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The appeal was made by three local authorities in respect of a decision of the President of the Valuation Tribunal for England in May 2014 (Please click here for a copy of our e-briefing in respect of the original decision)
Background – The Valuation Tribunal’s original Judgment
The original application to the Valuations Tribunal was made by two associations that were registered providers of social housing with exempt charity status. They had appealed against 3 local authorities decisions to refuse Category B Council Tax Exemption.
Category B Exemption is available if the following four conditions are satisfied:
- The dwelling is owned by the body in question; and
- The body must be established for charitable purposes only; and
- The dwelling must have been unoccupied for a period of less than six months; and
- The last occupation must have been in furtherance of the objects of the charity.
The President of the Valuation Tribunal (the “President”) granted the appeal stating that the local authorities approach was “incorrect” and “overreached”. The President effectively found that the fourth condition could be presumed by the fact that the bodies concerned were charitable providers of social housing operating within their objectives and therefore satisfying Class B exemption.
The local authorities concerned subsequently appealed all three decisions.
The Appeal – the High Court’s Judgment
In his judgment, Mr Justice Mostyn set out that it could not be disputed that the law requires proof to be supplied in respect of each consideration and that the debate before him revolved around the “scope of the requisite evidence and on who falls the burden of adducing it”. In essence the issue before the Court was whether the decision of the President of the Valuation Tribunal amounted to “legitimate (if adventurous) judicial interpretation or whether it crosses the line into illegitimate judicial activism”.
Mr Justice Mostyn, in allowing one appeal but dismissing the other two, found that:
- The President was wrong in holding out that a presumption (as set out above) existed, though he could see the need for such a presumption;
- Taking into account the often low value of exemption claims, “It would be grossly burdensome and would have the effect of emasculating the intent of the exemption if extensive evidence had to be supplied to support the application”.
- It “should normally be enough” for a Council to receive a “short written representation by the applicant (which might usefully be done on some kind of standard form) which addresses all four conditions directly and which states (a) that based on the material held by the applicant that conditions are met and (b) that the statement is true to the belief of the representor”.
- The evidence provided in respect of the two appeals that were dismissed “was only just sufficient to satisfy” the fourth condition. Mr Justice Mostyn noted that no evidence at all was provided to satisfy this condition in respect of the appeal which was allowed.
Mr Justice Mostyn also called on the Secretary of State to consider a revision to the Class B exemption to provide “a presumption in relation to condition (iv) where the application is made by a charitable social housing provider”.
Prior to Mr Justice Mostyn’s judgment, Councils had, unsurprisingly, been slow and laboured in their approach to deal with this issue. The original President’s judgment no doubt resulted in Councils receiving numerous applications from Housing Associations for current exemption but also backdated repayments. As a result, future revenue collection from Council Tax is going to be effected with Councils also potentially being forced to refund previous Council Tax payments incorrectly demanded from, and subsequently paid by, Housing Associations.
Mr Justice Mostyn’s judgment was not necessarily the decision that Councils would have been hoping for and in essence little has changed fundamentally since the original President’s decision. Whilst the High Court declined to uphold the President’s view that a presumption of entitlement arose, although stating that such a presumption would be beneficial, the Court confirmed that, in dismissing two appeals, that the exemption was available to registered providers with exempt charity status and that the evidence to be submitted with applications was limited.
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