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Court of Appeal refuses Valuation Office Agency permission to appeal ruling on rateable valuation of council-run museum

The Court of Appeal has refused to grant the Valuation Office Agency permission to appeal a ruling in favour of Exeter City Council over the rateable valuation of the city’s Grade II-listed Royal Albert Memorial Museum & Art Gallery (RAMM).

In January this year the Upper Tribunal (Lands Chamber) found in Hughes (VO) v Exeter City Council (RATING - valuation - alteration of rating list - museum located in an historic building) [2020] UKUT 7 (LC) that the RAMM should not be valued based on the cost of rebuilding (contractor’s or CB), which was the VOA’s preferred method.

The case was brought by the VOA as an appeal against a decision made by the Valuation Tribunal for England in August 2018, which used the Revenue and Expenditure (R&E) basis for valuing RAMM and set its rateable value at £1 from April 2015.

The previous rateable value, also the result of an appeal, was £445,000.

The Upper Tribunal judgment recognised the intrinsic high operational costs of occupying a listed building and running a museum and it was made clear that “there is no legal principle which would preclude the use of the R&E method in the present case and would require the CB to be used”.

Exeter City Council said the decision would have a significant impact on the way many English and Welsh museums are valued in the future, especially those in similar listed buildings with high operating costs.

Due to the importance of the case to the sector, the council was supported by Arts Council, England (ACE) and the National Museum Directors Council (NMDC).

Cllr Rachel Sutton, Exeter’s Portfolio Holder for Climate and Culture, said: “We are relieved by the outcome which is good news for RAMM but also the sector as a whole. Like all other local authorities, Exeter is facing huge financial challenges and the new rateable value will represent a substantial saving at a critical time. 

“The judgment recognises the reality of the public subsidy required for a museum that is highly valued by its community but has an intrinsic cost. Many other museums and local authorities will find themselves in a similar position and our hope all along was that this judgement would also benefit other museums and the communities they serve.

“We are extremely grateful to ACE and NMDC. Without their support this landmark case would have been too costly for us, as a district council, to pursue.”

Colin Hunter of Lambert Smith Hampton, who acted as an expert witness at the hearing, said: “This appeal is the culmination of several years of discussions and appeals on behalf of various museums, both local authority and independent museums.

“The first appeal to reach this level was in respect of the 2000 Rating List for Waltham Abbey Royal Gunpowder Mills, which was followed by an appeal heard by the Upper Tribunal for four properties in York that considered appeals against the 2005 and 2010 Rating List.”

Hunter added: “The detailed 70 page decision in respect of RAMM pulls together all of the previous arguments raised by both the museums and the Valuation Office and provides extremely valuable guidance for how museums should be valued in the future.

“The principle issue between experts was the appropriate valuation method to be applied. The Valuation Office relied on a method based on the cost of construction of a modern equivalent museum. This decision goes back to first principles and explores what a reasonable museum tenant could and would be willing to pay in rent. The refusal to allow an appeal to the Court of Appeal should mean that this decision is the final word.”

Founded in 1868, RAMM is the largest museum in Exeter and is housed in a Gothic Revival building of local New Red Sandstone that has undergone several extensions during its history.

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