VOA disputes Tories' BT fibre valuation

The government's Valuation Office Agency (VOA) has disputed Conservative Party claims that BT pays trivial business taxes on its fibre network links.

The government's Valuation Office Agency (VOA) has disputed Conservative Party claims that BT pays trivial business taxes on its fibre network links.

In a policy statement, the Tories said, "Currently the rateable value of a pair of BT optical fibres is around £15 per pair per kilometre per annum whereas the rateable value applied to the first pair used by a competitive carrier is £500 per pair per kilometre per annum. In addition, BT pays no increase in rates with an increased use of fibre."

A Communities and Local Government (DCLG) spokesman said the VOA did not recognise the £15 figure quoted for valuing BT optical fibres.

"BT is valued on an overall receipts and expenditure basis, which includes fibres, copper lines to individual homes and business premises, telephone kiosks and telephone exchanges," he said.

"Other fibre operators are valued at a rate per kilometre, depending on the size of the network and the number of fibres lit. The Uniform Business Rate is then applied to arrive at the rates payment."

He said there was no evidence that the application of a different valuation method to BT had given the company an advantage over its competitors.

"This has been tested both in the Court of Appeal 28 January 2010 and in a Lands Tribunal (12 February 2009) and stated in the European Commission's decision dated 12 October 2006," he said.

The Court of Appeal dismissed Vtesse Networks' appeal against a VOA valuation on its networks in a split decision. Lawyers for the VOA had said that it was impossible to disaggregate BT's fibres from the rest of its infrastructure for valuation purposes.

Lawyers for Vtesse pointed out that Ofcom had done precisely this to establish a value for OpenReach, BT's regulated infrastructure company.

Lord Justice Sedley, dissenting, said, "It is now evident that there is arguably a gross disparity in BT's favour between the rateable value of its and Vtesse's cables."

Refusing Vtesse's appeal might allow "a radical inequity in the rating system" to continue. This would be an "injustice", he said.

The Tories said that if elected, they planned to review the rating system to make it more equal.

The DCLG spokesman said all rateable values are assessed independently by the VOA to the same standard of annual rental value. "This maintains fairness in the system," he said.

He said valuation officers had been independent of both central government and local councils since 1950.

"It is only right that the VOA acts independently of ministers in assessing rateable values," he said. "It would not be desirable to take choices about how to determine the rateable value of a property away from the independent experts and make them political decisions for ministers."

The first laws levying taxes on businesses were introduced in the early 1600s by Queen Elizabeth I. Most of the case law on valuation dates from the 19th century.

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