted by the Renfrewshire Valuation Appeal Committee. However, whilst the court refused the appeals in relation to the two smallest buildings (it considered that the assessor had reliable rental evidence for buildings of up to 6,000 sq. m), it allowed appeals in relation to the three larger buildings.

The assessor was entitled not to apply the SAA valuation scheme if in his judgement the scheme was not suited to the circumstances in the valuation area. The Committee had also been correct to reject Rolls Royce’s valuation which followed the methodology of the assessor’s scheme but applied the quantum adjustment from the SAA scheme. However, there were two main problems with the assessor’s calculation of the quantum discounts:

1. the assessor had relied on agreed valuations under the 2005 Valuation Roll and evidence of rental growth from those valuations (whereas, on the correct approach, a revaluation should be based on a fresh appraisal of the subjects without regard to their earlier values); and
2. the assessor had also relied on the current rent for the Rolls Royce premises which, on the evidence before the Committee, had not been an open market rent and had been based on pre-ordained contractual increases rather than contemporaneous review.

The cases in respect of the three larger buildings were returned to the Committee for a re-hearing and the assessor directed to reconsider his valuations in the light of the decision.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Appeal in the Land Valuation Appeal Court of the Court of Session concerning the valuation of unit in the Silverburn Shopping Centre in Glasgow. The unit was a deli selling food and coffee as a franchise of Coffee Republic. The assessor entered the unit on the Roll as a shop with an annual value of £159,000 as it was not a licensed restaurant, was adjacent to shops and could be easily altered to shop use. However the Valuation Appeal Committee allowed an appeal by the unit’s owner, Monti Marino and applied a lower ‘restaurant’ rate entering a value of £87,000. The assessor then appealed the Committee’s decision to the Court of Session.

The court refused the appeal noting that it has long been established that lands and heritage are valued in their current state without regard to the potential for physical adaption (providing that use is beneficial and is not subject to arbitrary restrictions).

The question of whether the subjects should have been entered in the Roll as a shop or as a restaurant or café was a question of fact for the Committee. At least five considerations pointed to the unit being a café or restaurant:

1.  the layout of the premises with tables and chairs for diners and seats outside;
2. the extent of food-based spending at the premises by comparison with food outlets that are valued as shops;
3. the fact that only a minority of the trade was take-away;
4. the fact that food was prepared on the premises for service at the tables; and
5. the availability of customer toilets.

The Committee’s decision was not unreasonable and there was therefore no error in law. Also, with regard to the assessor’s contention that the Committee should not have ignored the rental evidence of the zoned shops, the Committee was entitled to adopt that valuation which it considered to be supported by the evidence relating to other food outlets at the Centre. Since the Committee regarded the subjects as a restaurant, it was entitled to reject the values taken by the assessor from shops in the mall.

The full judgement is available here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Time for another “tax land”.

Where to start?  Jersey seems as good a place as any.  Jersey is also considering its constitutional options.  This is not new news.  I was in Jersey a couple of years ago and independence was also being discussed amongst the lawyers I was meeting.  Jersey is in a different position to Scotland as it is for all intents and purposes already fiscally autonomous and is a British Crown dependency.  An article on this from the Guardian can be found here.  This is from the Guardian article:

“A barrage of regulatory clampdowns and political attacks on the Channel Islands’ controversial financial industry has prompted one of Jersey’s most senior politicians to call for preparations to be made to break the “thrall of Whitehall” and declare independence from the UK.  Sir Philip Bailhache, the island’s assistant chief minister, said: “I feel that we get a raw deal. I feel it’s not fair.  I think that the duty of Jersey politicians now is to try to explain what the island is doing and not to take things lying down.  The island should be prepared to stand up for itself and should be ready to become independent if it were necessary in Jersey’s interest to do so.”

It seems that the constitutional genie is well and truly out: Scotland, Falkland Islands, Jersey and now it seems on UK membership of the European Union.

Now to the announcement by the Scottish Government of its intention to create its own tax administration and collection agency, to be called Revenue Scotland.  Its main job initially will be to administer the two new Scottish taxes devolved under the Scotland Act.  The fact that it is to work closely with Registers of Scotland and the Scottish Environment Protection Agency, also makes sense.  These new taxes, a Scottish Stamp Duty Land Tax and a Landfill Tax, will be directly linked to the work done by these organisations.  A press release from the Scottish Government on this can be found here.

As regular readers of this blog will know I have been writing about this issue for many years now.  Whilst I welcome this announcement I still think we need to be more radical.  We need to review all government tax, law and registration services.

I was not surprised to see some negative comments about the Revenue Scotland announcement. However, if Scotland has its own tax system it needs its own tax administration and collection agency.  That applies just as much under the Scotland Act as independence.  That though is not the only reason.

Let’s not forget the fact that UK tax law is based on English legal principles, or how HMRC and HM Treasury dealt with the introduction of Stamp Duty Land Tax in Scotland, or the inheritance tax changes to trusts, or the proposed planning-gain supplement, or the Scottish Government’s local income tax proposal or VAT and the new Scottish police and fire services.  All good reasons for welcoming Revenue Scotland.

The Scottish Government is in no doubt that Revenue Scotland will be able to administer the new Scottish taxes at a lower cost than HMRC.  I agree with that.  I have also noticed that no-one seems to remember one of the more ridiculous claims made when the Calman Commission proposals were being debated.  The Scotland Office claimed that the cost of administering a separate Scottish tax system would be the same as the present UK system.   Complete and utter nonsense.  The Scotland Office paper can be found here.

One last point on Revenue Scotland.  I met with a number of Scottish Government officials just before the 2011 Scottish election on this issue.  It was quite clear that they wanted nothing to do with this idea and only met with me at the insistence of a Scottish Minister.  Thank you Jim Mather.  I wonder if their attitude has changed in any way?  Let’s hope so as this is just the start.

The Scottish Government has also published its consultation on a Land and Buildings Transaction Tax.  This will replace Stamp Duty Land Tax.  The consultation for Scotland’s replacement to Landfill tax will follow later this year.  I use the word “summer” advisedly.  The consultation can be found here.

And there’s more.  The Scottish Government has finally published its consultation in a “plastic bag tax”.  The consultation can be found here and a press release from the Scottish Government here.

Even the UK Government is playing its part.  The UK Government is consulting on whether to allow the Scottish Government the power to issue its own bonds.  The move would potentially allow Scottish Ministers to raise hundreds of millions of pounds.  A provision in the Scotland Act 2012 has already enabled the UK government to amend the way in which Scottish Ministers can borrow from 2015-16.  An article on this from the BBC news website can be found here.  The consultation can be found here.

One last point on fiscal powers.  The UK government is reportedly considering proposals to devolve complete control of income tax if Scotland votes ‘no’ in the independence referendum.  This sums up nicely what is wrong with the UK Government’s approach to this debate.  If the UK Government has a serious proposal to make, make it.  If not be quiet.

Now to tax and morality.  David Cameron branded comedian Jimmy Carr “morally wrong” for seeking to avoid paying his fair share of tax.  Mr Carr is understood to use an aggressive, though legal, tax avoidance scheme which enables members to pay income tax as low as 1%.  This is dangerous territory for David Cameron.  Already the press have published the names of many others who are involved in similar schemes.  If David Cameron seriously wants to tackle this issue he must act against all those who seek to evade tax.  Has he considered the public disclosure of all tax returns or a minimum percentage of tax that must be paid?  I suspect not.

This is not just a UK Government issue.  The Herald discovered that Transport Initiatives Edinburgh used tax loopholes to allow directors to avoid paying income tax rates on £1 million in fees and bonuses. The company, which closed last year due to its handling of the trams project, paid directors and consultants through their firms.  As a result, they were subject to 20% corporation tax rather than 40% income tax.  The article from the Herald can be found here.

The evidence that the “rules” do not apply to everyone is growing.  Whether it is the 3,000 UK civil servants being paid through a company, or the payments made to those who were partially responsible for the trams fiasco in Edinburgh or the celebrities avoiding tax.  I am resisting the urge to say it was ever thus but in times such as this it does seem even more reprehensible.

One last point.  I often am quite critical of HMRC.  I would argue for good reason.  That said, is it really time to cut 10,000 jobs?  An article on this and the proposed strike by HMRC staff can be found on the BBC news website here.

Have a good week.

Outer House case concerning an alleged breach of duty under the Occupiers’ Liability (Scotland) Act 1960 at Lakeland’s store on Hanover Street in Edinburgh. Miss Brown argued that a two-fold failure by Lakeland to install a handrail and to signpost an existing alternative exit on George Street (which had a ramp and handrail) resulted in her falling down a flight of stairs at the Hanover Street exit.

Whether or not Lakeland had breached its statutory duty depended on whether it had been negligent. The question for the court was whether Lakeland had done or omitted to do something which had, as its reasonable and probable consequence, injury to others. This was a matter of fact and circumstance. Consideration was given to the knowledge and magnitude of the risk and the practicality and effectiveness of preventative measures.

Lord Woolman found that Lakeland had not been negligent. As regards knowledge of the risk, it was noted that there had been no history of accident amongst perhaps 3 million persons to have visited the store. In relation to magnitude of the risk, there was no risk of falling far (Miss Brown had fallen four or five steps). With regard to practicality of preventative measures, Lakeland had already established a disabled entrance (on George Street) which complied with the relevant legislation and had taken steps to bring its existence to the notice of customers. As to effectiveness of preventative measures, there was no evidence that, had Lakeland installed a handrail at the Hanover Street entrance, it would have prevented Miss Brown’s accident. Further, Lord Woolman also took account of  the expert evidence of two architects which indicated that it was unclear whether planning permission would have been granted for a handrail.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

We have added to our range of bulletins with a monthly litigation bulletin.  This will be produced by litigation specialist Dr Dianne Millen of Baird & Company who will also be contributing regularly to our blog. A sample of the bulletin is available here. To sign up for a free trial of our bulletins click here.

Great to see progress at last on a Scottish tax system.

One of the first steps is the Scottish Government’s consultation: Taking Forward a Scottish Land and Buildings Transaction Tax.   The consultation document can be found here. 

The consultation runs to 30 August 2012.

This is from the website of OPG Scotland.

“The Public Guardian is aware of the significant problems experienced by attorneys, withdrawers and guardians when dealing with banking institutions and other fund holders. There is a regular programme of awareness raising and training with fund holders to try and reduce these difficulties but this makes little impact at the present time. The Equality and Human Rights Commission are keen to hear from individual attorneys, withdrawers or guardians, who encounter such difficulties and with permission may be able to raise a legal challenge against a fund holder on the grounds that they are treating incapable adults less fairly than a capable person. The Commission can be contacted:

• By e-mail scotlandhelpline@equalityhumanrights.com or
• By telephone on 0845 604 5510 or
• In writing to Equality and Human Rights Commission Helpline Scotland
  Freepost RSAB-YJEJ-EXUJ
  Equality and Human Rights Commission
  PO Box 26961
  Glasgow, G2 9DU”

More on this can be found here.

Judicial Review seeking to reduce a conditional consent and the related deemed grant of planning permission for a 59 turbine wind farm development situated 5 miles south of Dufftown and just over a mile outside the northern edge of the Cairngorms National Park.

William Grant were part of a group of third party objectors. The main thrust of their argument was that, having concluded that there was a need for the wind farm at the site, the planning reporter was then “anxious not to find too many things in the way of a consent” and allowed the need for the site to override other important adverse factors.

Section 36 of the Electricity Act 1989 provides that a generating station cannot be constructed except with the consent of the Scottish Ministers. Section 57(2) of the Town and Country Planning (Scotland) Act 1997 provides that, on the granting of such consent, the Scottish Ministers may direct that planning permission is deemed to have been granted subject to any conditions specified by the Ministers.

William Grant argued that section 25 of the 1997 Act, which requires that regard must be had to the development plan in making any determination under the planning acts, also applied, contending that the Scottish Ministers’ direction under s57(2) was flawed due to a failure to afford the development plan the enhanced status required by s25.

This argument was rejected by Lord Malcolm:

“In my view it is clear that the purpose of a section 57(2) direction is to allow circumvention of the process of a planning application, including any need for a determination in terms of section 37 of the 1997 Act (which does specify that regard is to be had to the development plan). By contrast, section 25 applies to decisions under the planning acts when it is a requirement that regard is to be had to the development plan. There are several provisions in the 1997 Act where one finds such a requirement. Section 57(2) is not one of them.”

Lord Malcolm found that, although the need for the site may have played a significant part in the overall conclusion, the decision was an “entirely normal and rational exercise of the kind of judgement required” in such applications and also rejected various other grounds of challenge based on policies in the local plan and supplementary guidance.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case concerning the extent of a public road (the A801) at Whitecross near Linlithgow.  The question for the court was whether an embankment to the east of the road formed part of the public road or was the private property of the Council.

Morston argued that the public road extended all the way from the fence at one side of the road to the fence at the other side and included the embankment. If this were the case it would allow them to take access to the road from a proposed development on the east side of the road without making a ransom payment to the Council.

After noting that much could be said for both sides of the argument, Lord Malcolm came to the conclusion that the embankment did not form part of the public road.  In deciding whether the land formed part of the road, the question to be resolved was whether the disputed ground had been ‘dedicated to public passage’. This would depend on the particular facts and circumstances.

When the local authority acquired the land (in the 1960’s) the part on which the embankment was situated would have allowed the addition of a second carriageway to the road. Lord Malcolm noted attractions in the argument that, having built a widened embankment for the purpose of holding the land in reserve for possible future use as a highway, the roads authority had dedicated that land for public passage. He noted also that the widened embankment was held in the Council’s roads account. However, prior authorities indicated that the matter should be tested by the use, character and function of the land at the time not by future intentions. At no time had the embankment been put to use as a highway, or as part of a highway.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

We are on holiday until Monday 18 June.  Our blogs will resume then.