Section 2(1)(f) “Error” Appeals Are Confined to Objectively Verifiable Facts, Not Valuation Methodology or Comparable Selection

1) Introduction

The Nail & Beauty Zone LTD, trading as Pure Spa and Beauty (“the appellant”) appealed against the Assessor for Grampian Valuation Joint Board (“the assessor”) concerning the valuation roll entry for a shop at 381 North Deeside Road, Cults. The entry, made at the 2017 revaluation (effective 1 April 2017), fixed a net annual value (NAV) of £16,750.

The premises had two access points: one from North Deeside Road (leading down stairs) and a principal customer access from South Avenue at the level of the trading area beside a car park. The property had been let on a lease originally agreed in 2008, reviewed in 2014 to £20,500, and later assigned to the appellant in May 2017 with certain variations (including a 6-month rent-free period and “nil uplift” for outstanding reviews).

Critically, the appellant did not appeal at revaluation and did not lodge a “new tenant/new occupier” appeal in time. Instead it raised a running roll appeal alleging an “error” under section 2(1)(f) of the Local Government (Scotland) Act 1975, contending the assessor had wrongly valued the shop on an overall basis by comparison with 14A South Avenue, rather than using zoning (as for other North Deeside Road shops) and/or selecting different comparables.

After transfer from the Valuation Appeal Committee system to the First-tier Tribunal (Local Taxation Chamber) due to pandemic-related delays, the tribunal determined the appeal on written representations (at the appellant’s request), refused it, and the appellant appealed onward to the Lands Valuation Appeal Court (Inner House).

Key issues

  1. Whether adopting an overall method rather than zoning, and choosing certain comparables, could amount to an “error of ... classification” (or other “error”) under section 2(1)(f).
  2. Whether the tribunal erred in law in its approach to section 2(1)(f), in its fact-finding on rent, and/or in the adequacy of its reasons.
  3. Whether the procedure was unfair (delay; refusal to adjourn; written determination).

2) Summary of the Judgment

The court (Lord Malcolm, Lord Doherty, Lord Ericht) refused the appeal. Lord Doherty delivered the principal opinion.

The decisive holding was that the appellant’s complaints were, in substance, disagreements with the assessor’s valuation judgement: the choice between zoning and overall valuation and the selection of comparables. Those are not “errors of measurement, survey or classification” (nor clerical/arithmetical errors) within section 2(1)(f), which is confined to objectively ascertainable factual mistakes.

The court also rejected criticisms of the tribunal’s reasoning and the fairness of the procedure. It further observed that, even on the merits, the NAV did not appear excessive: it was supported by tone-date rents (including those of the subjects and 14A South Avenue), and business unprofitability is irrelevant to rating valuation under the statutory hypothesis.

3) Analysis

A. Precedents Cited

1. Trustees of the National Gallery for Scotland v Lothian Assessor [2010] CSIH 94, 2011 SC 277

This case was the foundation for the court’s interpretation of section 2(1)(f). Lord Doherty quoted and applied Lord Justice Clerk Gill’s well-known analysis that section 2(1)(f) is confined to errors on matters that are “empirically verifiable”—i.e., objectively checkable by “counting, by measurement, by inspection and so on”. It does not permit a running-roll “error” appeal to re-open disputes of opinion, judgement, or law.

The judgment also adopted Lord Hardie’s emphasis that the error must be an error “in the entry” and must be within the specified categories; and that survey/classification, properly understood, remain essentially factual and objective.

Influence on outcome: it provided the controlling principle that the appellant’s complaints (valuation method and comparables) were not section 2(1)(f) errors at all, but challenges that should have been made by timeous revaluation (or new occupier) appeal.

2. Assessor for Central Scotland v British Waterways Board (Scotland) [2018] CSIH 82, 2019 SC 222

Cited to reinforce that the section 2(1)(f) gateway is narrow: the statutory “error” categories are directed to objectively ascertainable matters, not valuation judgement. The court used it as consistent Inner House authority confirming the post-National Gallery line.

3. Assessor for Grampian v CDS (Superstores International) Ltd t/a The Range [2018] CSIH 13, [2018] RA 333

This authority was used on a different but important point: practice notes (here, the Scottish Assessors Association, Commercial Properties Committee, Practice Note 1 on shops) are not binding on assessors. Influence on outcome: it neutralised the appellant’s attempt to elevate the “recommended” zoning approach into a rule which, if not followed, constituted an “error”.

4. Armour, Valuation for Rating (textbook references)

While not a judicial precedent, the opinions relied on Armour for orthodox valuation principles: (i) adjust rents to reflect the statutory hypothesis (section 6(8) of the 1956 Act); (ii) assessors are not obliged to adopt zoning in every shop case; (iii) selection of comparables is evaluative. These propositions supported the conclusion that the appellant was attempting to re-argue valuation merits via an impermissible procedural route.

B. Legal Reasoning

1. The statutory framework: why the “error” route mattered

The appellant’s case was constrained by timing. Having missed the ordinary revaluation appeal route and the new tenant/new occupier window, it could only succeed if it brought itself within section 2(1)(f) of the Local Government (Scotland) Act 1975, read with the then section 3(4) and 3(4A)(b): a running roll appeal is competent “at any time while the roll is in force” only if there is a qualifying section 2(1)(f) error (or a material change of circumstances, which was not the focus here).

That statutory design explains the court’s insistence on maintaining the boundary between: (a) time-limited merits challenges to valuation judgement, and (b) time-flexible correction of objectively verifiable mistakes. The judgment expressly endorsed the policy concern articulated in Trustees of the National Gallery for Scotland v Lothian Assessor: a broader reading would “subvert the whole system of quinquennial valuations”.

2. “Classification” does not mean “valuation method”

The appellant’s primary submission was that the assessor committed an “error of classification” by using an overall approach rather than zoning. The court rejected this categorically.

“Classification” in section 2(1)(f) refers to placing subjects into the correct category in the valuation scheme (e.g., hotel vs bed and breakfast). Here, the subjects were classified as a shop, and that was correct. Choosing a method (zoning vs overall) is not a classification exercise; it is valuation judgement.

3. Comparable selection is valuation judgement, not an objectively ascertainable fact

The appellant also attacked the choice of comparator: why 14A South Avenue rather than North Deeside Road shops (or The Courtyard). The court treated this as a paradigm matter of valuation opinion. Even if one could disagree with the assessor’s preference, disagreement does not convert judgement into “error” under section 2(1)(f).

The tribunal’s factual findings supported rational comparability: both the appeal subjects and 14A South Avenue were entered from the same car park, with trading areas on the South Avenue level; whereas the nearby North Deeside Road shops had trading areas at the North Deeside Road level.

4. Adequacy of reasons and procedural fairness

The court held the tribunal’s reasons were intelligible and adequate: it identified that the alleged mistakes fell outside section 2(1)(f) and explained why. Given that this was the dispositive legal point, further reasoning on valuation merits was unnecessary.

On fairness, the court emphasised (i) systemic delay due to Covid-19, (ii) the statutory deadline obliging disposal by 31 December 2024, (iii) the availability of video participation, and (iv) that the appellant itself requested written determination under the tribunal rules. In those circumstances, there was no unfairness in refusing an adjournment to 2025 and proceeding on written submissions.

5. Observations on valuation merits (obiter but instructive)

Although not necessary to decide the appeal, Lord Doherty added that the NAV did not appear excessive:

  • It was below the passing rent at the tone date, with no suggestion the tone-date rent was not fairly conditioned and open market.
  • Business unprofitability was “nothing to the point”: valuation uses a hypothetical tenant, not the actual occupier’s success or failure.
  • The £120 per m2 rate was supported by the rent evidence for 14A South Avenue.
  • The appellant’s proposed figure being less than half the indicated rental rate was a “powerful indication” it did not reflect the statutory hypothesis.

C. Impact

1. Reinforcement of a strict “factual error only” gate for running roll appeals

The judgment consolidates (and applies in a shop-valuation context) the principle that section 2(1)(f) is not a backdoor merits appeal. Ratepayers cannot characterise disputes about valuation method, zoning, quantum allowances, or comparator choice as “classification” errors to obtain an at-any-time remedy.

2. Practical consequence: time limits matter more than the valuation debate

The case illustrates that once the ordinary appeal windows are missed, the scope for correction narrows sharply. Parties must treat revaluation appeals (and new occupier appeals) as the proper forum for contesting valuation judgement. After that, only demonstrable, objective mistakes—measurements, surveys of physical facts, true clerical/arithmetical slips, or genuine misclassification of property type—are likely to succeed.

3. Tribunal procedure: written disposal and deadlines

The decision signals judicial tolerance for robust case management where statutory disposal deadlines apply, including refusal of adjournments and proceeding by written representations (especially where remote attendance is offered and/or written disposal is party-requested).

4) Complex Concepts Simplified

  • Net Annual Value (NAV): the yearly rent the property could reasonably be expected to achieve on the statutory assumptions used for rating valuation.
  • Tone date / rental level date: valuations at a revaluation are pegged to rental market levels at a fixed date (here, 1 April 2015), even if the valuation roll takes effect later.
  • Statutory hypothesis (section 6(8) of the 1956 Act): a set of legal assumptions applied to estimate rent in a hypothetical letting; it is not the same as the actual occupier’s business experience.
  • Zoning vs overall valuation: two common shop valuation techniques—zoning values different depth “zones” at different rates; overall applies a single rate to the main area. Choosing between them is typically professional judgement.
  • Section 2(1)(f) “error”: a limited correction power for objectively verifiable mistakes (e.g., wrong floor area), not disagreements about valuation approach.
  • “Classification” (in section 2(1)(f)): the type/category of property in valuation terms (shop, hotel, office, etc.), not the method used to compute value.

5) Conclusion

The court’s core contribution is a clear, applied restatement of the boundary drawn in Trustees of the National Gallery for Scotland v Lothian Assessor: section 2(1)(f) is confined to objectively ascertainable factual errors and does not extend to valuation methodology, comparator selection, or other matters of professional judgement. A valuation dispute of that kind must be pursued through the time-limited revaluation (or other proper) appeal mechanisms; it cannot be revived indefinitely by re-labelling judgement calls as “classification” errors.