York Museums Trust wins landmark business rates case

Nicola Sullivan, 06.06.2017
Decision could result in lower business rates for 767 museums
York Museums Trust has won a landmark appeal case over the way its business rates are calculated and has received a rebate of £100,000 in backdated bills.

The Upper Tribunal has ruled that the business rates paid by the trust should be based on net income and expenditure, and not the cost of rebuilding or the contractor’s method, which the government’s Valuation Office Agency uses to set business rates for many independent museums.

The tribunal has also ruled that the York Castle Museum shop and Yorkshire Museum and Gardens fall within the remit of the trust and not just its commercial arm York Enterprises. This means that both sites will be eligible for the 80% charitable relief.

The ruling means the trust’s annual rateable value has reduced by £120,000 with a large amount of the savings coming from the revaluation of business rates for Yorkshire Museum and Gardens (which includes St Mary’s Abbey, York Observatory, the Roman Multangular Tower and the Hospitium), which require a high level of expenditure to run and maintain.

The ruling will result in total annual savings of around £10,000. This has been backdated for 10 years, which means the trust has received a rebate of £100,000. 

Mike Woodward, the chief operating officer for York Museums Trust, said: “We are pleased that we have been able to successfully argue the case for what we believe is a much fairer way of paying rates on the buildings and spaces we maintain. The precedents set on the valuation methods of historic buildings should be of significant benefit to the wider sector.”

The appeal case was brought by the Valuation Office Agency to ensure shops, cafes and offices were treated as commercial enterprises that were separate from charitable trusts, so would have to pay higher business rates. This was unsuccessful with the tribunal ruling that all but one of York Museums Trust's shops should be valued as part of the trust.

Colin Hunter, the divisional director at Lambert Smith Hampton, who acted as the trust’s expert witness during the case, said: “The Valuation Office Agency’s attempt to separate out the values of shops and offices is the most financially damaging aspect of the case. Had its appeal succeeded, the implications would not only affect museums, it would have significant repercussions for any charity with a trading subsidiary.”

Hunter said the tribunal’s decision could help 767 museums in England and Wales that pay business rates based on the contractor’s method.

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