Tyne & Wear Archives & Museums (Twam) has won a landmark case against the Valuation Office Agency over the rateable value of three of its museums.
The judgment means that Twam will only have to pay nominal business rates for Shipley Art Gallery, Laing Art Gallery and South Shields Museum and will benefit from substantial backdated and future savings.
The original rateable value of the three properties was £94,500, £193,000 and £62,500 respectively. This has been reduced to £10 for each museum.
Business rates advice for MA members
Our members are entitled to a free consultation with Colin Hunter, Director of Business Rates at Lambert Smith Hampton, an expert witness in Tyne & Wear Archives & Museum’s landmark business rates case.
The Lands Chamber of the Upper Tribunal dismissed a bid by the VOA to reflect the social value the venues provide to the local area within their rateable value.
The tribunal ruled that the museum’s rateable value could not be based on the socio-economic benefits that the museums provide, because that benefit is to the community and not to the museum operator. The judgment also ruled that is it not possible to quantify the social value of that public benefit to the local authority. It was therefore determined that the three venues should not be penalised with large rates bills for providing benefits to the local community.
Jackie Reynolds, Twam’s head of finance, governance and resources, said: “We are delighted to see the original decision in our case being upheld. We fundamentally believe that museums should not be penalised with large rates bills for simply delivering the benefits that we clearly do for our local communities.”
Like previous business rate wins by the Royal Albert Memorial Museum & Art Gallery and York Museums Trust, the case has implications for the broader museum sector in England and Wales. It should change the way that the VOA calculates the amount that many museums in England and Wales are liable for, leading to savings for most museums but especially for loss-making institutions.
However, it is likely that museums hoping to benefit from the ruling will need to engage in their own appeals because their rateable value will not be reduced automatically.
Sector bodies are calling on the VOA to change its methodology in response to the tribunal’s decision.
MA policy manager Alistair Brown said: “This is a really positive outcome for Twam after a lengthy legal case. Many other museums can and should benefit from this landmark ruling – but it would be a waste of the sector’s resources for hundreds of individual appeals to now be launched.
“Instead, we want to see a new VOA methodology for setting rates which reflects the tribunal’s decision, and we will be pursuing discussions with the VOA jointly with the Association of Independent Museums and the National Museum Directors’ Council to make this a reality.”
Twam was advised by Colin Hunter of property consultancy Lambert Smith Hampton, Stuart Ward of Stuart Ward Solicitors and Jenny Wigley QC of Landmark Chambers.
Hunter said: “This is a victory for common sense and drives a coach and horses through the VOA’s assertions of implied value attached to museums. It will come as welcome news to occupiers across the cultural and heritage sectors and offers much-needed clarity.”