UK: Geography, Function And Objective Necessity: A New Approach To Non-Domestic Rates In The Office

Last Updated: 14 August 2015
Article by Bryan Johnston

Woolway v. Mazars [2015] – One building, one business, two hereditaments


The Supreme Court has handed down judgment in a non-domestic ratings case that has overturned the approach to determining hereditaments where there are floors separated by common parts occupied by a tenant in the same building.

Section 41 of the Local Government and Finance Act requires a valuation officer to record each hereditament in his/her area and update the ratings list every five years. Previously, a ratepayer holding two or more non-contiguous leases within a multi-let building would expect the interests to be listed as one hereditament on the ratings list if an essential functional link existed between the floors let to the ratepayer.

The Supreme Court's decision changes this position. The consequence of this is that ratepayers with two or more hereditaments in a single building will likely be liable for more business rates than if the various demises had been treated as a single hereditament.


The Tower Bridge office block in question had eight floors. There was a common reception on the first floor, which contained lifts to the other floors as well as an atrium. Mazars occupied the second and sixth floors of the building. It had separate leases for each but they shared the same term.

The valuation officer initially entered them on the rating list as separate hereditaments. This was successfully appealed as the Valuation Tribunal determined that they should be treated as the same, concluding (on the facts) that there was no significant difference between floors that were contiguous and floors that were non-contiguous.

This was upheld by the Court of Appeal – there was sufficient connection through the common parts and there was no need for the floors to be a "physical cube".

The Supreme Court granted leave for appeal.


On appeal, the Supreme Court unanimously upheld the decision of the valuation officer – that floors demised in the leases should be treated as two separate hereditaments. The decision was based on three tests:

The geographical test

It is likely that if the parts of the property can only be accessed through some other property (i.e. common parts) then they are separate hereditaments. A common-sense approach is taken here as to whether the unit in question visually appears to be single or two or more units which are separated. However, where the use of one space is necessary to be able to use the other, the fact that they are geographically separate may be irrelevant. The remaining tests must be used to answer the question.

The functional test

The key question is whether the parts of the property could be used without each other. For example, could the units be let separately, or would this render either obsolete? Where they could be, this is a resilient argument that they are separate hereditaments for the purposes of ratings liability.

The objective necessity test

The character of the property will also dictate the position. A valuation officer must use his/her professional common sense to objectively ascertain whether the property itself constitutes a number of hereditaments, and ensure that this is not linked to the tenant's/occupier's individual business needs.

Points to consider

The position on whether non-contiguous lettings to the same ratepayer constitute a single hereditament has now been clarified. However, whilst there is more clarity than previously, there is still an element of subjectivity. The individual facts concerning each relevant set of lettings will have to be considered and there is still scope for arguments. The tests seem to qualify each other and make the scope for argument smaller, albeit still present.

The case is clearly bad news for ratepayers holding non-contiguous leases in one building. However, it is also potentially bad news for ratepayers holding contiguous leases. Lord Sumption's judgment in particular suggests that if adjoining floors are geographically separate then they form two hereditaments. What is the difference between leaving the demised floor 2 and taking the lift in the common parts to access floor 6 and taking the lift from floor 2 to floor 3? Further, under Lord Sumption's test, the fact that there is a single letting of two "contiguous" floors separated by services and common parts is irrelevant to determining the geographic test. Lord Neuberger's judgment endorses this approach – if the floors are separate self-contained units, they will not satisfy the test for a single hereditament, regardless of whether or not the floors are contiguous, save in exceptional circumstances. The logical extension of this could be where the majority, or possibly the whole, of a building is let, but the landlord retains common parts and plant areas. If the floors are geographically separate, the default position would suggest separate hereditaments.

It is commonplace for businesses to have a demise of more than one floor in a building. The Supreme Court's decision in Woolway is likely to have a big impact on ratings liabilities when the Valuation Office Agency compiles the next rating lists. Separate hereditaments may not be taxation neutral, so businesses should plan for split hereditaments and take appropriate expert advice. In respect of future business decisions, the shape and layout of a potential building should be a consideration when ascertaining potential costs associated with any potential letting of the building or part of it. Further, a tenant may wish to ensure that it is able to effect alterations to the premises to ensure that there is sufficient interconnection between separate areas to minimise ratings liability risk.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
28 Sep 2017, Seminar, London, UK

On 26 July the FCA published its long-expected consultation paper on the extension of the SMCR to all FCA-authorised firms. The so-called "core regime" introduces the key concepts of regulator-approved senior managers, firm-approved certification staff and conduct rules applicable to virtually all staff.

3 Oct 2017, Conference, Zurich, Switzerland

As the founding Partner of the Europe-Iran Forum, Dentons Europe will once again support this year’s event. This compelling event which explores all Iran-related topics will take place in Zürich on 3rd and 4th October.

4 Oct 2017, Workshop, London, UK

We are hosting an interactive workshop where we will run a mock High Court trial of an employee competition case – where the members of the audience are the judges. The session, aimed at in-house counsel and HR professionals, will offer an insight as to how disputes involving employees moving to a competitor play out in practice.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.