Case Study: Harland & Wolff, Belfast
Harland and Wolff shipyard in Belfast is one of the most well known in the UK, having been a base for some form of shipbuilding since 1861, being most famous as the birthplace of the ill-fated White Star Line RMS Titanic and her two sister liners Olympic and Brittanic. Titanic sank on her maiden voyage after she hit an iceberg in mid Atlantic on the evening of 14th April 1912 with the loss by dawn of 1514 passengers and crew, including her captain, Edward Smith, her designer Thomas Andrews, together with some of the richest high society characters of the day. Controversially the chairman of the White Star Line, J Bruce Ismay, survived. The centenary of the sinking is being marked in 2012 with the opening of Titanic Belfast and the Titanic Experience, an iconic project for the city.
Some 1,700 other ships, offshore vessels, rigs, platforms and other marine structures have also begun life at Harland & Wolff. In more recent years it has also become a ship repair and maintenance yard, carrying out remedial works, repairs and refurbishment of ships in addition to new construction. The yard’s iconic yellow cranes, Samson and Goliath, tower over the yard and the city of Belfast and are capable of raising a combined capacity of 1,600 tonnes with a lift height of 70 metres over a span of 140 metres. Two substantial dry docks enable work to be carried out on some of the giant marine structures currently afloat.
Sanderson Weatherall was asked at very short notice in early February 2005 to advise on the rates liability of the yard, following a sea change in legislation due to take effect from 1st April 2005. Northern Ireland was until then the only remaining area of the UK where industrial de-rating prevailed, this historic form of rates relief having been abolished in England and Wales in 1963, and in Scotland by 1995.
The government’s proposal was to phase in rates charges in the first year at 15% of the calculated liability as provided by assessments in the 5th Revaluation. These figures had remained dormant and largely unchallenged for some time. Rapidly increasing phased amounts of 35% of total liability in 2006 and more, up to 100% of full liability would then swiftly follow.
Harland & Wolff had an assessment in the 5th Valuation List of net annual value £8.75 million, by some considerable extent the single biggest assessment in Northern Ireland. This assessment probably harped back to earlier days before large acreages of the yard were sold off to developers to form the new Titanic Quarter. There were major fears that as no appeal had ever been made, the yard would thus incur a very large liability to business rates, when there was in fact no budget set aside to pay for it, thereby prejudicing cash flow and in turn the future of a major local employer of longstanding that was already struggling to survive following globalisation and increasing international competition from overseas yards in Europe, the United States and the Far East.
As specialists in both mainland and international local property taxation advice, Robert Brown, Head of Rating Services and his plant and machinery colleagues carried out a site inspection before embarking upon research into the assessment with the local Valuation and Lands Agency and the relevant charging authority, the Rates Collection Agency.
Sanderson Weatherall was able to provide top level management with initial strategic advice on both the land and buildings; and the rateable plant and machinery. With regard to the famous cranes, it was established that whilst only one was now operational, both cranes had been declared to be scheduled historic monuments under the Historic Monuments and Archaeological Objects (NI) Order 1995.
Our advice confirmed that the Rating assessment was seriously out of date and that a more realistic assessment should have been in the region of net annual value £1.9 million. In the light of the sheer scale of the potential rates liability, urgent negotiations then took place at the highest level of government with a view to special concessions being made. Much of the outcome remains sensitive, but needless to say, political expediency prevailed and a settlement of the fundamental problem was duly achieved with the direct benefit of our advice and to the client’s ultimate satisfaction.