York Museums Trust calls for changes to business rates - Museums Association

York Museums Trust calls for changes to business rates

Call for rates to be based on income and expenditure
Nicola Sullivan
York Museums Trust is taking action against the government agency that sets business rates.

The Valuation Office Agency calculates business rates for museums that are run as charitable trusts in a number of ways. In the case of York Museums Trust, it has used the contractor's method, which is based on what it would cost to rebuild a museum or heritage site.

York Museums Trust will push for the Valuation Office Agency to assess business rates according to the institution’s income and expenditure instead of using the contractor’s method. The receipts and expenditure method would factor in revenue generated by admission charges, which were recently introduced by York Art Gallery.

York Museums Trust and the City of Bradford challenged the agency's decision to calculate business rates by the contractor's method at an appeal hearing earlier this year.
The appeal did not lead to a change of calculation method but it did result in an average rate reduction of 30% for seven museums and galleries in Bradford and York, said Colin Hunter, the director of Lambert Smith Hampton, the building consultancy firm that acted for the museums.
But Mike Woodward, the chief operating officer at York Museums Trust, said it had not gone far enough. He argued that the contractor's method did not make sense for ancient heritage sites, such as York Castle Museum.
“This is an 18th century prison building on an ancient monument site that’s built with heavy stone,” he said. “The Valuation Office has valued it on the basis of a notional rebuild, which we are saying doesn’t make sense because if this building didn’t exist you wouldn’t build it and certainly not like that.”

Woodward is hoping that if successful, the forthcoming appeal, due to be heard by a tribunal next year, will set a precedent for all museums that want to contest business rates based on the contractor’s method.

In a blog post on the Association of Independent Museums (AIM) website, Hunter said: “The Valuations Office Agency is currently defending the use of the contractor’s method of valuation, which uses the building costs to recreate the existing museum and produces much higher levels of value than most museums could ever afford to pay in rent.”
As it stands at the moment, museums are eligible for a mandatory relief of 80% for business rates levied on their premises as long as the property is wholly or mainly used for charitable purposes.

In some cases, museums will also be entitled to an additional discretionary rate relief of 20%, which is granted by the local authority.
York Museums Trust has not been granted the discretionary rate relief from the local authority. Woodward said continued cuts to public funding could mean that local councils may no longer be able to afford to offer the discretionary relief. This, he added, means more museums will be affected by the ways in which business rates are calculated.

A statement from the Valuations Office Agency said: "We can’t comment on individual cases. To arrive at a value for business rates, we have to estimate the rental value for non-domestic property.

"Where rents aren’t paid, chartered surveyors use other methods (such as estimated replacement cost, or receipts and expenditure) to arrive at what rent a tenant might pay. If we can’t reach an agreement with the rate payer, the most appropriate method and rateable value is determined by the independent Valuation Tribunal."

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