Local Taxation Flashcards
What legislation governs rating?
Local Government Finance Act 1988
General rates act 1967
NDR alterations 2009
Rating reforms act 2023
Commissioners for Revenue and Customs Act 2005
Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) Regulations 2009
What is business rates?
Tax on occupation not ownership. Tax on land and buildings unless exempt or domestic.
What is a rating list?
A list of properties that is compiled by a VO. (It is used by a billing authority to calculate the amount of non-domestic rates that are payable).
Definition of RV?
The Rateable Value of a non-domestic hereditament “shall be taken to be an amount equal to the rent at which it is estimated the hereditament might reasonably be expected to let from year to year” on three stated assumptions.
The estimated annual rental income expected to be achieved for a hereditament vacant and available to let on the open market, based on three statutory assumptions.
Where might I find the definition of RV
LGFA 1988 Schedule 6
When valuing for local tax what assumptions are made?
1) tenancy begins on day determination is made (AVD)
2) reasonable state of repair apart from those deemed uneconomical
3) lease agreed on FRI basis
What is AVD?
The date at which the determination is to be made. Achieves uniformity.
What do we consider at AVD?
Date - Non physical factors are taken into account (2 years prior to compiled list)
Rental values
Economy
Law etc
What is the current AVD?
01 Apr 2021
The Rating Lists (Valuation Date) (England) Order 2020
What is material date?
Day which has regard to any physical matters such as
Size, construction, use ..basically anything on MCC
Non-Domestic Rating (Material Day for List Alternations) Regulations 1992
Who sets the Material Day?
Non-domestic rating (Material day for list alterations) regulations 1992 SI No. 556
What is the effective date?
date when rating list starts, stops or amended
Non-Domestic Rating (Alternation of List and Appeals)(England) 2009
What is a hereditament?
section 115 (1) of the General Rate Act 1967 (the 1967 Act)
A unit of assessment or extent of a property that has a single entry in the Rating List.
(A single unit of assessment)
What is the appeals process for business rates?
Check - confirm FACTUAL survey details (12mth deadline, 4mth from DN to lodge CHG) [If the case is a MCC (material change of circumstances), the IP has 16 months from the submission of the check once we have settled the check]
Challenge - dispute VALUATION matters (18mth deadline, 4 mth from DN to lodge appeal
Appeal - disagree with CHG can go to appeal. Fees; small proposer £150 otherwise £300
If not resolved at appeal can go to
Upper lands tribunal
Court of appeal
Supreme Court
Why was CCA introduced?
Reformed appeal system to make it more efficient and reduce the number of speculative appeals.
Ensures factual details are dealt with early on the process by requesting details upfront
What is the CCA process?
Legal provision, which allows IP or agents to contend the accuracy of the rating list, factual information, or levels of value for their rating assessment
Is there any caselaw regarding a hereditament?
Gilbert (VO) v Hickinbottom
What are the six rules to satisfy a hereditament?
- Single rateable occupier
- In a billing authority
- (Capable of) Separate occupation
- Single use
- Single geographical unit
- Single definable position
Tell me about Woolway v Mazars 2015
Decision of Supreme court - Two floors in an office building separated by common areas should be assessed as two separate hereditaments. It established legal rules set out three principles for establishing the hereditament, including geographical, functional and the effectual enjoyment of the other
What is PICO 2018 [the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018 ]
Property that is in the same occupation and contiguous but not interconnecting and used for the same purpose can now be regarded as one hereditament.
where two or more hereditaments occupied or owned by the same person meet certain conditions as to contiguity, for those properties to be treated as a single hereditament.
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Property in common occupation 2018 3 rules for contiguity
1. Single use
2. Single ratable occupier
3. Contiguous as in floor plates touch
No requirement to intercommunicate
Took effect from April 2010 in England and in Wales from April 2024
What is the main difference between pico and mazars
mazars requires intercommunication between floors vs PICO does not
How does contiguity work for empty property?
Prev occ contiguous property will continue to be one assessment if becomes empty on same day. If parts vacated on separate days then individual assessments will apply
What are the 4 tenants of rateability?
JOHN LAING AND SON V KINGSWOOD 1949
ABET principles
ACTUAL- occupier must physically occupy the hereditament or physically control the site. Caselaw; Tomlin v WCC 1990 squatters liable
BENEFICIAL - Has the ability to offer level of benefit to hypothetical tenant. Eg. School makes no profit still rateable due to hypothetical benefit to tenant. Caselaw; Lambeth overseers v LCC 1897 Park held into perpetuity to public could never have benefits to hypothetical tenant
EXCLUSIVE- leading case Westminster CC v Southern railway 1936 question not who was in paramount ctrl of station but who was in paramount ctrl of part Let out. Also yoy can have x2 exclusive uses on land which are separately rateable
TRANSIENCE- must be degree of permanence. Used to be 12 months. Since Hampton v Lewis now based on intensity of use
What are Chattels?
Movable objects, if enjoyed together with land and have a sufficient degree of permanence can become rateable for e.g caravan, portacabin, floating restaurants
nightclub
What is MCC?
The Schedule 6 LGFA 1988 gives 6 factors to consider at material day:
- matters affecting physical state or enjoyment of the hereditament (building works)
- mode or category of occupation
- quantity of minerals / substances extracted
- quantity of refuse permanently deposited on hereditament
- Physical state of locality/ matters affecting physical locality in which hereditament is situated
- Use or occupation of surrounding properties (Tesco move in next door)
Note: NDR 2023 mandates if changes due to legislation/rules etc cannot appeal
What does it mean vacant to let?
assumed to be vacant and available to let on the statutory terms of the hypothetical tenancy.
What are the grounds for proposals?
1.MCC
2. eff date wrong
3. Recon
4. Removed or added to list
5. Change made by vo which is wrong
6. Compiled list error
7. Domestic or exempt
8. VT decision
9. P&M change
What property might be Exempt from rating?
LHFA 1988 SCH. 5
Agricultural land and buildings
Fish farms
Places of worship 1. Open invitation 2. Church of England certified. Caselaw church of Scientology 2023
Parks - Lambeth overseers v LCC 1897 free open access managed by LA. Ancillary to park if enhances enjoyment
Disabled - must be for training or keeping disability occupants occupied not for hospitals
Light houses
Visiting forces
What property might receive rating relief?
- EMPTY BUILDING ‘ 100% relief on vacant properties for 3 months and 6 months relief for industrial. (From Apr 24 must be re’occupied for 13 weeks
- LISTED BUILDINGS- 100% relief until re-occupied
- SMALL BUSINESS SUPPORT RELIEF - 100% relief for RV of 12k or less. Relief phased from £12,001 to 15k. Must occ one property in UK
- CHARITABLE - 80% if used for charitable purposes
- TRANSITIONAL RELIEF- protect IP from large increase or decrease in their rating liability between valuations. From 2023 only for increase
- ENTERPRISE ZONE RELIEF - If starting up or moving to Enterprise zone can get up to 55k over 5 years
- IMPROVEMENT RELIEF - if area has been increase, efficiency or p&m improved and certified that occ has been in occ for duration of works by ba then eligible
SMALL BUSINESS SUPPORT RELIEF - No increase of more than £600
Sec 44a building ot occupied following redevelopment Council can award discretionary relief for short terms
What is Rebus Sic Stantibus?
Value as it stands
value things as they stand at the material date based in two separate limbs: physical and use limb
PHYSICAL LIMB
Using reasonable personal test we only have regard for minor changes/alterations. We do not have regard for hope value. I.e stud wall in zoned shop, zone straight through as a reasonable person would remove at little cost. This would not be the case with structural wall.
USE LIMB
Using principle characteristics use test, must value property for same general purpose as existing use of the hereditement in the open market. Value attributable to the prospect of using for different purpose must be disregarded I.e if u have parade of shops at 10k and subject could be used as restaurant and value at 15k we value based on existing use
X2 caselaw
FIR MILL V ROYSTON 1960
held cotton mill valued as factory rather than a cotton mill. A factory is a factory and a shop is a shop, not a particular shop
SCOTTISH &NEWCASTLE V WILLIAMS 2000
Confirmed we assess mode and category based on 2 limbs of Rebus separately. Case was public house in parade of shops. Decision to value on existing use as public house
What is FRI and IRI?
- FRI - Full repair and insurance - No adjustment needed
- IRI - Internal repair and insurance only - Deduct 5% from headline rent
- IR - Internal repair only - Deduct 5% and 3.5% from headline rent
What is the central rating list?
Contains assessments of major transport, utility, and communications such as gas, water, railways etc
How is property in Central list valued and paid?
Singal totalled RV for all property occupier by rate payers. Paid direct to Ministry of Housing, Communities and Local Government
Where is the central list located?
Gov UK website
Do you know any caselaw in respect of weighting/hierarchy of evidence?
Lotus and Delta - 6 propositions
1. Subject rent should be starting point
2. Closer comparables are to time, subject and conditions, the more weight attached (Assess the validity of the rent against the hypothesis of rateable value)
3. Other rents should be used where available (Comparable rents)
4. Other assessments of comparable properties (Use comparable assessments and agreed assessment)
5. Value formed on actual rent and degree of comparability of evidence (Opinion can be formed from the above and attach different weight)
6. Where no comparable evidence, subject given most weight (refer back to subject rent)
What is tone?
The general range of comparable evidence setting the tone.
An established rate per m2 based on comparable evidence and other completed cases in a particular area/parade.
Tested through VT outcomes and settlement evidence.
What can you tell me about establishment of tone?
O’brien v Harwood (VO) 2003
Explanation of tone of list, 3 stages leading to establishment of a tone of list
o When value is introduced in a list it holds little weighting as its not tested
o Over time challenges and agreements form a pattern of value
o Rent agreements help establish tone later in the list as they have be tested over time
Futures London Ltd v Stratford (VO) [2005] -
End of the list at which points it’s considered the tone has been thoroughly examined by settlements/VT by rating surveyors.
