Source: https://property-elite.co.uk/blog/hot-topic-highlight-rating-hereditament
Timestamp: 2019-04-25 11:57:20+00:00

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Hot Topic Highlight - Business Rates - What is a Hereditament?
Woolway (VO) v. Mazars  and the Staircase Tax have been a rating hot topic over the last 5 years.
They are also likely to be one of the main areas of questioning for the Local Taxation and Assessment RICS APC competency.
What is a hereditament and why is this important?
Business rates and technical jargon go together hand in hand. You need to know these basic definitions to satisfy level 1, as well as being able to apply these to achieve levels 2 (doing) and 3 (giving reasoned advice). In this blog article, we will focus on the term, hereditament.
Hereditament means ‘an inheritable property’ and stems from the Latin word hērēditāmentum, meaning to inherit. Today, and in this context, it means a property which is assessed for rating purposes.
How is a hereditament defined by legislation?
However, since the Poor Relief Act 1601 which originally introduced the concept of business rates, there hasn’t been a single piece of legislation which adequately defines what a hereditament is.
Unhelpfully (and confusingly), the Local Government and Finance Act 1988 (the cornerstone of modern rating), simply refers back to the General Rate Act 1967, which in turn refers back to the Rating and Valuation Act 1925 and the Rating Act 1874. Although the Rating Act 1874 does mention hereditament a number of times, it doesn’t actually define it.
The Rating and Valuation (Apportionment) Act 1928 does try to define the term, but only really goes half way. It states ‘where two or more properties within the same curtilage, or contiguous to one another, are in the same occupation…’ ‘…they shall be treated as if they formed parts of a single hereditament’.
What happens where this doesn’t apply?
The 1928 Act fails, however, to deal with the situation where two properties are not within the same curtilage or are not contiguous to one another.
Of course, if two elements are occupied by different parties or are occupied by the same party, and are put to wholly different uses to one another, then they will always be considered as two hereditaments.
Does case law deal with this issue?
From the 1900’s to the 1950’s, various cases dealt with this issue. However, things really started changing in 1957 in the case of Gilbert v. Hickinbottom .
What happened in Gilbert v Hickinbottom ?
The Court of Appeal, lead by Lord Denning, heard Gilbert v. Hickinbottom  which concerned a bakery on one side of a public highway and a mechanic’s workshop, which serviced the bakery’s vans, on the other side of the road.
Should the two properties have been assessed as one hereditament or two?
The case turned on whether the two properties should be assessed as one hereditament or two.
The court considered that the first test should be the geographic – do the two elements touch one another or not? If so, then it is likely that they should be assessed as one hereditament. If not, then it is likely that they should be assessed as two.
However, there is an element of flexibility with that rule – ‘in such cases the two properties on either side of the road are so essentially one whole – by which I mean, so essential in one use the one to another – that they should be regarded as one single hereditament’.
As such, the court determined that the mechanic’s workshop was so essential to the operation of the bakery that the bakery could not exist without it and, as such, that the two properties should be assessed as one hereditament. This rule became known as ‘functional essentiality’.
What other case law should I be aware of?
This was a ground-breaking case at the time, and, one which has changed the face of rating law ever since.
Midland Bank v. Lanham (VO)  – applying the rule to a bank with associated training suites where it was held that the two elements were functionally essential and should be assessed as one.
Trunkfield (VO) v. Camden London Borough Council  – applying the rule to offices that were contiguous but only by a party wall, and did not have interconnectivity between them, where it was held that the two elements should be separately assessed.
Vtesse v. Bradford (VO)  – which concerned fibre optic cables and asked whether cables linking two geographically remote offices together fulfilled the geographical test, the answer was a resounding no!
In our next two business rates blog articles, we will focus on the Woolway (VO) v. Mazars  case and the Staircase Tax.

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