Museums and VOA lock horns

29 September 2021

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Museums across the UK are locked in disputes with the Valuation Office Agency (VOA) over business rate valuations two years after a landmark case in 2019 which should have set a precedent.

In this case the Upper Tribunal (Land Chamber) (UT) dismissed an appeal brought by the VOA against Royal Albert Memorial Museum (RAMM) in Exeter. The UT upheld the Valuation Tribunal England’s (VTE) decision that the rateable value of the museum in Exeter should be based on whether the property makes a net surplus (based on the receipts and expenditure method) rather than the cost of rebuilding (the contractor’s method).

Museums are generally loss making, and based on this method most would receive a nominal Rateable Value (RV) of £1. A similar case had previously been won by York Museums Trust in 2017.

Several court decisions have since upheld this, but the VOA has continued to appeal to the UT on similar museum cases and proposes alternative approaches based on uplifted ‘storage values’ or adopting an R&E approach, but with an arbitrary uplift to reflect the “socio-economic benefit” of the museum to a local community.

As a result, there is a backlog of museum appeals lodged with the UT and further appeals have been stayed until progress is made. VOA chief valuers have become involved and they have agreed to have talks with museums bodies to try to make some headway.

Jane Shankland, Business Rates Director at Cooke & Arkwright, who are advising National Museum Wales and nine Welsh local authorities in respect business rate appeals for their museums said, “We thought the RAMM decision brought a sense of reality to the valuation of these types of properties, which are mostly non-profit making and rely on significant deficit funding.

“As with the York Museum ruling, the Tribunal found that the valuation should be based on the receipts and expenditure basis, rather than the contractor’s method, which produces valuations that are manifestly too high. However, despite numerous UT and VTE decisions all finding in favour of the ratepayer, the VOA remains determined not to follow the guidance given in these decisions.

“We are now four years on from the York hearing and museums need this, and the RAMM ruling, to be upheld consistently as they are ill-equipped financially to keep challenging the VOA on an ongoing basis.”

Cooke & Arkwright has advised Network Rail on a wide variety of development sites in South Wales from Mon Bank in Newport to Radyr Sidings in Cardiff. They bring a high level of commitment, technical expertise and knowledge to the successful disposal of complicated development sites."

Stuart Kirkwood, Development Director, Network Rail