Problems in store: limits of the agricultural exemption

The application of the agricultural building exemption from non-domestic rates was considered by  the Upper Tribunal in the recent decision of Davies (VO) v Puffin Produce Ltd and Puffin Farms Ltd [2026] UKUT 236 (LC).

Puffin Produce Limited and Puffin Farms Limited (together “Puffin”) had previously succeeded before the Valuation Tribunal for Wales (“VTW”) in obtaining  the  exemption in a decision handed-down in March 2025. The reasoning in that decision though was undermined by the Court’s Appeal’s subsequent decision in Bunyan (VO) v Fridays Ltd [2025] 1 WLR 4112 so the VO appealed.

Factual background

The hereditament is a large potato storage facility near Haverfordwest.  The buildings were owned by Puffin Produce Limited (“PPL”) on the first material day (1 September 2018) and had been transferred to Puffin Farms Limited (“PFL”) shortly before the second material day (28 March 2022) in a restructuring of Puffin’s business.

The relevant arrangements of Puffin’s business involved the farming of a small area of land adjacent to the cold-storage buildings and other parcels of land in the general vicinity (at distances of up to 20 miles from the buildings), some of which were on the basis of informal verbal agreements.  Puffin stored potatoes grown by other growers in the region (and some of its own) in the cold storage buildings before the process of preparing the potatoes for storage began.

Puffin acknowledged that on the first material day, the cold storage buildings did not contain any potatoes that it had grown and on the second material day the percentage of its own potatoes within the cold store was only 2-3%.  

The statutory test

The agricultural exemption Puffin sought to rely upon is in Schedule 5 of the Local Government and Finance Act 1998.  Paragraph 1(b) of Schedule 5 states that a hereditament is exempt to the extent it constitutes an agricultural building.

The relevant statutory wording  is contained in paragraph 3(a) which states that :

A building is an agricultural building if it is not a dwelling and 

(a) it is occupied together with agricultural land and is used solely in connection with agricultural operations on that or other agricultural land, …

The Court of Appeal in Fridays stated that to qualify a building must be “occupied together with agricultural land” and it must be used solely in connection with agricultural operations on that or other agricultural land, tests that were termed the “occupation test” and “use test” respectively.  Only the occupation test was in issue during this appeal.

The sole issue  was therefore  whether the cold storage buildings and the agricultural land or other land were occupied together as a single agricultural unit. That was a question of fact for the Tribunal to decide.

The Upper Tribunal’s decision

The Tribunal noted that it was not necessary for the buildings to form part of a single hereditament with any agricultural land and accepted that at both material days Puffin occupied both agricultural land and the cold stores. 

However, it stressed that common occupation is not enough; the statutory test requires that the stores be occupied "together with" the land.  In this respect, the Tribunal made clear that distance alone is not determinative and would not have prevented the exemption applying.  

The decisive point, which the Tribunal held fatal to the application of the exemption, was the absence of a functional connection between the buildings and Puffin's own agricultural activities.  In 2018 none of the stored potatoes had been grown on land occupied by PPL and none of PPL's own produce was stored there, so the buildings were used solely in connection with land occupied by the independent growers.  By the second material day only about 2-3% of the stored potatoes had been grown by Puffin, which the Tribunal did not regard as significant or as altering the outcome.  

The Tribunal accordingly allowed the Valuation Officer's appeal, holding that the paragraph 3(a) exemption did not apply.

Wider implications

The decision leaves open the question of what degree of functional connection is required between the building seeking exemption and the agricultural or other land it needs to be occupied with. Where is the tipping point? Further, given the Tribunal accepted that Puffin’s farming operations were genuine it seems odd that a storage facility, which only Puffin was in a position to build, and which it uses for agricultural purposes, is not exempt just because it is also used to a greater extent by other farmers. That arrangement suits the needs of farmers in West Wales who, on this basis of this decision, may feel the legislation isn’t giving them the support they deserve.