Part 7: Material Change of Circumstances

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Valuation Office Agency

December 4

14:46 2023

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1.1 The right to make a proposal to alter the rating list is not unlimited and is restricted to the circumstances laid down in the legislation. Currently there are 15 grounds specified of which the right to make a proposal where there has been a material change of circumstance (MCC) is perhaps the most important.

1.2 A proposal to alter the rating list, normally requesting a reduction in assessment, on the grounds of a material change of circumstances can only be made under regulation 4(1)(b) of the Non Domestic Rating (Alteration of Lists and Appeals)(England) Regulations 2009 SI 2268, or the equivalent in the NDR (Alteration of Lists and Appeals)(Wales) Regulations 2005 SI 758(W.63).

This states that a proposal may be made if:

The rateable value shown in the list for a hereditament is inaccurate by reason of a material change of circumstances which occurred on or after the day on which the list was compiled.

1.3 The Non-Domestic Rating Act 2023 (NDR Act 2023) amends the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 SI 2268 so as to restrict in England the circumstances in which a proposal can be made under Reg. 4(1)(b) for the 2023 and later lists. The Act adds the additional text but this is subject to paragraph 2ZA of Schedule 6 to the Act

1.4 The new paragraph 2ZA contains provisions such that any change to the following matters:

2(7)(aa) matters affecting the physical enjoyment of the hereditament
2(7)(da) matters which, though not affecting the physical state of the locality in which the hereditament is situated, are nonetheless physically manifest there
2(7)(e) the use or occupation of other premises situated in the locality of the hereditament

must be disregarded if that change is directly or indirectly attributable to:

Legislation of any country
Provision made under legislation of any country
Advice and guidance by a public authority of any country
Anything done by a person to comply with the above

So, a proposal reliant upon any changes covered by the provisions of para 2ZA would not be a lawful proposal.

1.5 A material change of circumstances in relation to a hereditament is defined by regulation 3 of 2009 SI 2268 as a change in any of the matters mentioned in Para 2(7) of Schedule 6 LGFA 1988`.

1.6 It should be noted that the right to make a proposal is not because there has been a material change of circumstances as such, but that the rateable value shown in the list in inaccurate by reason of the MCC, which is a subtly different thing.

1.7 In 2017 new regulations were introduced for England only regarding the procedure for challenging the assessments of properties for all rating lists compiled on or after 1 April 2017. The new system in England is referred to as Check Challenge Appeal (CCA).

1.8 For rating lists in Wales, and for rating lists compiled before 1 April 2017 in England, the previous procedures still apply including checking that a proposal is validly made.

1.9 Section A below outlines the position in England pre CCA so for all lists before the 2017 rating lists, and the system still currently applying in Wales.

1.10 For the position in England for the 2017 rating lists onwards reference should be made to Section B below.

1.11 Section C then goes on to consider in detail the meaning of a material change of circumstances.

A. Pre 2017 Rating Lists in England and all Rating Lists in Wales

2. Validity - Relevant Criteria

2.1 Broadly, for a proposal to be validly made on the grounds of a material change of circumstances it must:

a) have been made at any time before the day on which the next list is compiled (Regulation 5(1) of 2009 SI 2268)

b) include a statement of the nature of the change (Regulation 6(1)(e)(iii)), and

c) state the date on which the person making the proposal believes the change occurred (Regulation 6(1)(e)(iii)).

2.2 Inevitably these provisions will give rise to questions as to whether proposals have been validly made and how to challenge them if they have not.

2.3 Proposals that fail to comply with the factual requirements of the above Regulations should be treated as invalid. Examples would include:

a) failure to specify the material change of circumstances;

b) failure to specify the date on which the change was believed to have taken place;

c) failure to link the event in question to at least one of the matters specified in schedule 6 para 2(7) to the LGFA 1988.

2.3 It should be noted that failure to correctly specify the exact date when the change took place does not necessarily render a proposal invalid. Regulation 6(1)(e)(ii) merely requires a statement of the date on which the maker of the proposal believes the change took place. In many cases a statement in this respect will be difficult to challenge.

2.4 The date should normally be the day, month and year but an indication of only the month and year is acceptable.

2.5 It may be difficult in some instances to determine the precise date on which a purported material change occurred. For example, where the material change is a building project, or road works in the locality, which has no effect on the property initially but gradually comes to do so. In such circumstances it is conceivable that there will be several successive material changes as the works progress and it should not be maintained that there is only one date which can be accepted, whether this is the day on which the works began or were completed.

2.6 More difficult questions of interpretation surround the phrase material change of circumstances. The scale of the alleged change is not the determining factor when considering a change in any of the matters mentioned in para 2(7) of Schedule 6 and even a minor change is material if it satisfies this definition. A detailed consideration of what comprises a material change of circumstances is provided in paragraphs 7-11 below

3. Consideration of Validity on Receipt of a Proposal

3.1 General policy on the question of validity of proposals is dealt with in Rating Manual Section 6. The following paragraphs deal more specifically with proposals made on the grounds of material change of circumstances.

3.3 If there is a material deficiency, such as a failure to specify the material change or the date it took place, then an invalidity notice should be served. However, where it is considered that the deficiency lies in the purported material change itself the matter should be approached with some caution.

3.4 It is not generally a matter of validity where it is accepted that there is a material change of circumstances but the change has no effect on the value of the property. The proposal is valid but remains to be substantiated in valuation terms.

3.5 It could be argued that in the particular circumstances of a case the material change of circumstances is so remote in terms of its influence on the subject property that the maker of the proposal could not possibly believe that the change would have an effect on value. A challenge on these grounds will not be easily substantiated and Regulation 8(1) invalidity procedure should not normally be invoked unless there is good reason to believe that the proposal is vexatious or totally without foundation.

3.6 Failure to treat a proposal as invalid under Regulation 8(1) does not preclude the question of validity being raised at a later stage - e.g. on appeal to VT (Regulation 8(12)).

4. Scope of Proposal

4.1 Once it is accepted or established that a proposal has been validly made, no attempt should be made to restrict consideration of the assessment to the precise grounds of the proposal alone.

4.2 Legal advice indicates that where, for instance, a proposal is made for a reduction on account of the demolition of part of a hereditament, the VT and Lands Tribunal are not precluded from examining the whole of the assessment on the remainder, notwithstanding that this could not have been challenged otherwise. Similarly, when considering a proposal for a temporary reduction in assessment it is necessary to check that the existing list entry is correct. If the entry is, for example, insufficient then any allowance for the temporary disability must be deducted from the correct entry.

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