Rating Manual - Volume 4 - Section 8 - Exemptions

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Section 8 : Exemptions

Part A : Property Used for Disabled Persons

1 Introduction

The legislative provisions for Disabled Persons Exemption are set out in Paragraph 16, Schedule 5 Local Government Finance Act 1988 [LGFA 1988] as follows:

Property used for the disabled

16 (1) A hereditament is exempt to the extent that it consists of property used wholly for any of the following purposes-

(a) the provision of facilities for training, or keeping suitably occupied, persons who are disabled or who are or have been suffering from illness;

(b) the provision of welfare services for disabled persons;

(c) the provision of facilities under section 15 of the Disabled Persons (Employment) Act 1944;

(d) the provision of a workshop or of other facilities under section 3(1) of the Disabled Persons (Employment) Act 1958.

    (2) A person is disabled if he is blind, deaf or dumb or suffers from mental disorder of any description or is substantially and permanently handicapped by illness, injury, congenital deformity or any other disability for the time being prescribed for the purposes of section 29(1) of the National Assistance Act 1948.

(3) "Illness" has the meaning given by section 275 of the National Health Service Act 2006.

(4) "Welfare services for disabled persons" means services or facilities (by whomsoever provided) of a kind which a local authority has power to provide under section 29 of the National Assistance Act 1948.

In summary:

● Paragraph 16(1), in sub-paragraphs (a)-(d), sets out the four exemption provisions

● Paragraph (2) defines the term “disabled”

● Paragraph (3) defines the term ”illness”

● Paragraph (4) defines the phrase “welfare services for disabled persons”.

In practice, these definitions are complex and their application requires the consideration of detailed criteria that varies depending upon the type of exemption being sought. The specific requirements are determined by individual ‘tests’ set within the wording of paragraph 16.

2. The Legislative Tests

In common with the other exempting provisions of Schedule 5, the specific wording of paragraph 16 sets a series of tests that must be satisfied before exemption can be granted. Such tests are set by either specific wording or reference to other legislation.

This annotation of the paragraph 16 wording shows those tests:

16 (1) A hereditament is exempt to the extent that [Test 1] it consists of property used wholly [Test 2] for any of the following purposes-

  • the provision of facilities for training, or keeping suitably occupied [Test 4], persons who are disabled [Test 3a] or who are or have been suffering from illness;
  • the provision of welfare services [see Test 8] for disabled persons [Test 3b];
  • the provision of facilities under section 15 of the Disabled Persons (Employment) Act 1944 [Test 5];
  • the provision of a workshop or of other facilities under section 3(1) of the Disabled Persons (Employment) Act 1958 [Test 6].

(2) A person is disabled if he is blind, deaf or dumb or suffers from mental disorder of any description or is substantially and permanently handicapped by illness, injury, congenital deformity or any other disability for the time being prescribed for the purposes of section 29(1) of the National Assistance Act 1948 [Test 7].

(3) "Illness" has the meaning given by section 275 of the National Health Service Act 2006

(4) "Welfare services for disabled persons" means services or facilities (by whomsoever provided) of a kind which a local authority has power to provide under section 29 of the National Assistance Act 1948 [Test 8].

3. The Tests in Detail

3.1 Test 1: “to the extent that”

It is important to note that the exemption applies to a hereditament only to the extent that the hereditament consists of qualifying property used for the disabled.

The use of the words “to the extent that” in paragraph 16(1) means that the whole of the hereditament does not need to be ‘used wholly’ for a qualifying purpose. The phrase “to the extent that” is common to all the exemption classes in Schedule 5 and its use in paragraph 16(1) makes it clear that if an identifiable part of a hereditament is used wholly for a qualifying purpose, that part can benefit from the exemption, even if the rest of the hereditament is not used for the qualifying purpose.

The words "to the extent that" should be construed in a purely spatial context, thus giving exemption to a part of a hereditament (if it meets the other requirements), rather than restricting the relief to whole hereditaments used for such purposes. The spatial extent of the overall hereditament wholly used for a qualifying purpose may be relatively small (but not an insignificant part of the whole), yet it will still qualify for exemption to that “extent”.

3.2 Test 2: “Used Wholly”

Case Law

When considering whether part of a hereditament is “used wholly” for a qualifying purpose, it is necessary to consider the use of the rest of the hereditament. This is because whilst it may, prima facie, appear as if a part of a hereditament is used wholly for a qualifying purpose when that part is considered in isolation, that part may in fact share the non-qualifying function of the hereditament as a whole. For example, the part may form an ancillary or incidental supporting function for the primary non-qualifying activities of the hereditament as a whole. In such a case, it could not be said that the part was being used “wholly” or even mainly for a qualifying purpose, because it would also share the non-qualifying use/purpose/function of the rest of the hereditament. This is particularly relevant when the part is an insignificant part of the whole.

Conversely, if only part of a hereditament was being used for a qualifying purpose but that part was not an integral part of the rest of the hereditament in terms of use/purpose/ function, then it could be said that the part was being used “wholly” for a qualifying purpose.

The question whether any property within the hereditament is “used wholly” for any of the qualifying purposes was explored by the Court of Appeal in Samaritans of Tyneside v Newcastle Upon Tyne City Council CA [1985] RA 219. Although this decision predates LGFA 88 [and was concerned with the Rating (Disabled Persons) Act 1978 and relief from rates], it turned essentially upon the phrase ‘used wholly for purpose(s)’. The decision demonstrates that consideration must centre upon:

the expressed purpose of the occupier of the property under consideration, and

the purpose for which it is actually being used.

These are questions of fact and degree. If, when analysed in this way, the use of the property under consideration extends beyond the scope of the qualifying purposes, then the exemption does not apply.

However, the fact that activities wholly incidental to the qualifying purpose (that in themselves would not qualify for exemption) are carried on within the property under consideration would not take it outside the exemption. Nor need account be taken of de minimis occasional and temporary incidence on any given day of use for wider purposes. See section 67(5) LGFA 88 and Tully v Jorgensen(VO) [1988] RA 242.

NB Where s.67(5) refers to the state of affairs existing immediately before the day ends, it is not requiring that attention be confined to the particular activities being carried on at a precise moment in time. What has to be considered is the use of the property with all its features and all that s.67(5) does is to identify the material time by reference to which any change in the use of the property is related.

In Chilcott (VO) v Day [1995] RA 285, the President of the Lands Tribunal considered whether holiday accommodation adapted for the disabled and let to disabled persons only when accompanied by an able bodied person was “wholly so used” within the meaning of paragraph 16(1). The President considered that the provision of a holiday cottage did not fall within 16(1)(a) - “keeping suitably occupied”, but the VO conceded that the provisions of 16(1)(b) – provision of welfare services - were satisfied. The President did not find it necessary to determine as a matter of construction whether the phrase “used wholly” is subject to the application of the maxim ‘de minimis non curat lex’, because in his judgement the purpose for which the cottages were used was primarily for holiday accommodation for families having one or more disabled members. Use by disabled persons was ancillary to the main purpose of the hereditament. This reasoning is consistent with the Court of Appeal decision in Samaritans of Tyneside v Newcastle City Council.

Another example illustrating the principle of ancillary or incidental use would be a respite care facility operated by an NHS Trust within a hospital. The primary function is to provide a period of rest to the patients’ usual carers and to provide treatment and nursing care to patients during their stay. A recreation room or common room is part of the respite care facility and can be identified as being provided as a facility for keeping patients suitably occupied under paragraph 16(1)(a) of Schedule 5. However, because provision of the recreation room is incidental to the main purpose of the hereditament (that of a hospital), it is not exempt. It is unrealistic to distinguish the common room or recreation room from the remainder of the hospital. The former is an integral part of the latter in terms of function and purpose. It is part of the regime of treatment and care at the hospital and it is that purpose which governs its provision and use by both full-time and part-time (ie respite care) in-patients.

3.2.2 “Used Wholly” and the ‘De Minimis Non Curat Lex’ Maxim

The term ‘de minimis non curat lex’ means that the law is not concerned with very small things. Whilst it is necessary under paragraph 16(1) for property to be “used wholly” for a qualifying purpose, the application of the de minimis principle would prevent the injustice of the exemption being denied in a case where the use is almost completely for a qualifying purpose but there is a very small non-qualifying use.

In Reid(VO) v Barking, Havering & Brentwood Community Health Care Trust [1997] RA 385, the Lands Tribunal expressed the view that the de minimis principle could apply, and this is consistent with the approach of courts in other areas of the law, where there is a willingness to apply the principle to prevent an obvious injustice. It should be noted that the point was left open by the President in Chilcott (VO) v Day [1995] RA 285, at p.291.

The de minimis principle in this context relates to use:

● use by non qualifying persons, and

● use for non-qualifying purposes.

It is considered that the amount of time or space attributed to a non-qualifying use/user should not exceed more than 3% of the total use or time in use. Over this figure, the non- qualifying use would result in rateability.

3.3 Practical Application of Tests 1 and 2:

The qualifying requirements of Test 1: “to the extent that” and Test 2:“used wholly” apply to each of the four categories described in paragraph 16(1)(a) to (d). With the Identification the main purpose for which the hereditament being used as a pre-requisite, each test should be applied in sequential order having regard to this main purpose. The following thought processes should be applied:

(i) Look at the hereditament as a whole. Does its purpose come within the exemption provisions in sub-paragraphs (a) to (d)? If it does, any property within the whole which does not itself meet the exemption requirements, but which has a purpose incidental or ancillary to the exempt purpose, will be included within the exemption.

      (ii) If the hereditament as a whole does not have a purpose which falls within the exemption provisions in sub paragraphs (a) to (d), consider whether there is any significant identifiable part of the hereditament (either physical identity or identifiable by use) which warrants separate consideration. Is it being used wholly for a qualifying purpose? This part should be a significant part rather than an odd room in a larger whole which does not have an exempt purpose.

3.4 Test 3a: “Disabled” & Test 3b: “Disabled Persons”

3.4.1 Definitions

[NB Where legislation other than LGFA 88 is quoted in the advice given below, the relevant extracts from those statutes may be found in APPENDIX 3.]

In relation to paragraphs 16(1)(a) & (b), the definition of “disabled person” is set out in paragraph 16(2) and expanded in paragraph16(3).

● Under paragraph 16(2) a person is "disabled" if:

(i) blind, deaf or dumb,
(ii) suffering from mental disorder of any description or

(iii) substantially and permanently handicapped by illness, injury, congenital deformity or any other disability prescribed for the purposes of section 29(1) National Assistance Act 1948.

● Under para 16(3), "Illness" has the meaning given in section 275 of the National Health Service Act 2006.

Briefly, the definition in paragraph 16(2) is a repetition of that set out in section 29(1) of the National Assistance Act 1948 [see APPENDIX 3].

Section 275(1) of the National Health Service Act 2006 states that the word “illness”:

“includes any disorder or disability of the mind and any injury or disability requiring medical or dental treatment or nursing.”

Both definitions are based on NHS legislation. It requires a person to whom the definition applies to be clinically treated or diagnosed by a psychiatrist, doctor or consultant (further support for this contention is in the evidence reported in Samaritans of Tyneside v Newcastle Upon Tyne City Council CA [1985] RA at page 224 and second paragraph page 229).

The disability has to be a substantial and permanent disability.

The Equalities Act 2010 provides a less stringent test of the definition under section 6, but this Act does not apply in determining whether a person is disabled or suffering from illness for the purposes of paragraphs 16(1)(a) &(b), (2) or (3). However, see 3.8 and 3.9 in relation to paragraphs 16(1)(c) and (d), which relates to sheltered workshops and other facilities set up under the Disabled Persons(Employment) Acts.

In practice, there are few problems in identifying qualifying persons who are physically disabled for any of the four categories for disabled person exemption. However, the qualification in relation to ‘mental disorders’ is far stricter and more problematic. It should be noted that since 2007 a mental disorder has to be diagnosed by a medical practitioner and not a social service psychologist.

The preferred definition of a “mental disorder” is set out in section 1 of the Mental Health Act 1983 (MHA 83). Section 1(2) states that:

““mental disorder” means any disorder or disability of the mind…”.

However, section 1(2A) of the MHA 83 refers to a “person with learning disability”, which is defined in section 1(4) as “state of arrested or incomplete development of the mind which includes significant impairment of intelligence and social functioning”.

The MHA does not state that a person with a learning disability does not have a mental disorder. Section 1(2A) provides that a person with a learning disability shall not be considered by reason of that disability to be suffering from mental disorder for the purposes of some of the provisions in the MHA, which relate to matters such as compulsory admission to hospital for treatment, community treatment orders, detention and remands to hospital, unless that disabilityis associated with abnormally aggressive or seriously irresponsible conduct on his part”.

Thus the MHA 83 does not state that the definition of mental disorder excludes learning disability, but aims to protect those with learning disabilities who are not abnormally aggressive or seriously irresponsible from the kind of interference that could be applied to others with mental disorder. Against that background, those with learning disabilities cannot be treated as having no “mental disorder”. However, a person cannot be treated as having a learning disability unless satisfying the meaning of learning disability set out in section 1(4) of the MHA, ie “a state of arrested or incomplete development of the mind which includes significant impairment of intelligence and social functioning”.

The essential issue is whether persons are disabled or ill within these definitions. If they are not, then exemption under para 16(1)(a)-(b) cannot apply.

As an example, questions have arisen in the case of persons attending day centres or similar facilities who are classified as “elderly” or EMI (elderly, mentally infirm) rather than “disabled” by the local authority which provides the facility, or has referred the person to a privately operated facility.

Counsel has advised that elderly persons can fall within the exemption even though their disability is brought about through old age, and that the legal definition of illness or disability is inclusive rather than exclusive. Whilst old age itself is not an illness or a disability, persons can come within the definition by being both elderly and disabled.

Similarly, EBD (emotional and behavioural disorder) pupils in special schools who are statemented and suffering from emotional and behavioural difficulties that may be a product of social and environmental upbringing rather than illness or disability, are considered to fall within the definition of a “disabled person” in paragraph 16(2).

Any cases of doubt should be referred to the NSU Technical Adviser for advice.

3.4.2 Obtaining Information about Disabled Persons

When disabled persons exemption is being claimed, information about the persons using the hereditament should be sought by using the form of return attached at APPENDIX 2.

This has been designed to obtain the necessary information in a suitably anonymous format.

Although this questionnaire has been approved by counsel and the Valuation Tribunal for England, in the event that queries arise about its use, the Technical Advisor must be advised.

It is not expected that VOA caseworkers will make detailed medical judgements in this area.

3.5 Test 4: “facilities for training or keeping suitably occupied”

Background

There are two aspects to paragraph 16(1)(a) –

“facilities for training” and “facilities … for keeping suitably occupied”.

Both are aimed primarily at a type of help for the disabled which, if provided in the public sector, is provided by local authority social service departments, rather than by education departments or by main stream “hospital” provision in the NHS.

The wording of paragraph 16(1)(a) is taken directly from paragraph 2(1)(b) of Schedule 8 to the National Health Service Act 1977 [NHSA 77], which provides:

“2(1) A local social services authority may…… make arrangements for the purpose of the prevention of illness (etc)… and in particular for (b) the provision…. of centres or other facilities for training them or keeping them suitably occupied…”

As a whole, Schedule 8 to the NHSA 77 aims to empower local authority social services departments to carry out “after-care” functions. The fact that the wording of paragraph 16(1)(a) LGFA 88 is self-evidently based on paragraph 2 of Schedule 8 NHSA 77 strongly suggests that the ‘target’ for the exempting provision was the sort of activity one would expect a social services department to be providing in this connection.

3.5.1 Distinguishing “training or keeping suitably occupied” and ‘treatment’

It is important to determine whether activity at a facility constitutes ‘treatment’ since, if it does, it does not qualify for exemption under paragraph 16. To do this, a sensible starting place is Section 3 of the NHSA 77. The immediately relevant parts of Section 3 provide for two different aspects of the comprehensive health service, in the following terms:


“(1) It is the Secretary of State’s duty to provide…… to such extent as he considers reasonably necessary to meet all responsible requirements –
a. Hospital accommodation
b. …….
c. …….
d. …….
e. Such facilities for the prevention of illness, the care of persons suffering from illness and the after-care of persons who have suffered from illness as he considers are appropriate as part of the health service;
f. …….”

The existence of Section 3(1)(e) NHSA 77, which does authorise the Secretary of State to provide, as part of the Health Service, matters (including facilities for training) which can be provided by social services departments, prevents the simple argument that if a facility is provided as part of the health service it cannot be a facility for training. Nonetheless the case law on the meaning of “hospital accommodation” within Section 3(1)(a) helps to identify the divide between this training aspect of Section 3 and the other, after-care. Section 3(1)(a) has to be read with the definition of “hospital” in Section 128 NHSA 77:

“Hospital” means:

a. any institution for the reception and treatment of persons suffering from illness,
b. any maternity home, and
c. any institution for the reception and treatment of persons during convalescence or persons requiring medical rehabilitation”.

The scope of this definition was considered in Minister of Health v Royal Midland Counties Homes for Incurables [1954] Ch 530. The case makes it clear that a wide approach is appropriate and that, in particular, the provision of skilled palliative nursing skills will be “treatment” within the definition, with the consequence that an institution for the reception of persons requiring nursing will be a hospital provided pursuant to the duty in Section 3(1)(a), rather than a facility providing after-care.

Looking at the private sector, there is a powerful argument that any institution that requires registration as a nursing home under the Registered Homes Act 1984 [RHA 84] would be a “hospital” as defined (and therefore providing “treatment”) if provided as part of the Health Service. This is because the definition of nursing home in Section 21(1)(a) of the RHA 84 includes any premises used….. for the reception of, and the provision of nursing for, persons suffering from any sickness, injury, or infirmity”.

A similar point arises in relation to the definition of mental nursing home in Section 22 of RHA 84. The approach taken in the Home for the Incurables case has been followed by the Social Security Commissioners and the Court of Appeal in a number of social security cases determining whether claimants were being maintained free of charge in a “hospital or similar institution” under arrangements made as part of the Health Service.

The Home for Incurables case was directly concerned with skilled palliative nursing and whether this amounted to treatment. When considering the application of para 16(1)(a), a similar approach should be adopted to any example of skilled therapeutic intervention. In Reid (VO) v Barking [1997] RA 385, the Lands Tribunal member regarded “the one to one focused counselling with a professionally qualified person which is undertaken by the CDAS [Community Drugs Advisory Service]” to be treatment. In so doing, he relied heavily on the Home for Incurables case. It is true that in the CDAS case the principal argument was in relation to paragraph 16(1)(b) rather than 16(1)(a), but for the reasons already given, an institution providing something that is ‘treatment’ should not be regarded as a facility for training, either as a result of the application of the ordinary meaning of the phrase or of consideration of the context within the NHSA77, from which the words were originally taken.

This line of argument was submitted by counsel for the Valuation Officer in Halliday (VO) v The Priory Hospital Group of the Nottingham Clinic [2001] RA 355. In his decision, Judge Marder QC, the President of the Lands Tribunal, made a number of pertinent observations on the meaning of training in the context of a private clinic providing remedial facilities for persons suffering from drug or alcohol abuse and addiction. The case for the ratepayers was that after a person had been detoxified (phase 1 of the procedures and accepted as not exempt), the rest of the time in the clinic (phase 2) was spent receiving group therapy and discussion, counselling and other procedures aimed at helping address and cope with the illness; and thus these phase 2 procedures should properly be described as training. The case for the Valuation Officer was that phase 2 was not primarily training within the meaning of paragraph 16(1)(a) and should properly be regarded as treatment.

In his judgement the President considered the dictionary definition of training, and concluded:

“But a dictionary definition is no more than an aid to understanding, and it is not sufficient that some element in the definition of a word should be found to be capable of application to the subject matter under consideration. Clearly the individuals in phase 2 are being instructed and educated in their addictions and how to deal with them. The therapy is cognitive in nature … ... The techniques employed at phase 2 are directed towards developing the patients knowledge and understanding of his illness and fitting him for a normal life free of his addiction, but it does not seem to me that he is being “trained” in the normal, general meaning of that word.”

The President reviewed the previous decisions in Chilcott (VO) v Day [1995] RA 285 and O’Kelly v Davey (VO) [1996] RA 238, both of which concerned “keeping suitably occupied”, but it was clearly implicit in those decisions that the President Judge Marder QC regarded “training” as indicating training for a particular occupation. At page 365 of the Halliday decision he stated:

“I am of the same view. In my judgement “training” in para (16)(1)(a) is clearly … … instruction for some particular occupation or practice. What is in contemplation is the training of a person who is disabled or who is or has been ill so that he can occupy himself in a way that is suitable to his condition. The provision does not extend to training of a general sort designed to make an individual fit for a normal life in the sense relied upon by the ratepayer and it is clear that the clinic is not providing training for particular occupations.”

Applying this reasoning, a shop or café used to give practical training to persons who are disabled and who are or have been suffering from illness will qualify for exemption where the primary purpose is the provision of training to enable those persons to gain employment elsewhere or become an established member of the workforce. If the training purpose is however merely incidental to the commercial operation of the shop, then exemption will not be appropriate.

On a broad approach, mental nursing homes and NHS Trust hospitals will not be exempt because an appropriately registered mental nursing home in the private sector is an institution for the reception of people requiring nursing; would be a “hospital” if provided as part of the Health Service and provides treatment rather than training. An NHS trust hospital is similarly likely to be provided pursuant to the “hospital” duty in Section 3(1)(a) of the NHSA 77 and therefore to be providing treatment, rather than training.

Assisted Daily Living Units (ADLs) will not qualify for exemption under paragraph 16(1)(a) unless they are a genuine aftercare facility and provide training within the definition outlined above. Assessment by occupational therapists and provision of physiotherapy or similar examples of therapeutic intervention are not regarded as falling within the provision of “training” although each case must be considered on its own facts. ADLs may however fall within paragraph 16(1)(b) on the basis that the units could be provided under Section 29 of the National Assistance Act 1948, and any cases concerning ADLs must be referred to the Technical Adviser for advice.

3.5.2 Distinguishing “training” and Education

Provision for education in the state sector is made under a statutory regime distinct from social services provision, and is made by local education authorities rather than by social service authorities (the two bodies may or may not be the same).

The following indicators help to distinguish “training” from education:

● The Rating (Disabled Persons) Act 1978 did not give relief to special schools.
● The wording of Section 16(1)(a) is taken from wording conferring powers on a Social Services department and not an Local Education Authority.
● A social services department does not have the power to provide an institution having the purpose and functions of a special school in reliance on the powers in Schedule 8 of the NHSA 77.
● The general educational functions of a special school are distinct from the type of training envisaged as part of aftercare in Schedule 8.

Two county court decisions have adopted a wide interpretation of “training”. However, in both cases the issue was whether relief from rates should be granted, rather than exemption from rates. The Valuation Officer was not involved in either case and the question of exemption was not argued.

Thus, in Nottingham County Council v Nottingham City Council (1987) RVR 82, Judge Heath held that a special school provided by an LEA was a facility for training. He did so because he was persuaded to adopt the wide definition of training set out in the compact edition of the Oxford English Dictionary. In Church of England Children’s Society v Southwark London Borough Council (1982) 22 RVR 8, it was also decided that training could be given a wide meaning which would include classroom teaching or education, though for adults it was considered in these cases that training would usually be directed to some specific purpose or occupation.

As explained at 3.5.1, paragraph 16(1)(a) is derived from a provision in health service legislation which focuses on activities normally provided by social services, rather than education departments. However, this alone is not sufficient justification for concluding that it must follow that the provision of any facilities labelled as ‘education’ facilities is automatically excluded from the ambit of paragraph 16(1)(a).

Whilst the Nottingham and Church of England Children’s Society cases are of some assistance in indicating that ‘education’ can amount to ‘training’, their assistance is limited because the meaning of the word “training” in the context in which it appears in paragraph 16(1)(a) together with the words “keeping suitably occupied”, was not considered. The cases of Chilcott and, particularly, Halliday are of more assistance in this regard.

In those cases, the Lands Tribunal considered the word “training” in the specific context in which it appears in paragraph 16(1)(a). The decision in Chilcott suggested that “training, or keeping suitably occupied” meant something like ‘training or occupation’. In Halliday, it was indicated that training in its statutory context meant ‘training for a particular occupation’ or the training of a disabled/ ill persons to occupy themselves in a way suitable to their condition, rather than training of a general sort to make them fit for a normal life.

The meaning of ‘education’ is broad. It is the process of receiving or giving systematic instruction. There is no clear conceptual distinction between ‘training’ and ‘education’. For example, the meaning of the verb ‘train’ can also be to subject to discipline and instruction - see paragraph 17 of Halliday. If a disabled person is being ‘educated’ to occupy himself in a way suitable to his condition, it is very difficult to see how that is any different to him being ‘trained’ to occupy himself in that way. There would be no justification for allowing exemption in the latter case (on the basis of Halliday) but not in the former.

Accordingly, caseworkers should focus on the nature of the facilities/activities provided by special schools in deciding whether paragraph 16(1)(a) applies, rather than on whether the label of ‘education’ can be attached to such facilities/ activities. If the facilities/ activities are intended to instruct disabled persons to occupy themselves in a way suitable to their condition or for a particular occupation or to otherwise keep them suitably occupied, they are capable of falling within paragraph 16(1)(a).

For the reasons given above, the law does not mandate that all special education units and special schools should be treated as exempt. The question of whether they should be exempt or rateable will depend on:

      a) the nature of the facilities they provide, and
        b) whether these facilities are provided for “disabled” people (which is considered at 3.4 above).

The correct approach would be for caseworkers to consider these matters on a property by property basis, as some special schools/special needs units may meet the requirements for exemption and others may not.

However, providing the requirements of paragraph 16(2) are met, Special Needs Units within local authority schools should be treated as exempt under paragraph 16(1)(a) because paragraph 16(1) provides for a hereditament to be exempt to the extent that it consists of property used wholly for an exempt purpose.

Care should be taken that all the pupils using the facility qualify as disabled persons and not simply suffering from behavioural or social problems. This is increasingly important when many disabled pupils are being absorbed into mainstream schooling and the emergence of more 'pupil referral units'

In such cases the description of the entry for the main school must include the words “part exempt”. Individual classrooms within a ‘mainstream’ school used by Special Needs (disabled) children may still be treated as exempt if:

● the sole function of the unit is to provide special needs education
● the rooms are used only by pupils who are disabled within the meaning of paragraph 16(2)
● a specific purpose is easily identifiable, for example, by rooms fitted out for a special purpose.

When present, such features are sufficient to meet the requirements for each room to qualify for exemption. That said, it is not considered practical to adhere to rigid criteria of what features must be present in order to reach a conclusion that parts of a hereditament should qualify for exemption. Instead it is better to recognise that there are a number of ‘pointers’ than can assist in the making of a decision.

Therefore, where individual rooms or parts of the overall hereditament are, on the facts, in practice wholly or exclusively used for the qualifying purpose, then those rooms are likely to qualify for exemption - even if they are not physically connected or adjacent to each other.

3.6 Test 4 (continued): “keeping suitably occupied”

The word ‘suitable’ is defined in the shorter Oxford English Dictionary as “fitted for, adapted or appropriate to a person’s character, condition, needs, etc”. In the context paragraph 16, if the adjective ‘disabled’ is inserted into this definition before the word ‘person’s’, it follows that “keeping suitably occupied” means suitable not for anybody, but for the disabled person(s) concerned.

Premises used by a disabled person to run a business may not necessarily constitute such facilities. Whilst the premises may be very suitable for the disable person’s particular circumstances, they may be just as suitable for any one else to use for business, eg a ground floor office. The use of such premises does not keep a disabled person, having regard to the disability, suitably occupied but affords the opportunity to conduct a business, just as it would anyone else.

There is an element of fact and degree to be considered and, in particular, the nature of the business is important. If the disabled person could be said to be occupying the premises primarily for therapeutic reasons rather than for earning a living then exemption would be appropriate (provided other requirements for exemption are satisfied). The division between exemption and non-exemption is therefore between whether the use is primarily a business undertaking, rather than one that is more in the nature of a pastime or hobby. Use for the purposes of a business could come within the phraseology of keeping suitably occupied if it is a business which is specifically suitable for the disabled person and is not one that might be generally followed in the absence of a disability.

Guidance on interpretation was given by the President of the Lands Tribunal, His Honour Judge Rich QC, in O’Kelly v Davey (VO) [1996] RA 238. When deciding that a workshop and store adjacent to a disabled person’s home and occupied by that person did not qualify for exemption under paragraph 16(1)(a), he said:

“I think that the meaning of ‘suitably occupied’ must be understood from the context of its juxtaposition to “training”. In this I agree with the approach to construing the words which was adopted by the President in Chilcott (VO) v Day. Occupation in this context means, in my judgement, occupation for the sake of occupation where training is not going to be beneficial. ‘Occupation’, however suitable, which is for the purpose of reward is not in my judgement contemplated in the sub paragraph, although if the occupation, pursued in its own sake, incidentally attracted re-numeration to the trainee, that would not necessarily prevent the facilities … ...being provided for the purpose of keeping persons who are disabled ‘suitably occupied’.”

Hence the occupation should be for its own sake; a hobby occupation; a therapeutic occupation or as referred to in the debate which led in the provisions of the Disabled Persons Employment Act 1958, a “diversionary occupation”. The test is directed to the benefit of the occupation itself rather than the benefits of the fruits of the employment.

The provision of such an occupation can be made by the disabled person independently, or some other person or body for the benefit of the person to be occupied.

3.7 Test 7: “the provision of welfare services for disabled persons”

3.7.1 Statutory Background

The exempting provision contained in paragraph 16(1)(b) refers simply to “the provision of welfare services for disabled persons”.

Paragraph 16(2) indicates who are to be treated as disabled and paragraph 16(3) defines the meaning of “illness”.

Crucially, paragraph 16(4) provides:

“ “Welfare services for disabled persons” means services or facilities (by whomsoever provided) of a kind which a local authority has power to provide under Section 29(1) of the National Assistance Act 1948.”

This direct link to Section 29 of the National Assistance Act 1948 [NAA 48] again relates to the responsibilities for the disabled placed on the social service departments of local or unitary authorities.

Thus the scope of Section 29 NAA 48 is of critical importance.

In particular, Section 29(6) states that the remainder of Section 29 does not authorise or require “the provision of any accommodation or services required to be provided under the National Health Service Act 1977…”.

As explained at 3.5.2, institutions providing skilled nursing or other skilled therapeutic intervention would be “hospitals” within the extended definition in the NHSA 77 if provided as part of the Health Service, and would thus be provided pursuant to the mandatory duty contained in Section 3(1)(a) of that Act. Specifically, section 29(6)(b) NAA 48 does not authorise local authority social services departments to provide nursing homes and the like.

In short, if an institution is providing “treatment”, it cannot be regarded as providing a service or facility of a kind which could be provided under Section 29.

On the face of it, section 29 NAA 48 gives local authorities wide powers to provide welfare services and facilities for disabled persons. The section is extended and made more specific by Section 2 of the Chronically Sick and Disabled Persons Act 1970.

However, the local authority’s powers are circumscribed by virtue of Section 29(1) of the 1948 Act (as amended) which makes provision of such services subject to the approval or direction of the Secretary of State.

The current approvals and directions of the Secretary of State are to be found in Appendix 2 to Department of Health Circular Local Authority Circular [LAC] (93)10, which came into force on 1 April 1993 [see APPENDIX 3]. The material direction is number 2, which says:

“2. (1) The Secretary of State hereby approves the making by local authorities of arrangements under Section 29(1) of the Act for all persons to whom that subsection applies and directs local authorities to make arrangements under Section 29(1) of the Act in relation to persons who are ordinarily resident in their area for all or any of the following purposes

a) to provide a social work service and such advice and support as may be needed for people in their own homes or elsewhere;

b) to provide, whether at centres or elsewhere, facilities for social rehabilitation and adjustment to disability including assistance in overcoming limitations of mobility or communication;

c) to provide, whether at centres or elsewhere, facilities for occupational, social, cultural and recreational activities and, where appropriate, the making of payments to persons for work undertaken by them.

(2) … …

(3) The Secretary of State hereby approves the making by local authorities of arrangements under Section 29(1) of the Act for all persons to whom that subsection applies for the following purposes:

(a) to provide holiday homes;

(b)-(e) … …

(4) Save as is otherwise provided or under this paragraph, the Secretary of State hereby approves the making by local authorities of all or any of the arrangements referred to in section 29(4) of the Act (welfare arrangements etc) for all persons to whom section 29(1) applies”.

The approvals and directions given in LAC (93)10 replace those given in LAC 13/74, the circular extant at the date on which the 1990 rating lists came into force and the relevant circular on the facts of Evans v Suffolk County Council [1977] RA 120. Paragraph 8 of 13/74 set out a range of approved services and facilities that closely correspond to those approved in the more recent directions in LAC (93)10.

See also s.2(1) Chronically Sick and Disabled Persons Act 1970 which makes arrangements for all or any of the following matters, namely:-

(a) the provision of practical assistance for that person in his home;

(b) the provision for that person of, or assistance to that person in obtaining, wireless, television, library or similar recreational facilities;

(c) the provision for that person of lectures, games, outings or other recreational facilities outside his home or assistance to that person in taking advantage of educational facilities available to him;

(d) the provision for that person of facilities for, or assistance in, travelling to and from his home for the purpose of participating in any services provided under arrangements made by the authority under the said section 29 or, with the approval of the authority, in any services provided otherwise than as aforesaid which are similar to services which could be provided under such arrangements;

(e) the provision of assistance for that person in arranging for the carrying out of any works of adaptation in his home or the provision of any additional facilities designed to secure his greater safety, comfort or convenience;

(f)facilitating the taking of holidays by that person, whether at holiday homes or otherwise and whether provided under arrangements made by the authority or otherwise;

(g)the provision of meals for that person whether in his home or elsewhere;

(h)the provision for that person of, or assistance to that person in obtaining, a telephone and any special equipment necessary to enable him to use a telephone,

In Evans, the Lands Tribunal appears to have construed paragraph 16(4) as being apt to include ‘welfare services’ of a kind which a local authority has power to provide irrespective of whether or not actual approval has been given by the Secretary of State for such welfare services at the material date, under 13/74 (or the later direction, as appropriate). This conclusion is based on the incidence of the words “of a kind” and “(by whomsoever provided)” in the relevant paragraph 16(4).

However, if a local authority has power to provide some facilities under specific legislation other than section 29 NAA 48, subject to limitations, it may well not be open to it to claim provision under the broader power of Section 29 rather than the specific legislative code in order to obtain exemption from non-domestic rates. This would be matter of construction of the relevant code.

In any case of doubt, on whether the interpretation “of a kind” can embrace provision of facilities provided under subsequent legislation (such as the NHS and Community Care Act 1990, which made provision of some facilities or services to be mandatory, rather than giving a power to provide under the 1948 Act), advice should be sought from Technical Adviser.

3.7.2 Practical Application of Test 7

The general approach to be adopted in relation to paragraph 16(1)(b) is therefore:

1. Look at the statutory power under which the facility is operated.

2. Identify the target beneficiary group of the facility. That target group must be based on the statutory functions of local authorities. As far as paragraph 16(1)(b) is concerned, the target group is identified by Section 29 National Assistance Act 1948. Anything that can be done under this provision will normally qualify for exemption (but other criteria must be met too).

3. Where the hereditament is devoted to more than one target activity, consider the application of “to the extent that” contained in the statute. Can any significant part of the whole be identified as being used wholly for a qualifying purpose? If it can, that part will normally qualify for exemption.

If a facility is operated by an NHS Trust it is unlikely to be provided under Section 29 by reason of the exclusion in section 29(6)(b) NAA 48.

If the provision is by a local authority or by a management company appointed by that authority, then in order for the provision not to be ultra vires it must have a statutory authority. If that authority is not the NAA 48, the exemption cannot apply under para 16(1)(b).

3.7.3 Practical Examples of “welfare services …”

The following are all examples of “welfare services …” that fall within the ambit of section 29 NAA 48:

a. Hostels

Section 29(4)(c) of NAA 48 enables the provision of hostels for disabled persons who are employed in sheltered workshops, or for whom work or training is being provided under the Disabled Persons (Employment) Acts of 1944 and 1958. These hostels (which in some cases may be non-domestic and otherwise rateable because they provide only short-term accommodation) will be exempt.

b. Shops

Section 29(4)(e) of 1948 Act enables the provision of shops and other facilities for the disposal of produce made by disabled persons. (NB: This does not confer exemption on ‘charity shops’ generally).

c. Recreational Facilities

Section 29(4)(f) of the 1948 Act enables the provision of recreational facilities for disabled persons. Examples of such facilities that will qualify for relief include sports facilities specifically provided the disabled; social or day centres, short stay holiday homes, nursery schools and special care units for children below school age. (NB: Day centres, etc where the users do not fall within the definition of “disabled” in paragraph 16(2) will not be exempt.)

d. Advice Centres

Advice centres potentially fall within Section 29. If it is plain, on the facts, that the target group for advice consists entirely of the disabled or ill within the relevant statutory definitions, then the centre will be exempt. Exemption will not fail if from time to time advice is given to a person falling outside the definitions such as carers and mental health professionals, provided such use does not offend the de minimis non curat lex maxim. If on the other hand it is clear that the Centre exists to give advice to a wider set of clients, only some of whom are disabled etc., it cannot be regarded as being wholly used for the relevant purpose.

e. Support Services

It is possible for a property to qualify for exemption even though it is not physically used by the disabled The pertinent test is whether it is used wholly for services directly supporting the provision of qualifying welfare services.

An example would be a floor of offices occupied by a local authority Social Services department that serve as the base for outreach teams who deliver services to disabled persons in the community.

Without this ‘operational hub’ it would not be possible to deliver the services. If these services or facilities are of a kind which fall within section 29 of the NAA 48 there is no reason to refuse exemption, unless the open plan offices are shared by persons engaged in work which does not fall within a qualifying purpose, and that proportion of use is more than de minimis. In that case the “wholly used” test is not satisfied and exemption cannot apply.

(NB: Offices which are used for fund raising will not be exempt, nor where the functions are of an administrative or financial nature, such as the Finance Department of a local authority which in addition to its other tasks will handle payment of accounts, invoicing, wages, etc for teams which deliver welfare services to the disabled.)

Offices that are located within a hereditament that is exempt or partially exempt may also be treated as exempt if their use is no more than incidental to the qualifying exempt use.

In contrast, exemption will not be appropriate in respect of respite care facility/emergency beds occupied with a day centre (unless it can be shown that the use is incidental to the primary use of the building as a day centre).

In Evans (VO) v Suffolk County Council [1997] RA 120, a day centre was occupied as part of a larger complex comprising long and short stay residential accommodation, physiotherapy, administrative offices and other facilities. It was accepted that the day centre itself was exempt under paragraph 16(1)(b). The sole issue in the appeal was whether at the material date the short stay accommodation was exempt.

In Evans, the President of the Lands Tribunal held that he was bound by the decision in Vandyk v Oliver (VO) [1976] AC 659, finding that:

“the provision of residential accommodation is not within the power of a local authority to provide as “welfare services” under s.29 of the 1948 Act.”

It should be noted that the President took into account changes in the relevant legislation in NAA 48, but nevertheless held that the Vandyk case remained an accurate statement of the extent of a local authority’s power to provide residential accommodation under NAA 48. He said, at page 131:

“the provision of accommodation is not incidental, but is the predominant function and purpose of the provision made. As it seems to me, the single common strand running through the 11 categories which… represent those persons admitted, is the need for shelter, for a roof over their heads for a short period – Nor is a person whom the Social Services Department require to observe and assess, in order to determine the extent of home care which may be necessary, [admitted in order to benefit from training or suitable occupation]. Likewise, the first requirement in the case of “respite care” is accommodation away from the permanent home … .”

Although the overriding purpose of a local or unitary authority in establishing and operating both a respite care facility and emergency beds is to provide residential accommodation to those admitted, it is inevitable that such persons be provided with daytime activities and the incidents of residential care during their stay. That provision, however, is properly to be characterised as incidental to the overriding primary purpose of the respite care/emergency facility. It follows that neither the respite care facility nor the emergency beds can be said to be wholly used for the purposes described in either paragraph 16(1)(a) or paragraph 16(1)(b).

3.7.4 Limitations on section 29 NAA 48 and paragraph 16(1)(b)

Because section 29(1) is a general enabling provision, it does not specify any of the arrangements that a local authority may make, but section 29(4) lists some of them by way of example. However it is possible to identify a number of services or facilities in respect of which a local authority may not make arrangements under section 29. These are:

a.Residential Accommodation

It is settled law that a local authority is not empowered to provide residential accommodation in the exercise of its community care functions under section 29 of the National Assistance Act 1948. In Vandyk v Oliver [1976] AC 659, Lord Wilberforce said, at page 690B:

“As regards the second Act (of 1948) I regard it as clear that section 29 does not authorise the provision of residential accommodation. I shall not enlarge on this since I believe that all your Lordships agree on the point. Section 21 of the same Act does so authorise…”.

It should be noted that Section 29(4) does in fact authorise the provision of hostel accommodation in the specific circumstances there stated.

In the case of training centres operated by the Guide Dogs for the Blind Association, it has been accepted that residential accommodation which is provided for partially sighted and blind persons attending the centre for training purposes as an integral part of the training process, should be treated as exempt because it is incidental to the primary purpose that is exempt under paragraph 16(1)(a).

b. The provision of the services provided under the National Health Service Act 1977

Section 3(1) of the NHSA 77 specifies the Secretary of State’s duty in this respect, which includes, inter alia, the provision of hospital and other accommodation; facilities for the prevention of illness; the care and after-care of persons suffering from illness, and such other services as are required for the diagnosis and treatment of illness. It should be noted that the provision of these matters is excluded from section 29 of the 1948 Act by section 29(6)(b), except insofar as they may fall within the arrangements made under section 29(4)(b) or (4)(c).

Mental health nursing homes and NHS Trust Hospitals will be outside section 29, save for the rare possibility of an institution provided by the Secretary of State for Health purely under the after-care functions in section 3(1)(e) of the NHSA 77.

Private clinics for alcohol and drug abusers if registered as nursing homes will similarly fail the test.

In Reid (VO) v BHB Community Health Care NHS Trust [1997] RA 385, it was held that parts of a health centre used on premises for the Community Drug Advice Service [CDAS] were not exempt under paragraph 16(1)(b) because the counselling service, which formed the principal part of the services provided by CDAS at the appeal hereditament, constituted diagnosis and treatment within the meaning of section 3 of the NHSA 77, and were not therefore welfare services which a local authority has power to provide under Section 29 of the NAA 48. The CDAS provided a treatment advice and counselling service for drug misusers, and also provided advice to members of the public who were not drug dependent but required advice on the subject of drug abuse.

c. The provision of any arrangements for fund-raising activities (unless exceptionally encompassed within section 29(4)(e) of the 1948 Act).

d. The Children Act 1989 specifically amended the application of the 1948 Act to require a local authority only to provide facilities under this provision to those over 18 years old. Services or facilities provided to disabled children are not of the kind that may be provided under section 29 of the NAA because, under section 29, a local authority is only empowered to make arrangements to promote the welfare of persons aged over eighteen. A local authority has no power under section 29 to provide services or facilities to disabled children.

Any claims for exemption of welfare facilities for disabled persons under the age of 18 should be referred to the Technical Adviser. Disabled persons under the age of 18 using a facility where exemption is claimed under para 16(1)(b) should also be regarded as non-qualifying persons in relation to the “wholly” test. Accordingly a hereditament may fail to gain exemption under paragraph 16(1)(b) where the number of disabled person users under the age of 18 exceed de minimis.

e. Car Parking Spaces for Disabled Persons

Car spaces allocated and marked for use as “disabled spaces” or reserved for use as part of a Shopmobility Scheme will not be exempt under paragraph 16(1)(b) because they are not considered to fall within any of the part of Section 29 of the NAA 48. Counsel has advised that where local authorities provide car parking spaces for disabled persons in their car parks the powers to do so are to be found in the Road Traffic Regulation Act 1984 Part IV, in particular sub-sections 32 and 35. Section 117(3)(b) of that Act defines a “disabled person’s concession” as “a provision made in any order under this Act for the use of a parking space by disabled persons’ vehicles”. If the spaces are provided under these regulations rather than section 29 of the NAA 48 they will not be exempt under paragraph 16(1)(b).

The fact that such spaces may be provided free of charge is not relevant when considering exemption from rating.

f. Shopmobility Schemes

Shopmobility schemes are operated by many local authorities, private bodies, and charities who are members of the National Federation of Shop Mobility. A scheme will normally provide manual and powered wheelchairs and battery powered scooters and chairs to anyone with a limited mobility. A scheme will be available to anyone with difficulty walking as a result of temporary or permanent disablement, age, accident, illness, pregnancy etc. The service is available for use by both the young and elderly alike and there is no requirement to be registered as disabled.

Persons using the scheme will be required to register for insurance purposes on the first visit but thereafter subsequent visits can be made without notice. The facility will usually be free of charge. It may be funded directly by the local authority, or by a combination of grant, donations or sponsorship.

Facilities required to operate a shopmobility scheme will usually include a store for the equipment and vehicles, admin offices and parking.

It has not been possible to establish the statutory powers under which local authorities can operate such schemes, and therefore the position regarding exemption is unclear. It may well be that such schemes will not qualify for exemption because they fail the “wholly used” test, being available to persons who do not meet the definition of disabled or are aged under 18. However, all such claims for exemption should in the first instance be referred to the Technical Advisers for advice.

g. Public Conveniences Reserved for Disabled Persons

The issue is whether a public convenience reserved for use by disabled persons is a facility of a kind which a local authority is empowered to provide under section 29 of the NAA 48.

Legal advice has concluded that such a facility is not exempt because it is not a facility the provision of which the Minister has directed nor approved under Section 29(1) of the NAA 48, and because there exists express and specific powers for the provision of such a facility by local authorities under section 87 of the Public Health Act 1936 and section 5 of the Chronically Sick and Disabled Persons Act 1970. The 1970 Act enables the provision of public conveniences for the disabled by both County and District Councils, whereas welfare service under the 1948 Act are provided by Social Services authorities, ie County Councils (and now unitary authorities). Parliament so ordered the distinction of functions under the 1970 Act with the result that the provision of public conveniences for disabled persons is treated separately from the provision of welfare services under section 29 of the NAA 48, and is to be undertaken by a wider class of authorities. There is therefore a strong case for concluding that Parliament never intended that the powers under section 29 were to be used to provide public conveniences since the facilities and services mentioned in section 29(4) of are quite different in kind to public conveniences for the disabled.

There is no authority directly in point, and the issue is open to argument.

However, given that exemption has previously been conceded over a number of years since 1990 in accordance with earlier instructions, the issue of exemption for public conveniences should as a matter of policy not be contested where the facility is specifically reserved or constructed for use for the purposes of disabled persons.

In many cases a disabled persons’ toilet will form part of a larger public convenience. In which case the hereditament will be partially exempt to the extent that the toilet for disabled persons is exempt, and the description in the list must in such circumstances contain the words “part exempt”.

3.8 Test 5: “Facilities under section 15 of the Disabled Persons (Employment) Act 1944”

Facilities may be provided under section 15 of the Disabled Persons (Employment) Act 1944 for enabling disabled persons who, by reason of the nature or severity of their disability, are unlikely to obtain employment, or to undertake work on their own account. Such facilities are the subject of Ministerial determination and their funding subject to Treasury approval.

Whether or not a factory or workshop is provided under the relevant provision can normally be resolved by reference to the constitution of the occupying body.

If the premises are provided under this statutory provision, then exemption under paragraph 16(1)(c) will be appropriate.

Facilities provided under this heading are sometimes called ‘sheltered workshops’ and perhaps Remploy is the most common provider. It has been confirmed that this company was created under the provisions of the 1944 Act, and exemption should therefore be granted at their workshops, as well as to associated premises.

3.9 Test 6: “Workshop or other facilities under section 3(1) of the Disabled Persons (Employment) Act 1958”

A local authority has power under section 3(1) of the Disabled Persons (Employment) Act 1958 to provide facilities for registered persons ordinarily resident in its area who are seriously disabled for employment, or to work on their own account, under special conditions, and of training for such employment or work.

Again, enquiry should be made whether or not the premises are provided under the relevant provision and, if so, If the premises are provided under this statutory provision, then exemption under paragraph 16(1)(d) will be appropriate.

3.10 Tests 5 & 6: General

Associated premises, which do not qualify for exemption under paragraph 16(1)(c) or (d) of schedule 5 to the 1988 Act, may qualify for exemption under paragraph 16(1)(b) if they are used wholly to form a provision of “welfare services for disabled persons”. The scope of these “welfare services” is explained in more detail at 3.7.

The only case law under these provisions is Davey (VO) v O’Kelly [1999] RA 245. This case concerned the provision of a wheelchair by the Employment Service for use in the appeal hereditament (a workshop and store occupied by Mr O’Kelly for the repair of musical instruments, making musical boxes and musical instruments). The claim for exemption was limited to paragraph 16(1)(c) and the Lands Tribunal decided that the wheelchair had been provided under the Training Act 1973 and not the Disabled Persons (Employment) Act 1944; that the appeal premises comprised business premises used as a workshop and that the hereditament was not used wholly for the provision of the wheelchair. The appeal hereditament was therefore not exempt from rating under paragraph 16(1)(c).

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