The New Art Gallery Walsall has had its rateable value reduced from £25,000 to £1

More museums appeal business rates after York Museums Trust ruling

Geraldine Kendall Adams, 18.07.2018
Rates across England and Wales rose significantly after 2017 revaluation
The New Art Gallery Walsall is the latest in a number of museum and galleries to have succeeded in reducing its business rates liabilities following a legal victory by York Museums Trust (YMT) at the Upper Tribunal last year.

Several more institutions have since followed in YMT’s footsteps, Museums Journal has learned. In addition to Walsall, which found out this week that its rateable value would be reduced from £25,000 to £1, Chatham Historic Dockyard in Kent has had its rateable value cut from £470,000 to £66,000, Segedunum Roman Fort near Newcastle has seen its rateable value drop from £152,000 to £55,000, and Wythall Transport Museum near Birmingham has had its rateable value reduced from £160,000 to £9,000. The Mary Rose Trust in Portsmouth also successfully appealed its liabilities recently, while a case brought by the Royal Albert Memorial Museum in Exeter is ongoing.

The YMT's landmark case overturned the Valuation Office Agency’s (VOA) standard practice of valuing museums based on the cost of rebuilding – known as the contractor’s method – and instead determined that the valuation should be based on receipts (the museum’s net surplus income). The ruling relates to museums where the building itself can be classed as part of the attraction.  

The rateable value is used to calculate how much the museum should pay in business rates. On average, valuations based on receipts result in a rateable value five or six times lower than those calculated by the contractor’s method. The ruling is particularly relevant to loss-making museums, whose rateable value can be reduced to £1 on receipts.

YMT received a backdated rebate of £100,000 following the change in its rateable value, and has made total annual savings of around £10,000 on its business rates.

The rulings come at a time when museums are facing increasing pressure from rising rates, according to Colin Hunter, the director of business rates at the property consultancy Lambert Smith Hampton. The business rates revaluation in England and Wales last year saw museums amass a total rateable value of £216m, an increase of 48% on the previous rating list from 2010.

In addition, while museums that are registered charities are still entitled to 80% business rate relief, Hunter said many are increasingly being denied the discretionary 20% top-up relief that they have traditionally received from councils.

“A lot of councils have changed their policies," he said. "Going from having nothing to pay to a substantial rates bill can be quite shocking.”

“Museums are being hit from all sides,” he added. “They being starved of funding and seeing rates rising and the loss of relief.”

Hunter said that the opportunity to appeal rates could be shortlived, however, as the VOA was looking for reasons to overturn the YMT decision.

“I’m trying to get everyone [in the museum sector] singing from the same hymn sheet on this and not just accepting what the VOA is doing,” he said. “If we could just get the VOA away from its obsession with the contractor’s method it could make a hell of a difference. The contractor’s method just doesn’t make sense and the courts are now agreeing with us.”

Comments