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MB - RICS APC Competencies Revision > Local Taxation > Flashcards

Local Taxation Flashcards

1
Q

What are business rates?

A

A national taxation on the occupation of non domestic land and buildings.

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2
Q

What is a Rateable Value?

A

Set by the VOA.

Annual rental value on the AVD of a property assuming a hypothetical tenancy.

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3
Q

Rateable Valuation based on a hypothetical tenancy based on the following assumptions

A

-Vacant
-Available to let on an annual tenancy
-FRI terms
-In good repair
-Tenant pays rates
-Current use
-No alterations may be made (only minor)

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4
Q

How do you calculate business rates liability?

A

RV x Multiplier (less any reliefs)

Multiplier:
Small = 49.9
Large = 54.6 (was 51.2)

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5
Q

What four ingredients make a rateable occupier?

A

-Beneficial occupation
-Exclusive occupation
-Actual occupation
-Transience or permanence

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6
Q

What six ingredients make a hereditament?

A

-Single rateable occupier
-In a billing authority
-Be capable of separate occupation
-Single geographical unit
-Single use
-Single definable position

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7
Q

What do you mean by AVD and what is it?

A

Antecedent Valuation Date is the date of valuation adopted for the 2023 Rating List

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8
Q

Name the RICS Guidance?

A

RICS:
RICS Code of Practice 2024: Rating Consultancy, 5th edition

RICS Rates Appeals Guidance Note 2017

VOA:
Agent Standards

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9
Q

What is a hereditament?

A

A statutory definition does not exist. The General Rate Act 1967 describes a hereditament as “property which is or may become liable to a rate, being a unit of such property which
is, or would fall to be, shown as a separate item in the valuation list”.

A hereditament is land or property that satisfies the following 6 rules:
-In a billing authority
-Single rateable occupier
-Be capable of separate occupation
-Single geographical unit
-Single use
-Single definable position

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10
Q

What is in the RICS Code of Practice 2024: Rating Consultancy, 5th edition

A

Acknowledgements

RICS standards framework

Introduction

Separate section for each countries
-Code of practice applicable in:
England and Wales
-Code of practice in: Scotland
-Code of practice

  1. Background
  2. Seeking instructions
    -General principles
    -Conduct of marketing and telesales staff
    -Marketing material and communications
  3. Terms of Engagement

Code of practice applicable in Scotland

  1. Background
  2. Seeking instructions
    -General principles
    -Conduct of marketing and telesales staff
    -Marketing material and communications
  3. Terms of Engagement
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11
Q

Recent Changes to RICS Code of Practice 2024: Rating Consultancy, 5th edition

A

Effective Date: 1 June 2024

Recent Changes:
Updates to the appendices and other areas, enhancing accountability through stricter requirements for declarations and improved consumer protection measures. It applies to all RICS, IRRV, and RSA members

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12
Q

Name some relevant legislation?

A

-Local Government Finance Act 1988
-Rating Valuation Act 1999
-General Rate Act 1967
-Levelling-up and Regeneration Act 2023
-Rating Act (Empty Properties) 2007

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13
Q

What is the Local Government Finance Act 1988?

A

The Local Government Finance Act 1988 introduced the uniform business rate and the Community Charge (poll tax) in the UK, fundamentally changing local government funding.

It replaced the previous system of property rates with a new approach, aiming to create a more standardized and transparent method of local taxation.

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14
Q

What is Rating Valuation Act 1999?

A

The Rating Valuation Act 1999 reformed the system of property valuation for taxation in the UK. It updated the process for determining the rateable value of properties, which is used to calculate local taxes, ensuring a fairer and more accurate assessment.

The Act aimed to modernise the valuation system, making it more responsive to changes in property markets and providing a more equitable basis for local taxation.

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15
Q

What is General Rate Act 1967?

A

The General Rate Act 1967 established the framework for local taxation in the UK through property rates, allowing local authorities to tax non-domestic properties based on their rental value to fund public services. It remained the primary method of local government finance until the introduction of the Community Charge in 1990.

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16
Q

What is Levelling-up and Regeneration Act 2023?

A

The Levelling-up and Regeneration Act 2023 aims to reduce regional inequalities across the UK by promoting economic growth, enhancing public services, and improving living standards in underserved areas. It focuses on empowering local communities and driving sustainable development to create more balanced opportunities nationwide.

17
Q

Second Home Council Tax Premium

A

The Levelling Up and Regeneration Act allows local authorities to charge a premium on second homes.

Cornwall Council has agreed to charge an additional 100% Council Tax premium on second homes from 1 April 2025.

Proposed Exemptions:
-Annexes forming part of, or being treated as part of, the main dwelling
-Job related properties.
-Properties being actively marketed for sale or let will have a 12-month exception to the premium
-Properties undergoing probate will have a 12-month exception to the premium after probate or letters of administration have been granted
-Seasonal homes where year-round or permanent occupation is prevented, and
-Occupied caravan pitches and boat moorings

18
Q

What is the current UBR for 2024/25?

A

UBR = Uniform Business Rates

Small (used for RV under £51,000):
0.499

Standard (used for RV over £51,000) :
0.546 (previously 0.512)

19
Q

Summarise the current rating list and your knowledge of any upcoming revaluations?

A

The most recent revaluation came into effect in England and Wales on 1 April 2023, based on rateable values from 1 April 2021.

The next revaluation will come into effect on 1 April 2026, based on rateable values from 1 April 2024.

20
Q

What rates support was provided through COVID-19?

A

100% retail and hospitality relief from 1st April 2020.

Grants for small businesses (£10,000 for those with RV up to £15,000)

21
Q

What is a completion notice?

A

Notice specifies a proposed completion day when building is deemed to be completed. Issued in accordance with S46a of LGFA 1998.

22
Q

Is there any relief available for partially vacant buildings?

A

Yes. Section 44a allows temporary exemption from rating of partly occupied buildings, however it is discretionary.

23
Q

What does the Rating (Empty Properties) Act 2007 comprise?

A

If a property is vacant then it can receive 100% relief.

24
Q

How long must a property be re-occupied for before it can qualify for empty property rates relief again?

A

13 weeks

25
Q

Recent relevant case law relating to empty properties?

A

Makro Properties LTD v Nuneaton & Bedworth Borough Council (2012)

The court addressed a case involving the issue of “rate avoidance” on empty commercial properties. Makro, the property owner, temporarily stored a small amount of documents in an otherwise empty warehouse for a short period, claiming this constituted “occupation” of the property, which reset the clock on the exemption from paying business rates for empty properties.

The court ruled in favor of Makro, agreeing that the temporary use of the property, however minimal, did count as “occupation” under the law. This allowed Makro to avoid paying business rates during the period when the property was otherwise unoccupied. The case highlighted the potential for legal loopholes in the business rates system.

26
Q

Recent business rates relevant case law relating to properties undergoing works?

A

Hurstwood Properties (A) Ltd v Rossendale Borough Council (2021)

UK Supreme Court ruled that properties undergoing substantial renovations might be exempt from business rates if they are “incapable of beneficial occupation.” This decision clarified that significant works could justify a rates exemption, depending on the property’s condition during the renovation.

27
Q

Recent relevant case law relating to splits / mergers?

A

Woolaway v Mazars (2015)

Ruled that different floors of a building, connected only by shared spaces, should be assessed separately for business rates. This decision reversed previous case law and led to higher rates for many occupiers, clarifying that direct and exclusive access between units is required for them to be treated as a single rateable unit.

28
Q

Types of Business Rates Relief?

A

-Small Business Rates Relief
-Transitional Relief
-improvement Relief
-Retail, Hospitality & Leisure Relief
-Empty Property Relief
-Rural Relief
-Charitable Rate Relief

29
Q

What do you understand about small business rates relief?

A

-Your property’s rateable value is less than £15,000
-Your business only uses one property (you may still be able to get relief if you use more)

-RV up to £12,000 - no rates payable
RV

-Between £12,000 and 15,000, tapered relief between 100% and 0%.

Multiple Properties
-To be eligible for the relief the rate payer must have one property with a value of less than £15,000 or one main property.
-none of your other properties have a rateable value above £2,899

-the total rateable value of all your properties is less than £20,000 (£28,000 in London)

30
Q

What can you tell me about rural relief?

A

-Rural area with population of under 3000

-Only village shop or post office with RV less than £8500

-Only pub or petrol station with RV less than £12500

31
Q

What can you tell me about retail, leisure and hospitality relief?

A

75% reduction off your business rates bills for the 2024 to 2025 billing year

The most you can get in relief each billing year is £110,000 per business.

32
Q

What can you tell me about charitable relief?

A

Charities and community amateur sports clubs can apply for charitable rate relief of up to 80% if a property is used for charitable purposes. Local authorities can increase this to 100% at their discretion.

33
Q

Can you tell me about the CCA process and the different timescales?

A

From submission of check, the VOA have 12 weeks to respond, but have extended this to 12 months to deal with backlog from the revaluation.

Once you have completed a check, you can challenge any valuation related to the same property:
-within 4 months of the check decision notice.
-within 16 months of your check submission if the challenge is about a change in the surrounding area (such as roadworks) if the VOA has not made a decision on your check after 12 months

34
Q

If you were to represent your client at valuation tribunal, in what capacity would you be acting?

A

Surveyors intending to appear before a VT are advised to be aware that their primary duty in giving expert advice is to the VT, overriding any duty to their employer

Surveyors can appear at VT in a dual role of both advocate and expert witness, where they are satisfied they may do so appropriately

Case must be well prepared and presented

When appearing at a VT without legal representation (as is usually the case), the surveyor and the VO is each combing the roles of three individuals who would usually be present at a hearing in the High Court

Roles must be separated clearly – i.e. the change from advocate to expert witness made clear by the statement ‘I will now give my evidence’

Advocate: deal with matters of law and present case, never seek to give evidence

Expert: restrict to evidence and not make legal submissions
Either capacity – duty to assist the tribunal

Expert: provide evidence openly and honestly

Advocate: may emphasise a point, but not to the extent the tribunal is mislead

35
Q

What is transitional relief?

A

Transitional relief reduces the impact of higher rateable values with an upward cap to limit the increases from the new Rating List. Transitional relief limits how much your bill can change each year as a result of revaluation.

36
Q

What information do you include in a check submission?

A

Factual details – information to confirm floor areas, address, lease information etc relevant to non-valuation contentions such as split, merger, floor area query

37
Q

How does this change for challenge submissions?

A

The requirements for a challenge submissions are more detailed, for example, I would be including comparable evidence for a valuation contention.

38
Q

What is meant by the principle of ‘rebus sic stantibus’?

A

As things stand

MB - RICS APC Competencies Revision (2 decks)

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