The recent Upper Tribunal case of Kevin Prosser KC v Andrew Ricketts [2024] provides useful insight into how Judges will approach the rateability of barristers’ chambers and other similarly structured businesses or organisations.

Key ruling on the rateability of barristers' chambers and similar business structures 

The recent Upper Tribunal case of Kevin Prosser KC v Andrew Ricketts [2024] provides useful insight into how Judges will approach the rateability of barristers’ chambers and other similarly structured businesses or organisations. 

Background 

Pump Court Tax Chambers (PCTC), a barristers’ set in central London, leased part of a building at 15 Jockey Fields to accommodate barristers’ rooms and ancillary services. The demise was subject to a ratings assessment of £157,000 in the 2017 ratings list produced by the Valuation Office (VO). 

PCTC proposed that, rather than a single assessment for the entire demise, the ratings assessment ought to be split across the individual rooms comprising the building (e.g. barristers’ offices, clerking rooms etc) in order that small business rates relief could be claimed by the occupants of those rooms, thus minimising the barristers’ rates exposure in respect of the premises. 

The VO disagreed and determined that the barristers were jointly in occupation of the whole demise for rating purposes and, therefore, the correct ratings assessment was based on a single large hereditament, rather than multiple smaller hereditaments.  

This decision would prevent the tenant barristers from claiming small business rates relief, which would inevitably reduce their yearly rates bill, and retain the status quo whereby the rates liability for the entire building is split between members of chambers. 

Appeal 

PCTC appealed to the Upper Tribunal with its head of Chambers, Kevin Prosser KC, as the named appellant. 

The key question for the Tribunal was whether PCTC was in occupation of the rooms for rateable purposes or whether the individual barristers have exclusive occupation of the rooms, such that they ought to be separately rated. 

PCTC’s arguments as to why the rooms should be separately rated centred around the following key submissions: 

• Each member has exclusive use of their room, based on the terms of PCTC’s incorporation, and cannot be required to share or relinquish their room.
• The rooms are used for the purposes of the barristers’ individual businesses - on the basis that they are self-employed and not employees of PCTC.
• Each member can decorate and furnish their room as they see fit and at their own expense.
• PCTC does not stipulate to members the use to which the rooms must be put. 

The Tribunal, however, felt more emphasis should be placed on the context within which the barristers operated including: 

• PCTC’s legal structure - pursuant to which the demise was held on behalf of its members - which required all members to subscribe to, and be bound by, chambers’ constitution.
• The fact that the accommodation was purposefully acquired to retain a collective identity for PCTC.
• The barristers’ common purpose and mutual use of shared administrative and clerking services within chambers.  

The Tribunal determined that the separate occupation of rooms by individual barristers did not undermine the joint occupancy arrangement in order that the rooms should become separately rateable and the appeal was dismissed.  

Comparisons were drawn with the seminal case of Cardtronics UK Ltd & Ors v Sykes & Ors (Valuation Officers) [2020] where the Supreme Court determined that cash machines annexed to supermarkets and other establishments would not be rateable as a separate hereditament because the host stores had not parted with possession of the ATMs and retained general control over those sites as part of the facilities provided by the stores.  

A similar logic was applied in the present case; PCTC retained general control over the individual rooms as part of the facilities provided by Chambers and this was intrinsic to PCTC’s incorporation and function. 

As in Cardtronics, the fact that the individual rooms could potentially form separate hereditaments did not mean that they were separately rateable from the host building where the context provides to the contrary.  

Comment 

The decision in Prosser is likely to have implications for individuals or businesses with similar occupational arrangements that are looking to minimise or reduce their rates liability.  

It may, however, prove welcome news to the occupants of hereditaments which are, at present, separately rated or which are at risk of becoming so in the next rating list (due in 2026) where the liability is currently borne by the “host” occupant of the larger hereditament of which they form part - as is the case with supermarkets and ATM machines following the decision in Cardtronics. 

Whilst each case will be fact and context dependent, Prosser may well assist in providing such occupants with a useful tool to resist separate rateability and mitigate rates exposure. 

The decision in Prosser may also serve as an additional driver in the shift to home working or the use of serviced offices for barristers’ chambers and other similarly structured businesses for whom an ever-increasing rates liability is a disincentive to occupy prime city centre office space.  

It will be interesting to see how this, coupled with inordinate rental liability, further impacts the traditional working practices of the legal profession over the coming years.