Dannhauser V Virk
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THE VALUATION TRIBUNAL FOR ENGLAND Summary of Decision: council tax banding appeal; increase in banding due to original list error, all evidence admissible, no evidence Trust sales were not arm’s length transactions or not at market value, Listing Officer evidence not comparable, appeal allowed. Re: Kerris Vean Farmhouse, Kerris Vean, Paul, Penzance TR19 6NT APPEAL NO: 0840801117/176CAD BETWEEN: Michael Dannhauser (Appellant) and Dal Virk (Respondent) (Listing Officer) BEFORE: Mr G Garland (President of the Tribunal) SITTING AT: Truro Business Space Chiltern House City Road Truro TR1 2JL ON: Wednesday 13 February 2019 APPEARANCES: The Appellant appeared in person. The Respondent Listing Officer was represented by Mr S Hickman of the Valuation Office Agency as advocate and Mr E Doran as expert witness. 1. The appeal was allowed as the best and most compelling evidence was a sale on the appeal dwelling in 1996 which was an arm’s length transaction on the open market. 2. The band was amended to band C with effect from 30 October 2016. Introduction 3. This decision document is not and does not purport to be a full verbatim record of proceedings. However, the parties can be assured that I gave all the evidence and arguments put forward due judicial consideration. 4. This was a council tax valuation appeal. Council tax was introduced by the Local Government Finance Act 1992 and replaced the much criticised Community Charge (or Poll Tax). It is a tax based on the value of a dwelling placed in one of a number of Valuation Lists, with discounts and exemptions granted by the local authority where the liable person meets the relevant statutory criteria. The person responsible for entering properties into the Valuation List is known as the Listing Officer (LO) and is a member of the Valuation Office Agency (VOA). 5. Sections 1 and 2 of the Act introduce council tax in respect of dwellings (properties) and the concept of liability. Section 3 sets out the definition of a dwelling. Section 5 (2) sets out the bandings and values from A to H which dwellings in England must be allocated to: Range of values Valuation band Values not exceeding £40,000 A Values exceeding £40,000 but not exceeding £52,000 B Values exceeding £52,000 but not exceeding £68,000 C Values exceeding £68,000 but not exceeding £88,000 D Values exceeding £88,000 but not exceeding £120,000 E Values exceeding £120,000 but not exceeding £160,000 F Values exceeding £160,000 but not exceeding £320,000 G Values exceeding £320,000 H 6. The valuation of each dwelling is calculated in accordance with the Council Tax (Situation and Valuation of Dwellings) Regulations 1992: 6 Valuation of dwellings: general (1) Subject to regulation 7, for the purposes of valuations under section 21 (valuations for purposes of lists) of the Act, the value of any dwelling shall be taken to be the amount which, on the assumptions mentioned in paragraphs (2) and (3) below; the dwelling might reasonably have been expected to realise if it had been sold in the open market by a willing vendor on 1st April 1991. (2) The assumptions are— (a) that the sale was with vacant possession; (b) that the interest sold was the freehold or, in the case of a flat, a lease for 99 years at a nominal rent; (c) that the dwelling was sold free from any rent charge or other incumbrance; (d) except in a case to which paragraph (3) or (3A) applies, that the size, layout and character of the dwelling, and the physical state of its locality, were the same as at the relevant date; (e) that the dwelling was in a state of reasonable repair; (f) in the case of a dwelling the owner or occupier of which is entitled to use common parts, that those parts were in a like state of repair and the purchaser would be liable to contribute towards the cost of keeping them in such a state; (g) in the case of a dwelling which contains fixtures to which this sub-paragraph applies, that the fixtures were not included in the dwelling; (h) that the use of the dwelling would be permanently restricted to use as a private dwelling; and (i) that the dwelling had no development value other than value attributable to permitted development. 7. There is one other matter which is important for this appeal and that relates to the issue of reasonable repair. The regulation states: (6) In determining what is reasonable repair in relation to a dwelling for the purposes of paragraph (2), the age and character of the dwelling and its locality shall be taken into account (my emphasis). 8. In this appeal, the relevant date for consideration of the physical state of the dwelling and its locality is the date the property had originally been entered into the Valuation List, namely 1 April 1993. The valuation is undertaken with reference to sale values at 1 April 1991 (known as the Antecedent Valuation Date). 9. The appeal has travelled a long and varied path. The subject property entered the List as a band C dwelling with effect from the introduction of council tax on 1 April 1993. After a perceived relevant transaction and review for potential alterations and improvements the banding was increased by the LO to band E, with effect from 30 October 2016. However, after receiving a proposal from the Appellant the LO subsequently discovered that no alterations or improvements had taken place at the property since its introduction into council tax. At that point the LO agreed that the banding should not be increased to band E. On reflection, the LO then considered that an error / mistake had occurred when the appeal property was originally placed into the list and decided that the banding should be increased to band D, with effect from 30 October 2016. 10. A proposal was served on the LO dated 20 April 2017 by Mr Dannhauser. He disputed the increased assessment from band C to band D. The LO determined that the proposal was not well founded and issued a decision notice to that effect on 14 June 2017. Mr Dannhauser subsequently made an appeal to this tribunal against the decision notice. 11. The panel that heard the case issued a decision on 7 December 2017 allowing the appeal of Mr Michael Dannhauser against the decision of the Listing Officer dated 14 June 2017 and ordered that the council tax band applicable to Kerris Vean Farmhouse, Kerris Vean, Paul, Penzance TR19 6NT be reduced from band D to band C. 12. That decision was appealed by the LO to the High Court on a point of law. The point was whether the Tribunal applied the correct legal test to determine Mr Dannhauser’s appeal. The High Court’s decision ([2018] EWHC 3162 (Admin)) sets out the test that the panel undertook, and I don’t intend to repeat it in this decision. The outcome of the appeal was that the panel applied the wrong test. I have summarised the mains points as follows: a. The reason as to why an error was made in the original valuation is not a matter for consideration (para. 53); and b. The Listing Officer can rely on any evidence in determining the applicable banding for the appeal dwelling including ‘tone of the list’ and sales after the original valuation (para. 68). 13. There are potential difficulties with panels accepting all evidence and following the ‘tone of the list’ which I will address below, however, panels are well equipped to consider each case on its individual facts and give what weight they feel is appropriate. Therefore, the best evidence available will usually be sales closest to the AVD followed by appeal decisions and settled appeals. Such sales are in the possession of the LO. Tone can be a far more complicated matter than may appear in the words of the learned judge and though it can be relied upon, it must be scrutinised with vigour as the wrong answer may be arrived at (see later). 14. I will now look at three issues that panels will need to address in their consideration of cases: a. Actual sales; b. Tone of the list; c. Burden of proof. Actual Sales 15. Actual sales are extremely helpful in valuing dwellings although it is a band that needs to be ascribed to a dwelling, not a specific value. This evidence is usually a mix of sales on the appeal dwelling and comparable dwellings. Murray J rightly states the further away from the AVD and the more adjustments that need to be undertaken, the less weight that should be given to them. Murray J considers the LO would be looking at later sales on the basis that the earlier, and usually most relevant sales, were not available to them (para.71). It seems to me the learned judge must not have been made aware that this evidence was, and still is, in the possession of the LO. 16. The Appellant is the one disadvantaged in that these sales are not available to them unless on the appeal dwelling. Some sales evidence can be found on the internet but certainly not back to 1991. Parliament recognised the difficulties that taxpayers faced with the LO holding all the sales evidence and implemented regulation 17 of The Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009. This regulation placed an evidential requirement on the LO to provide notice when such evidence is submitted at least two weeks before the hearing and for the Appellant to be able to seek a similar number of sales from the LO’s ‘pot’ of all the sales.