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Iceland Foods in centre of latest landmark ruling

Another groundbreaking decision from the Supreme Court has been handed down in this ‘golden age’ of rating with so much activity in the Supreme Court and Upper Tribunal (Lands Chamber).

This time the dispute was the rateability of a specialised air conditioning system used by Iceland Frozen Foods in its retail units that has caused many to scratch their heads.

The Court of Appeal had upheld the decision of The Upper Tribunal that the air conditioning system installed by Iceland was not part of a “trade process” and therefore not exempt from rating. In that decision it was suggested “that while a taxidermist who stuffs a dead owl could properly be said to be engaged in a trade process, the proprietor of a shop who displays the owl for sale in a glass case could not, even if he dehumidified the air in the glass case to protect the owl from deterioration”…!

The analogy was that the air conditioning system used by Iceland assisted in holding the frozen food in a steady state, but there was no process of change. Therefore the system could not be exempted from rating. But the Supreme Court has now handed down its judgment in Iceland Foods Limited v Berry (VO) [2018] UKSC 15.

The Supreme Court judgment was unanimous, the phrase “manufacturing operations or trade processes” was an alternative one and it said there is nothing in the word “process” that implies a transition or change. In the context of Iceland’s trade, the word “process” therefore covers the continuous freezing or refrigeration of goods. Because the services provided by the disputed plant was held to be “mainly or exclusively” for that trade process, it was excluded from rating.

The decision is important. It underlines that plant and machinery is not generally rateable unless it falls within the specific classes of the Plant & Machinery Order. Business will now want to look closely at their own activities to ensure that plant and machinery falling within its own “trade processes” is not included within its property’s rateable value unless it is specifically named in the Plant & Machinery Order. This will particularly concern those occupying retail, distribution and industrial properties. The full decision can be found here.

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