A long-running battle over how museums are valued for business rates has come to an end with a court ruling that they should be valued based on net income.

In the case of Stephen G Hughes v Exeter City Council the Upper Tribunal decided that the Royal Albert Memorial Museum in Exeter should not have been valued based on the cost of rebuilding, which is the Valuation Office Agency’s (VOA) preferred method.

The court ruled instead that the museum buildings should be valued based on Receipts and Expenditure, which means the rateable value will be reduced to £1, effective from 1 April 2015.

‘This is the third appeal of this kind that we have taken to the Upper Tribunal and, in all cases, the court has found in our favour,’ said Colin Hunter, director of business rates at Lambert Smith Hampton who advised Exeter City Council on the appeal.

‘However, what is interesting about this case compared with the others is that it makes it clear that the choice of valuation method isn’t a matter of legal principle but rather should be based upon fact and evidence.

‘The result is therefore likely to have a significant impact on the way English and Welsh museums are valued in the future, particularly older museums situated within historic buildings which would have substantial rebuild costs.’

‘Whether the VOA decides to appeal or not remains to be seen. However, either way, we’re keen to bring the VOA together with representatives from the various museum bodies across England and Wales in order to agree a way forward,’ Mr Hunter added.

‘We will also have discussions with the Valuation Tribunal for England to establish how best to clear the appeals against the 2010 rating list that are still outstanding, paving the way for the 2017 Rating List to be appealed or corrected.’