2.1 Definition
Paragraph 1 of Schedule 5 to LGFA 1988 states that:
A hereditament may be exempt to the extent that it consists of any of the following -
agricultural land;
agricultural buildings.
to the extent that is a phrase common to all the exemption classes within Sch 5. It allows the possibility of exemption for those parts of an otherwise non-exempt hereditament that are used for agricultural purposes with the Sch 5 definition.
Generally, the words should be interpreted in a spatial context, that is in the context of the space used, although they can be construed in terms of time, known as a temporal test.
Such a temporal test will only apply where the hereditament qualifies on certain days, but not on others (see also the provisions of s.42 LGFA 1988), and also in relation to s.67(5) LGFA 1988 where exemption falls to be determined at the end of the day.
Additionally, s.42(1) LGFA 1988 requires a relevant hereditament to be shown in a Rating List if, amongst other things, at least some part of it is neither domestic nor exempt property.
2.2 Rateable Value of partly exempt hereditaments
The rateable value of a partly exempt hereditament is determined in accordance with paragraph 2(1B) of Schedule 6 LGFA 1988 (added by paragraph 38(4) of Schedule 5 LGHA 1989).
Paragraph 2(1B) Schedule 6 LGFA 1988 requires that:-
the rateable value of a non domestic hereditament which is partially exempt from local non-domestic rating shall be taken to be an amount equal to the rent which, assuming such a letting of the hereditament as is required to be assumed for the purposes of sub-paragraph (1) above, would, as regards the part of the hereditament which is not exempt from local non-domestic rating, be reasonably attributable to the non-domestic use of property.
So the rateable value of a partly exempt agricultural hereditament should reflect the rental value of the non-exempt non-domestic property and ignore any value of the exempt or domestic property forming part of the hereditament.
In these cases, it will be necessary to add to the description in the rating list the words part exempt to satisfy the requirement in section 42(3) LGFA 1988 for example as Store and Premises (part exempt). Also, it may or may not be a composite hereditament (section 42(2)(b) requiring a composite indicator depending on whether there is domestic accommodation within the boundaries of the farm. Although the decision in [Cartwright (VO) v- Nickerson Zwann Ltd, 2005] RVR 319 found that the omission of the words part exempt in the description is not fatal to the entry in the rating list, VOs are advised to adopt best practice and use the part exempt suffix.
2.3 Relevance of case law to the general application of the exemption in paragraphs 2-7 Sch 5 LGFA1988 and occasional/temporary use for a non-exempt purpose
The exemption of agricultural land and buildings is defined by the use of the property (land and buildings) in the hereditament. Therefore cases decided in respect of earlier legislation remain relevant, subject to:
a) Paragraph 21 Sch 5 LGFA 88 (which applies to all parts of Schedule 5 LGFA 88) provides, at sub-paragraph 21(3), that:
Any land, buildings or property not in use shall be treated as used in a particular way if it appears that when next in use it will be used in that way.
b)The state of affairs at the end of the day provisions in s.67(5) LGFA 1988.
Paragraph 21 of Sch 5 and s.67(5) have a similar application to that of s.66(5) and s.67(5) for determining the extent of any non-domestic use of otherwise domestic property in a hereditament. Thus, if there are no physical adaptations to the exempt land or buildings at the end of the day, occasional use for a non-exempt purpose during the day will not be rateable, providing the exempt agricultural use is resumed by the end of the day.
The principles and practice for deciding whether occasional use of otherwise exempt agricultural land for another activity is rateable are discussed in detail below, and examples are given in Appendix 1.
