A company seeking to reduce the rateable value of a contaminated former industrial site has lost its appeal after the Upper Tribunal ruled that it did not have standing to make the original rating proposal. The decision highlights the importance of establishing the statutory right to challenge a rating-list entry before an appeal can proceed.
What did the Upper Tribunal decide?
In HDR Group Limited v Lucy Formela-Osborne (Valuation Officer) [2026] UKUT 375 (LC), dated 7 October 2026, Martin Rodger KC, Deputy Chamber President of the Upper Tribunal (Lands Chamber), struck out the appeal after finding that HDR Group Limited was not entitled to make a proposal to alter the 2017 valuation list and therefore had no standing to pursue the appeal.
The decision was handed down on 7 October 2026 by Martin Rodger KC, Deputy Chamber President. The Tribunal considered an application by the valuation officer to strike out HDR’s appeal on the basis that HDR had not been entitled to make the original proposal.
The Tribunal accepted that argument. HDR was not occupying the property when it made its proposal and did not have a legal or equitable interest in the property that entitled it to possession. As a result, it was not an “interested person” within the meaning of the applicable rating regulations.
The Tribunal therefore concluded that HDR had no standing to pursue its appeal and struck the appeal out.
What was the property and agreement about?
The property was a large former industrial site owned by Merthyr Tydfil County Borough Council. The evidence before the Tribunal described the site as having previously been used unlawfully as a waste facility, with contamination resulting from illegally deposited waste materials.
HDR Group specialised in the clearance and remediation of contaminated sites. On 29 March 2019, it entered into an agreement for lease with the Council under which the Council was to grant HDR a three-year lease at a nominal rent.
The proposed lease, however, was conditional. HDR was required to secure a permit from Natural Resources Wales under the Environmental Permitting (England and Wales) Regulations 2016 authorising waste operations at the site before the lease could be granted.
In the meantime, HDR received a temporary non-exclusive licence to enter the property. The licence began on 8 April 2019 and permitted HDR to undertake preliminary enabling works, including site preparation, security, health and safety measures and preliminary waste removal.
“The Agreement did not give the appellant possession of the Property, nor any right to enter except for the limited purposes of carrying out the preliminary works.”
HDR completed those preliminary works within approximately four to six weeks and left the site on 12 May 2019. According to the evidence relied upon by the Tribunal, HDR did not occupy the property again for at least two years.
The lease was eventually executed on 22 November 2021, by which time HDR had returned to the property and obtained exclusive occupation.
Why did HDR challenge the rating?
HDR submitted a proposal dated 12 May 2021 seeking to reduce the property’s rateable value from £46,500 to £23,000 with effect from 1 April 2017.
The proposal was made under regulation 4(1)(b) of the Non-Domestic Rating (Alteration of Lists and Appeals) (Wales) Regulations 2005, relying on an alleged material change in circumstances.
The valuation officer did not accept the proposal and referred the matter to the Valuation Tribunal for Wales. On 4 August 2025, the Valuation Tribunal dismissed HDR’s appeal, finding that no material change of circumstances had occurred.
The issue of whether HDR had been entitled to make the proposal had not been considered by the Valuation Tribunal at that stage. The valuation officer subsequently challenged HDR’s standing before the Upper Tribunal.
- HDR enters into an agreement for lease with Merthyr Tydfil County Borough Council.
- HDR receives a temporary non-exclusive licence to enter the property for preliminary enabling works.
- HDR completes the preliminary works and leaves the site.
- HDR makes its proposal seeking a reduction in the property’s rateable value.
- The Valuation Tribunal for Wales dismisses HDR’s appeal.
- The Upper Tribunal strikes out HDR’s appeal because it was not entitled to make the proposal.
Why was HDR not an “interested person”?
The central issue was the meaning of “interested person” under regulation 2(1) of the 2005 Regulations. The definition includes the occupier of the hereditament and certain persons holding a legal estate or equitable interest capable of entitling them to possession.
The valuation officer argued that HDR did not satisfy either category when it made its proposal in May 2021. At that point, HDR was not occupying the property. Its earlier licence had been limited to preliminary enabling works, which had been completed and followed by its departure from the site.
The Upper Tribunal accepted that position. The Tribunal noted that HDR’s own evidence established that it had vacated the property after completing the preliminary works and had not returned for a period of at least two years.
The Tribunal also rejected the argument that the question of whether the occupation amounted to rateable occupation did not matter. Although the point did not arise on the facts because HDR was not occupying the property at all when the proposal was made, the Tribunal agreed that “occupier” for the purposes of the regulations referred to someone in rateable occupation.
| Issue | Tribunal’s finding |
|---|---|
| Actual occupation | HDR was not occupying the property when it made its proposal in May 2021. |
| Rateable occupation | The issue did not arise because HDR was not in occupation at all. In any event, an occupier under the regulations means a person in rateable occupation. |
| Legal or equitable interest | HDR did not have a legal or equitable interest in the property capable of giving it a right to possession. |
| General affected-person argument | The regulations do not create a residual right for anyone directly or indirectly affected by a rating decision to make a proposal. |
What did the Tribunal say about an equitable interest?
HDR argued that its agreement for lease gave it an equitable interest in the property. It relied in part on the preliminary works it had undertaken, which it said had increased the value of the site.
The Tribunal rejected that submission. The agreement expressly provided that the grant of the lease was conditional on HDR obtaining the necessary environmental permit.
Until that condition was satisfied, HDR’s rights were contractual rather than an existing legal or equitable interest in the property. The Tribunal explained that once the permit had been obtained, HDR would have had a specifically enforceable right to a lease which could have been treated in equity as equivalent to a lease. But that position had not arisen when HDR made its rating proposal.
The preliminary works did not alter that conclusion. The agreement provided for those works in return for the right to be granted a lease once the relevant condition was satisfied. It did not create an existing right to possession before that point.
The Tribunal concluded that, until the agreement became unconditional, HDR’s rights were “purely contractual” and it had no legal or equitable interest in the property.
What does the ruling mean for rating appeals?
The decision emphasises that standing is not simply a question of whether a person is affected by a property’s rating liability. The statutory scheme determines who is entitled to make a proposal to alter a rating list.
HDR argued that a person directly or indirectly affected by a rating decision should be able to challenge it. It pointed to its obligation under the agreement to indemnify the Council against liability for non-domestic rates.
The Upper Tribunal rejected that broader approach. Section 55(4) of the Local Government Finance Act 1988 contemplates regulations specifying who, other than a valuation officer, may make a proposal. The 2005 Regulations provide that framework.
Regulation 4(2) limits the relevant right to make a proposal to the categories identified by the legislation, including current or former interested persons in the circumstances specified by the regulations and relevant local authorities.
The Tribunal also relied on regulation 6(1), which requires the maker of a proposal to identify the category under which they are entitled to make it. In the Tribunal’s view, that left no room for an additional category consisting of any person who considered themselves affected by the rating entry.
The decision therefore provides a clear reminder that the merits of a rating challenge will not necessarily be reached if the person bringing the proposal cannot establish statutory standing at the relevant time.
What was the final outcome?
The Upper Tribunal concluded that HDR Group Limited was not entitled to make the proposal and consequently had no standing to pursue its appeal.
The appeal was struck out. HDR’s representative accepted that striking out was the appropriate outcome if the Tribunal reached that conclusion.
The decision also records a right of appeal to the Court of Appeal on any point of law arising from the decision, subject to permission. Any application for permission to appeal must identify the alleged error of law and the result sought.
Frequently asked questions
Why was HDR Group’s appeal struck out?
The appeal was struck out because HDR was not entitled to make the original rating proposal. The Tribunal found that HDR was not an interested person when the proposal was made and therefore had no standing to pursue the appeal.
Was HDR occupying the property when it made its proposal?
No. HDR had completed its preliminary enabling works in May 2019 and had left the property. The Tribunal found that it had not occupied the property again for at least two years before making its proposal in May 2021.
Did the agreement for lease give HDR an equitable interest?
No. The lease was conditional on HDR obtaining an environmental permit. Until that condition was satisfied, HDR’s rights were contractual and did not amount to a legal or equitable interest in the property capable of giving it possession.
Could HDR rely on its financial exposure to business rates?
No. HDR argued that its obligation to indemnify the Council against its liability for non-domestic rates made it sufficiently affected by the rating decision. The Tribunal rejected the argument that being directly or indirectly affected created a separate statutory right to make a proposal.
What does “interested person” mean in this context?
Under the 2005 Regulations, an interested person includes the occupier and certain persons holding a legal estate or equitable interest capable of entitling them to possession of the hereditament or part of it.
Can the decision be appealed?
The judgment states that any party has a right of appeal to the Court of Appeal on a point of law arising from the decision, but permission is required. The judgment specifies the applicable time limit and requirements for an application for permission.