Summary

• the extent to which the plant and machinery of industries currently subject to prescribed assessments would be rateable under existing legislation; and,
• having regard to the financial and other considerations involved, to recommend any legislative changes required to ensure fairness of treatment and consistency with the principles that underlie present legislation governing the rating of plant and machinery in the UK.

The Plant and Machinery Regulations are split into 4 classes of rateable items.

Class 1 lists items of plant and machinery which are rateable provided they are used mainly or exclusively in connection with the generation, storage, transformation or main transmission of power in or on the hereditament.

Class 2 lists items of plant and machinery which are rateable provided they are used mainly or exclusively in connection with services to the hereditament (such as heating lighting, fire protection or security) and are not also used mainly or exclusively as part of a manufacturing or trade process.

Class 3 lists a number of rateable items of plant and machinery which broadly cover railway and tram lines, cables networks, pipeline networks and lifts and elevators.

Class 4 lists items of plant and machinery which are rateable provided that they are, broadly speaking, in the nature of a building or structure or perform the function of a building or structure.

Electricity Generation. Under Class 1 of the existing regulations most of the plant and machinery used in the electricity generating industry would be rateable. The Committee considered that Class 1 of the regulations was devised to bring into rating plant which generated power for use in some other trade or process which was the principal business activity of the ratepayer. However, in the case of the power generators, the manufacture and supply of power was the very business which they carried on.

Therefore, they recommended that a "tools of the trade" exemption should apply to generating plant and machinery belonging to the power generators, although such plant which was in the nature of a building or structure should continued to be rated. The Committee stressed that the exemption should not apply to manufacturers with their own internal power generation subsidiary supplying the needs of the ratepayer's own organisation.

National Grid and the Regional Electricity Companies. The existing regulations would rate most of the plant and machinery in National Grid and the RECs by either Class 1 (storage, transformation or transmission of power) or Class 3 (cable networks). The Committee considered that, like the power generators, National Grid and the RECs should benefit from a limited "tools of the trade" exemption in relation to their plant and machinery falling within Class 1. They also considered that while cables used to carry electricity to consumers should be rated under Class 3, the transformers, switchgear and equipment within substations and switching stations should also be considered as "tools of the trade" and exempted.

Water companies. The Committee considered that the plant and machinery used in the water industry was broadly similar to plant and machinery used in other industries which were subject to conventional assessment and the existing regulations. Therefore, they recommended that the regulations remain broadly unchanged in respect of the water industry although they did suggest some amendments to improve their clarity.

Sewers are currently exempt from rates. The Committee considered that the exemption was out of date and that there were no difficulties in placing sewers into rating. Therefore, they recommended that the sewers exemption be removed.

Railtrack and London Underground. Most of the plant and machinery used by the railway industry would be rateable under the existing regulations, and especially under Class 3 of the regulations. The Committee considered that movement of trains over tracks was similar, in principle, to the transmission of electricity along cables or the movement of gas and water through pipelines, both of which they considered should be rateable. Therefore, they recommended that tracks should also continue to be rateable, although overhead power lines and the third/fourth rail should not be rated.

The Committee also considered that Class 3, which would bring into rating most of the railway plant and machinery, was too wide and recommended that it should be amended to rate only a specific list of equipment integral to railway lines and tracks.

British Gas (Transco). The Committee considered that the plant and machinery used by British Gas was similar to equipment used in other industries (in particular long distance pipelines) which were subject to conventional assessment and the existing regulations. Therefore, they recommended that the regulations remain broadly unchanged in respect of the gas industry although they did suggest some amendments to improve their clarity.

The Committee also considered a recent court case which raised questions over whether fire protection equipment was rateable under the existing regulations. The Committee considered that, in line with the 1st Wood Committee's recommendations, fire protection equipment within the hereditament should be rated and that the regulations should be amended to remove any doubt.

Large Docks and Harbours. The Committee considered that most of the plant and machinery used in Docks and Harbours was commonly used elsewhere in industry and was subject to the existing regulations. They did not, therefore, recommend any changes for such items.

However, they identified some plant and machinery which was, to some extent, unique to the industry and considered whether it should be rateable. They recommended that while mobile cranes should not be rated, fixed cranes should be rateable provided they satisfy the "nature of a building or structure" test in Class 4 of the Regulations. They also recommended that lock gates should be rated in all cases (under Class 3) as they were an essential part of the port's infrastructure.

How to obtain copies:
The Rating of Plant and Machinery in Industries currently subject to prescribed assessment : A report by The 2nd Wood Committeer
ISBN 0 10 142832 4 Cm 4283 £8.95
Copies available from The Stationery Office