Significant Court Ruling on Rates in favour of York Museums Trust

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Significant Court Ruling on Rates in favour of York Museums Trust

6 June 2017

York Museums Trust’s business rates have been reduced following a court ruling which could have a significant impact on the way English and Welsh museums are valued in the future.

The Upper Tribunal (Lands Chamber) has ruled on appeals in favour of the Trust which argued that rates should be set based on net income, not the cost of rebuilding, which the Valuation Office Agency (VOA) has traditionally used for many museums.

The Tribunal also agreed that the York Castle Museum shop and the Hospitium were occupied by the Trust and not just its commercial arm, York Enterprises Ltd, so were eligible for the standard 80% charitable relief.
The decision has seen the Trust’s rateable value reduced by £120,000 against the original listing, with a large proportion of this coming from the Yorkshire Museum and Gardens’ revaluation because of the level of expenditure needed to maintain and run the site.

Mike Woodward, 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 run and maintain. The precedents set on the valuation methods of historic buildings should be of significant benefit to the wider sector.”

The Trust, which runs and maintains York Castle Museum, the Yorkshire Museum and Gardens (which includes St Mary’s Abbey, York Observatory, the Roman Multangular Tower and the Hospitium), York Art Gallery and York St Mary’s successfully argued for reduced rates based on advice from commercial property consultancy Lambert Smith Hampton (LSH) and Stuart Ward of Stuart Ward Solicitors.

Colin Hunter, Divisional Director at Lambert Smith Hampton, who acted as the Trust’s Expert Witness, said:

“The outcome of the appeal reflects more than a decade of discussions with the VOA on behalf of York Museums Trust and the Association of Independent Museums. This decision will not only help museums in York, it could also help the 767 museums valued on this basis in England and Wales.

“The VOA’s attempt to separate out the values of shops and offices is the most financially damaging aspect of the case. Had their appeal succeeded, its implications would not only affect museums, it would have significant repercussions for any charity with a trading subsidiary.”

Business rates for the buildings in the Trust’s care have historically been valued by reference to the cost of rebuilding – almost 50 per cent of all museums are valued by the VOA on this basis. As a result of the court’s decision, the Trust’s sites will now be valued based on net income achieved by the individual museums/galleries.

This means that York Castle Museum, which has high visitor numbers, will have a rateable value in keeping with this; now set at £183,000 per annum. Comparatively, the Yorkshire Museum, which includes the ruins of St Mary’s Abbey, has been reduced to a rateable value of £1, because of the higher costs to maintain such an historic and complex site.

The VOA brought the appeal forward to the Upper Tribunal in an attempt to separate out all shops and cafés, as well as the Hospitium that formed part of St Mary’s Abbey in the grounds of Yorkshire Museum. The VOA was unsuccessful in this request, with the Upper Tribunal agreeing that all but one of the shops should be valued as part of the museum. Had the VOA been successful, the rates liability for the museums could have increased significantly. Instead the appeal successfully saved the Trust nearly £100,000 in backdated rates bills.

The Trust’s rateable values given in the case were:

York Castle Museum (including shop and café) – £183,000
Yorkshire Museum (including Hospitium) – £1
Yorkshire Museum Shop – £7,600
York St Mary’s – £10,000
York Art Gallery (including shop and café) – £70,000