A historic legal case, which challenged the fairness of the Government’s Valuation Office Agency (VOA) and how it was choosing to tax fibre optic broadband cables between different UK network operators, has reared its head again after several criminal summonses were issued for members of the VOA, HMRC and others for alleged “perjury and fraud“.
Complaints against the business rates system are nothing new and in the past a number of smaller network providers (e.g. Vtesse / Interoute), specifically those that were building their own fibre optic broadband infrastructure, have claimed that the VOA’s “Fibre Tax” treats them unfairly (i.e. forcing them to pay more for their cable deployments than big fixed line providers like BT (Openreach) and Virgin Media).
A few years back, Vtesse Networks (original name before Interoute’s acquisition) challenged the VOA’s method of valuation primarily based on the length of its fibre network, which extended to just over 7,500km. The VOA had valued the fibre at £250/km, whereas Vtesse argued for £20/km (that ostensibly payable by BT), which would have reduced the rateable value (RV) from around £2m to a little over £234k.
Vtesse’s argued that the VOA’s basis of assessment was unlawful in the EU context, in that it breached competition law principles (these require equal treatment in tax terms for comparable businesses and networks). But the Tribunal ultimately found that a different valuation approach was justified, and the appeal was dismissed.
Just to be clear. The Tribunal’s decision made a key point that equality of treatment is a fundamental principle, not only of EU law, but also of UK domestic law insofar as it relates to non-domestic rating. But the principle of equality of treatment applies to comparable hereditaments (i.e. the comparison of like with like, not like with unlike). This principle exists in domestic law for rating purposes, yet the two hereditaments being referred to in this case, Vtesse and BT, were found to be “two wholly different hereditaments, not two comparable businesses”.
However, Aidan Paul, Vtesse’s original founder and chairman (until 2014), has long questioned the outcome of the case and maintained an active interest in investigating the issue. But anybody who thought this one was done and dusted might be in for a shock after Aidan’s latest LinkedIn post went live yesterday.
Aidan Paul said:
“Fibre Tax latest
5 criminal summonses have been issued to 3 members of the Valuation Office Agency, an HMRC Solicitor, and a retired member of the Renfrewshire Assessors by West Herts Magistrates for perjury and fraud for the submission of false evidence and withholding evidence in the 2020 Upper Tribunal hearing, of Vtesse v Gidman [2020] UKUT 13 (LC).
First Hearing December 6th at St Albans Magistrates Court – open to the public.”
Clearly this is a significant development and we have reached out to the VOA for a comment. But it would be quite understandable, given the nature of those summonses, if the agency chose not to issue any detailed public statements until after the case has concluded. At the time of writing we don’t have any further details on this but are investigating.