Local Taxation Flashcards
State some relevant law for Local Taxation
General Rate Act 1967
Local Government Finance Act 1988
Rating Valuation Act 1999
What is a UBR
Different multipliers apply to different geographical locations
What is the current uniform business rates for 2024/25
£0.499 for RVs of less than £51,000 (small business multiplier)
£0.546 for RV’s of £51,000 or more
When was the new rating list published
1st April 2023
When is the antecedent valuation date for the new list
1st April 2021
What are the four essential factors for rateable occupation
- Beneficial occupation
- Exclusive occupation
- Actual occupation
- Transience or permanence
What are the 6 rules to satisfy the definition of a hereditament
- Single rateable occupier
- In a billing authority
- Be capable of separate occupation
- Single geographical unit
- Single use
- Single definable position
What is the rateable value
- Set by the VOA which is part of HMRC
- Annual rental value on the AVD of a property assuming a hypothetical tenancy based on 7 assumptions
What are the 7 assumptions of hypothetical tenancy
- Vacant
- Available to let on an annual tenancy
- FRI terms
- In good repair
- Tenant pays rates
- Current use
- No alterations may be made
What is the rating list
A statutory document
Tone of the list - the general range of comparable evidence setting the tone
What is transitional relief
Scheme for transitional relief to lessen the impact of higher rateable values with and upward and downward cap to limit the increases and decreases over 5 years from the new rating list
What is the professional code in regards to local taxation
RICS Professional Standard: Rating code of Practice 2024
What is a completion notice
The VO can serve a notice on the owner of a newly constructed property to prevent the party avoiding the payment of rates by not completing the construction of the building
What is an appeal process
Check, Challenge, Appeal
Heard by the Valuation tribunal
Are partially vacant buildings exempt from paying business rates
Temporary exemption from rating of partly occupied buildings, by apportionment, at the discretion off the local rating authority
What is the business rates supplement act 2009
Gives local authorities the power to implement business rates supplements
What is stated in Rating (Empty Properties) Act 2007 Rules
The empty property rate is 100% of rates payable
3 months relief for offices and shops
6 months relief for industrial
If an empty property is re-occupied for more than 6 weeks and then empty again, it qualifies for the relief
What property types are exempt from paying rates
- Vacant listed buildings
- Charities
- Properties where the owner is prohibited by law from occupying it - demolition order
- Properties held by companies in administration
- RV of the property is less than £2,900
- Community amateur sports club
What are anti-avoidance measures
Rules in place so if a property is damaged to avoid paying rates, then the VO will disregard the changed state of the property when assessing RV
But the property does have to be capable of beneficial occupation
What is business rates relief
In existence with different amounts of relief for different properties such as: retail, hospitality and leisure relief, small business rate relief
Key rating cases
Makro Properties Ltd v Nuneaton and Bedworth Borough Council 2012
Woolway v Mazars 2015
Tell me about the Woolway V Mazars case
VOA won an appeal in the supreme court of whether the 2nd and 6th floor within the same office block should be assessed as one or two hereditaments
As the two floors were not contiguous apart from through a communal stairwell, the floors were not merged into one hereditament
What is the rental method used for
Used for rental properties - office/retail/industrial
What is the contractors method used for
Specialist properties - Universities/hospitals
What is the receipts method used for
Trade-related properties - Hotels
How does the rental method work
Estimates the RV on the AVD - for a hypothetical tenancy
Adopts the hierarchy of evidence (Lotus v Delta) when analysing
How does the contractors method work
Calculates depreciated replacement cost of buildings on site
Memorandum of agreement sets estimated replacement cost
Makes adjustments for age and obsolescence
Makes further adjustments for land value and location factors
How does the receipts method work
Start with audited accounts - 3 years in relation to AVD
Gross revenue - deduct expenses (maintenance/food & beverage) - get to fair maintainable operating profit
This is a divisible balance - must be apportioned to rent to LL & profit
What is the local government finance act
Legislation setting out definition of rateable value and ability to charge rates for local authorities
S44a - temporary rates relief for partially vacant buildings
S46A - VO can serve completion notice on buildings
What is meant by transience
Only last for a short period of time i.e. portaloos at a festival
What is set out within the Rating (Empty properties Act 2007)
3 months empty rate relief for office/retail
6 months for industrial/light warehouse
6 weeks intermitted occupation - changing to 13 weeks
What other types of properties get rating relief
Vacant listed buildings
Charities
Amateur sports clubs
Companies in administration
RV’s less than 2.5k
What is the role of the VOA
Set the rateable values
What is the role of the billing authority
Responsible for billing & refunds
When do you liase with the VOA/BA
VOA - CCA process
BA = rates demand, refunds, liabilty
How do you calculate business rates liabilities
Rateable value x UBR = Rates liability
Are there any supplements added on business rates liabilities
Crossrail supplement (across all of London)
City of London supplement
What is the precedent from Lotus & Delta v Culverwell
Sets out the hierachy of evidence when analysing rents
What is the precedent from Newbign v Monk
Building undergoing substantial refurbishment - is incapable of beneficial occupation
Are you aware of any other rating case law
Woolway v Mazars - contiguous assessment
What is CCA
Process of appealing the rateable value of a property
What is required at check stage
To confirm the facts of the property
What is required at challenge stage
Details on measurement
Current/proposed ratable value
Details on what you think needs to be changed (MCC/Split)
Check reference
Material/effective date
Photographs/evidence
What is required at the appeal stage
Supply evidence for the Valuation Tribunal
£150 fee for small proposer - £300 fee for a large proposer
How would your fee structure change when at an appeal stage
Cannot be on a performance related fee - change to an hourly rate
What are the timescales for CCA
Check - VOA have 12months to respond - no response, assume check is completed
Challenge - you have 4 months to respond from check decision notice - VOA have 18 months to respond
Appeal - you have 4 months to respond - VOA discretion to organise
MCCs - 16 months total from check submission date
Are you aware of any changes within Business rates
Proposed change to intermittent occupation - 6 weeks to 13 weeks
Nondomestic act 2023
Duty to notify rather than a check
Must notfiy VOA of changes to floor areas - if underassessed
revaluation cycle for 5 years to 3 years
What would differ in terms of engagement in terms of BR
Disclaimer that the RV has potential to go up/down
Instruction on a list - list basis - new TOE for new list
What is a split
Splitting the assessment due to the lease surrender
When is a split appropriate
When an assessment is no longer contiguous
What do you need to inspect in terms of a split
Confirm the facts - ensure there are no discrepancies with the split
What is the material date
Date of check served - confirming facts
What is the effective date
Date that the CCA is effective from:
- MMC - commencement of works
- Split - date of surrender
What is a check decision notice
Document from VOA - giving reference to check submitted and decision attached
What is a deletion
Deleting a property from the rating list
What constitutes a scheme of works
A genuine scheme of works - which means the building is no longer capable of occupation
Do you have to notify the VOA of the schemes completion
No - it is not your duty to do this
What is meant by beneficial occupation
Rights to use the property for its beneficial use
How are refunds issued?
From the commencement date - via the billing authority
What is an MCC
Material change in circumstances
What is it meant by compiled list appeal
An appeal challenging the main rate of assessment
How is the RV of a retail assessment displayed
In terms of Zone A (ITZA) rate
when did the 2017 rating list end
31/3/2023
Lotus & Delta v Culverwell - Explain the hierachy of evidence
Start with rent at the subject property
Open market rents - in relation to AVD
Settlement evidence
Tone evidence
What is the AVD
Antecedent Valuation Date - fixed valuation date to base RV’s off for certain list
How do you measure a Zone A Rate
6.1m zones back from the primary retail frontage
what is a merger
When two or more properties are combined
What are the benefits of merging two or more properties
Increases the square footage - could be eligible for quantum allowance
What are the disadvantages of merging two or more properties
Could increase the RV to above small business rates threshold so will have to pay a higher UBR
