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England) Land Union (London.

The new land taxes and mineral rights duty. The Land Union's handbook on provisional valuations; being general advice to owners of land and house property in dealing with valuations under the Finance (1909-10) Act, 1910, as amended by the Revenue Act, 1911 online

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Online LibraryEngland) Land Union (LondonThe new land taxes and mineral rights duty. The Land Union's handbook on provisional valuations; being general advice to owners of land and house property in dealing with valuations under the Finance (1909-10) Act, 1910, as amended by the Revenue Act, 1911 → online text (page 15 of 19)
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Value directly

attributable

ther.-to



(i>) Ex


jenditure of a capital nature (includin


y Expenses of Advertisement) : —


Date of
Expenditure.


By whom execu ed

and nature ol his

interest in the

Land


Particulars of Amount Expended
Expenditure


Value directly

attributable

thereto








£


£



6. Portion of the Total Value directly attributable to the Appropriation of any
Land or to the Gift of any Land for Streets, Roads, Paths, Squares Gardens or
other Open Spaces for the use of the public : —



Date



Name of person making
the Appropriation or ( rift
and nature of his interest



Particulars of Appropriation or Gift



Value directly

attributable

thereto



Portion of the Total Value directly attributable to —
(a) Expenditure on Redemption of Land Tax : —



Date of
Redemption.



Number of

Kedenipiion

Contract.



Amount of
Land Tax
redeemed.



Amount of

Redemption

Money.



Value directly

attributable

thereto.



(b) Expenditure on redemption of any Fixed Charge : —




Date of
Redemption.


Particulars of Charge redeemed.


Amount of Value directly
Redemption attributable
Money. thereto.






£


£



(c) Expenditure on Enfranchisement of Copyhold Land or Customary
Freeholds : —



Date of


Cost of Enfranchisement.


Value directly

attributable

thereto


Enfranchisement.


Particulars.


Amount.






£


£



140



LAND UNION HANDBOOK



(d) Expenditure on effecting the Release of any Covenant or Agreement
restricting the use of the Land which may be taken into account in
ascertaining the Total Value of the Land : —



Date when
Covenant or

Agreement
entered into.



Date of Release
of Covenant
or Agreement



Particulars of Covenant
or Agreement



Amount of
Expenditure



Value directly

attributable

thereto



(e) Goodwill, or any other matter which is personal to the Owner, Occupier,
or other person interested for the time being in the Land : —



PARTICULARS


Value directly
attributable thereto




£



8. Sums which it would be necessary to expend in order to divest the Land of
Buildings, Timber, Trees, or other things of which it is to be taken to be divested
for the purpose of arriving at the Full Site Value from the Gross Value of the Land,
and of which it would be necessary to divest the Land for the purpose of realising the
Lull Site Value : —



PARTICULARS



Amount



9. If the Land is Copyhold or Customary Freehold Land :-



(a) Name of the Manor

(/>) Date of birth of Copyhold Tenant

(c) Date of last Admittance ...



(d) Customs of Manor, viz. : —



Incidents of
Tenure.


PARTICULARS


When
Payable


Amount


Fines

Heriots ...
Quit Rents






£


s.


d.



Other Incidents of Tenure, with particulars and amounts of any money payments : —



LAND UNION HANDBOOK

(e) Estimated Cost of Enfranchisement : —



HI



PARTICULARS OF ITEMS


Estimated Cost




£


Total Estimated Cost of Enfranchisement ...





10. Undeveloped Land Duty.— Additional particulars of Expenditure (if any)
incurred by the owner of any Land included in any scheme of land development, or
by his predecessors in title, with a view to the development of the Land or to its use
for any business, trade, or industry other than agriculture, on Roads (including paving,
curbing, metalling, and other works in connection with Roads) or Sewers (Section 16).



Precise Situation

of Land included

in Scheme of

Development*



Area of Land included in

Scheme of Land

Development



Acres



Date of
Expenditure



Nature and Particulars
of Expenditure



Amount of
Expenditure.



A plan should be annexed, if possible.



I hereby declare that the foregoing particulars are in every respect fully and truly
stated to the best of my judgment and belief.



{ Signature of person
\ making the Return.



Rank, Title, or Description



Address.



142



LAND UNION HANDBOOK



DUTIES ON LAND VALUES.



UNDEVELOPED LAND DUTY.



REFERENCE to be quoted
in all communications.



.U.L.



-191



To the District Valuer at .

SIR,

In reply to your letter acquainting me of the assessment to Undeveloped
Land Duty proposed to be made upon me, I beg to claim the exemptions and

allowances mentioned below : —



1. Area of the Land



Ac.



2. Description and situation of

the Land

3. Whether the claim applies to

the Year 1909-10, or to
the Year 1 9 1 o- 1 1 , or both

4. Full particulars of the claim*



* If a claim is made in respect of expenditure on roads and sewers the information given should
include sufficient details to identify the situation and area of the land included in the scheme of land
development — a plan being furnished where necessary — and the dates, amounts, nature and
particulars of expenditure.

// a claim U made in respect of agricultural land held under a tenancy created before 30th April,
1900, th*e information given should include the name of the tenant, the date of the lease, or agreement
and of the commencement of the term, the length of the term, a statement (with particulars) whether
the landlord has power to determine the tenancy of the whole or part of the land, and the earliest date
after 28th April, 1910, at which it is or was possible for the landlord to determine the tenancy.

// a claim is made in respect of small holdings occupied and cultivated by the owner — (the term
" owner " is defined on page 2 of the accompanying sheet) — the information given should include the
full name of the owner, a statement whether the land is occupied and cultivated by the owner, and the
situation, area, and (if known) the total value of all other land (including houses, buildings, &c.)
belonging to the same owner.



.Signature.
.Address.



.Date.



LAND UNION HANDBOOK



143



UNOFFICIAL.



FINANCE ( 1909-1 0) ACT, 1910.

Duties on Land Values.



PROVISIONAL VALUATION.



The name of the Parish and
number of the hereditament
should be quoted in all com-
munications.



Description of Property




Situation


County


Parish




No. of
hereditament


Name of Occupier




Extent


Acres


Roods


Perches


| Yards



The Commissioners of Inland Revenue have caused to be made the following Provisional
Valuation of the land described above : —



Original Gross Value £



Deductions from Gross Value.



(a) To arrive at Full
Site Value.


(b) To arrive at Total Value.




£


4)

bo
a
O


Fee Farm Rent,
Rent Seek, Quit
Rent, Chief Rent,
or Rent of Assize


£


Public Rights
of Way or
User


£


Difference
between Gross


Other perpetual
Rent or Annuity




Right of
Common




Value of the
Fee Simple
of the Land


Tithe or Tithe
Rent Charge




Easements




divested of
Buildings,
Trees, &c.


Burden or Charge
arising by opera-
tion of law, or
imposed by Act
of Parliament.




Restrictions
under Cov-
enant or
Agreement






If Copyhold, Cost of
Enfranchisement.




Total

Deductions




Original Full
Site Value, £




Original Total Value £





Deductions from Total Value to arrive at Assessable Site Value.


Deductions from Gross Value to
arrive at Full Site Value (as above)


£


Enfranchisement of Copyholds


£


Works executed




Release of Restrictive Covenants




Capital Expenditure




Goodwill or personal elements




Appropriation of Land for streets,
roads, open spaces. &c.




Cost of clearing Site




Redemption of Land Tax or Fixed
Charge




Total Deductions





Original Assessable Site Value £



Value of Agricultural Land for Agricultural purposes where different from Assessable
Site Value r



Given under my hand this
(Signed)



-day of-



/Valuer appointed by the
"\ Commissioners of Inland Revenue
-District.



Form 36— Land,



Certified a true copy



Clerk to the Valuer.



APPENDIX II.
NOTES AND PAPERS



Reprinted from the Land Union Journal.

SUBSTITUTED SITE VALUES.



Finance (1909-10) Act, 1910, Sec. 2 (3), Revenue Act, 1911, Sec. 2.



In order to mitigate the obvious hardship of Increment Value
Duty being charged upon the recovery in value of land which had
temporarily fallen in value at April, 1909, provision was made in
the Finance Act for " substituting " in certain cases the Site Value
at the date of purchase for the Site Value at April, 1909, as the
datum line for Increment Value Duty purposes only. In order to
obtain relief, the owner must prove to the Commissioners that the
property in question had a higher bare Site Value at the date of the
purchase than it had in April, 1909, and the mere fact that the
Total Value was greater at the date of purchase is not in itself
evidence that the Site Value was greater. It will be remembered
that efforts were made to induce the Chancellor of the Exchequer
to provide that no Increment Value Duty should be payable in the
event of an owner selling his property at a lower figure than it cost
him, or, in other words, that an owner should not be taxed upon
a loss. The Chancellor of the Exchequer, however, refused to depart
from the principles governing the Act. Increment Value Duty
has nothing whatever to do with Total Values. It is a Duty raised
on Increments in Site Values, and if Site Values rise they are to be
taxed, even though the owner may lose on his sale of the whole
property, and may have nothing out of which to pay the tax. The
Substituted Site Value has to be deducted by calculation from the
purchase consideration, and the calculation is so difficult and com-
plicated that it is practically resolved into a mere matter of opinion ;
consequently the relief afforded to the tax-payer is very limited.
Nevertheless, there are many cases where the matter is of impor-
tance, and the rules governing claims for Substituted Site Value
should be carefully studied. The provisions will be found in Section
2, Subsection (3), of the Finance Act, as amended by Section 2 of the
Revenue Act.

Section 2, Subsection (3) of the Finance (1909-10) Act,
1910, reads as follows : — •" Where it is proved to the Com-
missioners on an application made for the purpose within the
time fixed by this section that the site value of any land at the
time of any transfer on sale of the fee simple of the land or of
any interest in the land, which took place at any time within
twenty years before the thirtieth day of April, nineteen hundred
and nine, exceeded the original site value of the land as ascer-
tained under this Act, the site value at that time shall be
substituted, for the purposes of increment value duty, for the
original site value as so ascertained, and the provisions of this



148 LAND UNION HANDBOOK

part of the Act shall apply accordingly. Site value shall be
estimated for the purposes of this provision by reference to the
consideration given on the transfer in the same manner as it
is estimated by reference to the consideration given on a
transfer where increment value duty is be collected on the
occasion of such a transfer after the passing of this Act. This
provision shall apply to a mortgage of the fee simple of the land
for any interest in land in the same manner as it applies to a
transfer with the substitution of the amount secured by the
mortgage for the consideration. An application for the
purpose of this section must be made within three months after
the original site value of the land has been finally settled under
this part of this Act."

This provision is amended, but not negatived, by the Revenue
Act, which reads as follows : —

" Subsection (3) of Section 2 of the principal Act (which
relates to the definition of increment value) shall apply to
the case of any transfer on sale of the fee simple of the land
or of any interest in the land which took place twenty years
or more before the thirtieth day of April, nineteen hundred and
nine, and which was a transfer to the person who is the owner
of the land or any interest in the land at the time when an
application is made under that provision, as it applies to the
case of a transfer on sale which took place within twenty years
before the thirtieth day of April, nineteen hundred and nine."

" In the cases where the original site value has been finally
settled before the passing of this Act, an application may be
made, notwithstanding anything in Subsection (3) of Section 2
of the principal Act, under that subsection, for the purpose
of giving effect to this provision within three months after the
date of the passing of this Act, and the Commissioners shall,
in such a case, alter the original site value as finally settled
in such manner (if any) as may be necessary to give effect to
the amendment made by this provision ; and, in cases where
any amount has been paid on account of duty, the Commis-
sioners shall make such repayment as may be necessary to
adjust the amount paid to any alteration of value made in
pursuance of this provision."

Considering the above sections together, the main points to be
noted are these : —

1. The benefit of the Substituted Site Value in the case of a
sale within twenty years is not limited to a sale to the present owner.
Any sale of the fee simple, or of any interest in the land within the
twenty years, gives a right to a claim for Substituted Site Value.

2. An " interest in the land " is defined by Section 41, and
inter alia includes a leasehold interest for a term exceeding fourteen
years. It is therefore apparent that either the freeholder or the
leaseholder of a property can claim Substituted Site Value, if either
the freehold or the leasehold interest has been sold within the
twenty-year period.

3. The application for Substituted Site Value need not be
made when the Original Site Value is under discussion, and for many
reasons should not bo made at that time. It must, however, be
made within three months after the Original Site Value of the land
has been finally settled under the Act.



LAND UNION HANDBOOK 149

4. It must bo noted that what is to be substituted is not the
price paid or " consideration," but the Site Value deduced from such
consideration by the same rules as are contained in Section 2 for
deducing Site Value from the " consideration " on the occasion,
and " like deductions " are to be made as are made for the purposes
of the April, 1909, Valuation.

5. If there has been a mortgage of the fee simple or of any
interest in the land during the twenty-year period, this also will
be a proper ground for an application for Substituted Site Value.
In this case the amount secured by the mortgage is to be treated
as the " consideration," and the value of the fee simple of the land
is to be calculated on the basis of such amount, subject again to
the " like deductions." It has been contended that it is the actual
amount secured by the mortgage from which the deductions are to
be made. This, however, is not in accordance with either the
wording or the principles of the Act. The fee simple value must
be calculated from the amount secured by the mortgage, and the
true actual site value at the date of the mortgage must be ascertained
and substituted. In practice, in the case of a mortgage of the fee
simple, it will probably be assumed that the Fee Simple Value
would be 50 per cent, greater than the amount secured, or, in other
words, that two-thirds of the value was lent. In the case of a
mortgage of a lesser interest than freehold, it will be more difficult
to arrive at or calculate the Fee Simple Value. But, however
difficult it may be to do it, it has to be done. After the fee simple
value has been calculated the process of deductions will be made
according to the same rules as govern valuations on occasions of
sale, etc.

6. The Revenue Act extends the benefit of Substituted Site
Value to all owners who have purchased their interests ; that is to
saj', the purchase in their case need not have been within the
twenty-year period to enable them to claim Substituted Site Value.
It should be noted that this again applies equally to owners of the
freehold and to leaseholders for a longer period than fourteen years.
This extended benefit is of enormous importance to owners, but
many forms (Nos. 35 and 44) have been issued by the Commissioners
of Inland Revenue since the passing of the Revemie Act, ignoring
the amendment and failing to draw the attention of owners to the
extension of the twenty years' term to the lifetime of the owner.



SOME POINTS AT ISSUE.

Besides the paramount question whether Increment Value Duty
is to be assessed on casual profits on buildings and other matters
depending on the brains and expenditure of an owner or solely
on the actual and clearly demonstrated rise of the value of the site
through the expenditure of the community and owner's neighbours
— already dealt with above — the following points, all of considerable
importance to owners and those liable to the new duties, await
judicial interpretation. Pending decisions on these points the
valuations of all important estates and properties should be kept
in abeyance unless an arrangement satisfactory to the owners can
be arrived at by agreement. Trustees in particular should care-
fully consider their position in relation to these doubtful points.

EXPENDITURE ON ROADS.— LAND APPROPRIATED
FOR ROADS.

Sec. 25 (4) (b) (c).

By Section 25 (4) (c) Deductions are to be made for any part
of the total value directly attributable to the appropriation of any
land, or to the gift of any land, by any person interested in the land
for the purpose of streets, roads, &c.

The Commissioners are willing to allow the actual cost of making
the roads, dealing with it as " expenditure of a capital nature " under
Section 25 (4) (b), but they refuse to make a deduction on account of
the appropriation of the land on the ground that the subsoil of the
street is still vested in the owner.

Owners contend that the deduction to which the Act entitles
them is not limited to the actual expenditure on the roads. The Act
clearly states that the deduction shall be : 1 . That part of tho total
value attributable to the expenditure upon the roads. 2. That part
of the total value attributable to the appropriation of any land for the
purpose of roads.

In most cases the value attributable to the roads must be largely
in excess of the cost of the roads or the roads would never have been
made. In any large scheme of development the roads are usually
made many years before the whole of the property comes to maturity
and compound interest for a considerable period has to be taken
into account.

On the other hand, it is possible for the value attributable to the
roads to be less than their cost, if an estate has been badly or
injudiciously laid out. This question was dealt with by the Chancellor
of the Exchequer in the course of several speeches, and he laid
great emphasis on the words of the Act, " any part of the total
value attributable to," and he pointed out that the cost of the
expenditure was not necessarily a gauge of the " value attributable "
to tho expenditure.

See the Deptford case reported in the " Land Union Journal" of
May, 1912. The Referee has decided in favour of the Owner, but
it is understood the Commissioners intend to appeal.



LAND UNION HANDBOOK 151

DEDUCTION FOR THE VALUE OF TITHE.

Sec. 25 (3).

The " total value " of land is the " gross value " after deducting
inter alia the amount by which the " gross value " (fee simple in
possession) is reduced by reason of the existence of fixed charges such
as tithe.

It is contended by owners that this deduction should be the full
cost of redeeming the tithe, this being in fact the difference between
the value of the land free of the tithe and its value subject to the
tithe.

The Commissioners contend that the difference is merely so many
years' purchase of the present value of the tithe rent charge, a
difference that is of course very much less than the cost of redemption

It is a question that should be decided at an early date by appeal

VALUE ATTRIBUTABLE TO BUILDINGS.

Sec. 25 (1) and (2).

In the case of land built upon, the " gross value " is the value
of the composite property in its entirety. The " full site value "
is the value of the land conceived as denuded of the buildings. The
difference between these is the value attributable to the buildings.
Theoretically under the Act, the value attributable to the buildings
never has to be directly ascertained. It is always the difference
between the value of the whole (land and buildings) and the value
of the part (the land only). In practice, however, and particularly
in regard to occasional valuations, it is found that the Commissioners
deal with the matter in the reverse order. They ascertain the value
of the whole (land and buildings). They estimate the value attribut-
able to the buildings and deducting this from the " gross value,"
they obtain the value of the land.

In our opinion this method is not in accordance with the Act,
or with the instructions to valuers of January 21st, 1911, and it
leads to discussions upon the depreciation of buildings with which
the Act does not purport to deal, and which are quite unnecessary
to the machinery of valuation erected by the Statute.

The Commissioners have no right to write off large sums for
depreciation, and thus by reducing the value attributable to the
buildings create a high " site value " on the occasion ; and this
method should bo resisted and an independent valuation of the site
denuded of buildings should be demanded on every occasion.

AGRICULTURAL LAND.— IMPROVED STATE.

DRAINS AND FENCES.

Sec. 25 (4) (d).

In arriving at the " site value " of purely agricultural land it is
contended that a deduction may be claimed under Section 25 (4) (d) :
1. For its improved state. 2. For drains and fences made by the
owner or his predecessor in title. The Commissioners contend that
the " site value " of purely agricultural land must be the same as its
" agricultural value," and that no such deductions are permissible.

This view of the Commissioners is inconsistent with the intention
of the Act that " site value " shall contain no element due to the
owners' enterprise and expenditure, but shall represent the value



152 LAND UNION HANDBOOK

which has been created by the community, neither do we see anything
in the wording of the Act to support the Commissioners' contention.

The last clause but one at the end of Section 25 (4) says that if
expenditure incurred for improving the value of land for agriculture
has also improved the value of the land as building land, it shall be
treated as having been executed for the latter purpose. But this is a
very different thing from stating that expenditure which has been
incurred for improving the value for agricultural purposes shall not be
taken into account in arriving at the site value of purely agricultural
land where there is no element of building value. In our opinion this
proviso is intended to amplify paragraph (6) of the same subsection
and to extend benefit of deduction, not to reduce it.

The possible adoption of site values for rating purposes makes
this question one of the first magnitude. The whole basis of the con-
tention of the Land Taxers is the relief of improvements from the
burden of the rates, and it is of the utmost importance that this
question should be settled. See also the next point as to the
meaning of " Buildings."

BUILDINGS DEEMED TO BE DIVESTED.

Sec. 25 (2).

The meaning of the words " divested of any building and of any
structures . . . appurtenant to any such buildings."

The Commissioners contend that "building" does not include
stone walls or any structures unless they are appurtenant to a building.
The meaning of building is somewhat vague. In one case (Moir v.
Williams, 1892, 1 Q.B. 264) Lord Esher stated that the usual meaning
of a " building" is a block of brick or stone work covered in by a roof —
but in many cases it has been held to have a much wider meaning, e.g.,
in the covenants to repair in a lease; the meaning is really controlled
by the context and also depends on the nature of the document in which
it occurs, and it is a question whether Commissioners' contention
is sound. Thus, see Bowes v. Law, L. R. 9 Eq. 641.

TURF.
Sec. 25 (2).

It is contended that in the case of pasture land a deduction
should be claimod under Section 25 (2) in respect of the turf growing
thereon. The definition of " full site value " of land is the value
of the land after divesting it of all growing timber, fruit trees, fruit


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Online LibraryEngland) Land Union (LondonThe new land taxes and mineral rights duty. The Land Union's handbook on provisional valuations; being general advice to owners of land and house property in dealing with valuations under the Finance (1909-10) Act, 1910, as amended by the Revenue Act, 1911 → online text (page 15 of 19)