Local Taxation Flashcards
What is rating?
Rating is a tax on occupation, not ownership. Tax on land and buildings unless they are exempt or domestic.
What legislation governs rating?
Local Government Finance Act 1988
Commissioner for Revenue and Custom Act 2005
Non-Domestic Rating (Alteration and List of Appeals) 2009
Non-Domestic Rating Act 2023
VT for England (Procedures) 2017
Definition of Rateable Value
LGFA 1988 Schedule 6, Paragraph 2
Annual rent that the hereditament might reasonably be expected to let from year to year by a hypothetical tenant with three assumptions.
What are the assumptions?
1) The tenancy begins at Antecedent Valuation Date
2) In reasonable state of repair, excluding those considered uneconomical
3) under a FRI lease terms
What is vacant to let?
Applies to all properties, assuming the hereditaments are to be vacant and available to let on the statutory terms of the hypothetical tenancy.
Ensure an uniformity approach in valuation and disregard characteristics that would affect the rental value i.e. particular attitudes/needs/concerns of actual occupier and landlord
What is a hereditament?
The General Rate Act 1967 S.115
repealed by S64 of LGFA 1988
A property which may become liable to rates, being a unit of such property which is, or would fall to be, shown as a separate item in the rating list.
Leading case to define a hereditament
Gilbert v Hickinbottom 1956
superseded by Woolway v Mazars 2015
6 factors:
1) Capable of Definition
2) Single rateable occupier
3) Single use
4) Single geographical location
5) Capable to be separate let
6) In one billing authority
Tell me about Woolway v Mazars 2015
Firms of accountants, occupied floors 2 & 6 of Tower Bridge House. VT decided that floors were functionally essential to each other, therefore they should be assessed as one.
However SC determined none of the floors were contiguous with one another. No intercommunication.
What legislation is introduced following by the Woolway SC decision?
Property in Common Occupation Act 2018
3 Rules:
1) Singe occupier
2) Single use
3) Property meets the “contiguity” condition that are clearly linked or adjoining
What are the four essential ingredients to determine rateable occupation?
Established in John Liang & Son v Kingswood 1949
ABET
1) Actual occupation - physical occupy (e.g storage of items)
Southend-on-sea case 1900: Intension to reoccupy (seasonal/periodic)
Tomlin case 1990: Squatters occupied by a former embassy found liable of rates even with no legal right of occupation.
2) Beneficial occupation - Not based on whether a profit is made, its use has a value to the occupier
R v School Board for London 1886: Has a statutory duty to fulfil and thus would be prepared to pay a rent for the property even it could make no profit.
Lambeth overseers case 1897: London Council not rateable as the park was for benefit of the public who can use the park in perpetuity.
3) Exclusive occupation - exclusively use for a particular use & paramount control.
Westminster v Southern Railway Co & WHS Smith 1963: Question not who is paramount control of station but who is in paramount control of the separate let out.
Holywell Union v Halkyn District Mines 1985: Confirms more than one rateable occ. can exist on a land for different purpose.
4) Transience - must be a degree of permanence
Dick Hampton (Earth Moving) case 1976: Used to be 12-months rules but now consider the intensity of use.
What are Chattels?
Movable objects that have enjoyment on land with a sufficient degree of permanence, may form a rateable hereditament.
Field Place Caravan Park v Harding: Caravan site contained nos. of residential caravans which had been in position for years. Rateable as if it is placed on a land and enjoyed with such circumstances and degree of permanence, chattel and land form a single hereditament.
Rudd v Cinderella 2003: Former ferry converted into a nightclub and moored on the river found rateable.
When will a newly constructed building rateable?
Portman v Gladman SIPPS 2011
If a property has been served with a Completion Notice or it is physically occupied, then it’s rateable.
What is a Completion notice?
Notice specifies a completion day when a newly constructed building deemed to be completed. Also work on those deleted assessments due to a scheme of reconstruction works when bring back into list. Issued in accordance to S46A of LGFA 1988
What are the difference between Material Day, Antecedent Valuation Day and Effective Day.
Material Day = all physical factors of the property and its locality
Antecedent Valuation Day = all non-physical factors affecting the value i.e. market conditions, rental values, economic circumstances
Effective Day = the day the hereditament come into the list / when rates liability starts, stops or changes.
What is MCC?
Material Change of Circumstances
IP can make a Challenge under Reg 4 of NRD Alterations Reg 2009 based on 6 mentioned matters (in LGFA 1988 Schedule 6, Paragraph 2 (7)):
1) Physical state/enjoyment of hereditament
2) Mode or category of occupation
3) Physical state of locality
4) Use of occupation of other premises in the locality
5) Quantity of mineral or substances extracted from hereditament
6) Quantity of refuse permanently deposited on hereditament
However changes in NRD Act 2023 mandates if changes in legislation/guidance from public bodies cannot appeal.
What properties are exempt from rating?
LGFA 1988 Part II Schedule 5
1) Agricultural lands and buildings used for agricultural operations
2) Place for public religious worship - shall meet two tests: Certification (Places of Worship Registration Act 1855 and Invitation test
3) Public parks, free and unrestricted used by public
4) Buildings used for training and welfare of disabled persons
5) Fish farms
6) Lighthouses
What reliefs are available?
1) Small business relief - 100% with RV <£12,000. Relief phased from £12,001 to £15,000.
2) Empty property relief - 100% if vacant for more than 3 months; 6 months for industrials.
Listed buildings with RV <£2,900 or 100% until it’s re-occupied.
3) Charitable relief - 80% if used for charitable purposes
4) Enterprise zone relief - if starting up or relocating to an enterprise zone, up to £55,000 over 5 years
5) Transitional relief - To protect business from large increase or decrease between revaluations. Phasing system to taper the difference. Only applies in England. (2024-25 be aware of any news as it may be removed by govt)
6) Improvement relief wef 1 April 2024 - Increase in area i.e. extension, improvements on efficiency i.e. heating/AC, new rateable P&M and certified that same ratepayer during the works by BA then eligible
