The oil company owner of a motorway service area has achieved a very significant reduction in its non-domestic rates after the Upper Tribunal (UT) accepted that the petrol filling station that forms an integral part of it should nevertheless be viewed as a separate ‘hereditament’ (a legal term for a land holding) from the motel, restaurant and other facilities provided on the site.
The owner of the freehold of the service area had leased most of the site – but not the petrol station – to a catering company. A valuation officer argued that the entirety of the service area should be seen as a coherent whole and given a single rateable value, whereas the oil company argued that the petrol station should be entered separately in the rating list.
The issue was of substantial financial importance in that it was agreed that the service area, if valued as a whole, would have a rateable value almost £150,000 greater than the petrol station and the remainder of the service area if valued separately. The view of the valuation officer was preferred by the Valuation Tribunal for England.
The UT acknowledged that the whole of the service area was accessed by a single route from the motorway and that the owner had entered into a deed with the Secretary of State for Transport by which it undertook, amongst other things, to maintain fuel facilities as well as free picnic and toilet facilities and to make available a fixed number of car parking spaces. The catering company tenant had also taken on the day-to-day running of the petrol station as the owner’s agent.
However, in upholding the owner’s appeal, the UT ruled that the petrol station was a separate hereditament in that the owner had not leased it to the tenant and had retained ‘paramount occupation’ of the site and control over the way in which it was operated. The petrol station was geographically separate from the rest of the service area and, although both owner and tenant were occupiers of the site, the owner’s supervision of the petrol filling business was comparatively detailed and strict.