Local Taxation - Level 1 Flashcards
What is the legislation for Local Taxation?
The Local Government Finance Act 1988
What are 3 primary sources of rules for our work in NDR?
- Legislation – LGFA 1988 is the primary source of legislation and provides an outline for the rating system
- Statutory instruments – Supplement legislation and provide further operational details
- Case Law – a wealth of case law (upper tribunal court decisions) provide further guidance
What is Rateable value?
Rateable Value – Schedule 6, 2.1 LGFA 1988
- A Rateable value is defined as an estimate of the annual rent a property might reasonably be expected to let from year to year, assuming the tenant is responsible for all usual costs, such as repairs and insurance.
- Rateable value is the measure by which non-domestic proeprty is taxed under the rating system. 3 things to consider
o Tenancy beings the day by reference to which the determination is to be made. (Valuation date)
o Reaosnble state of repair – but excluding from this assumption any repair which a reasonable landlord would consider uneconomical
o Tenant pays all usual tenant rates and taxes bears all costs of repairs and insurance and other expenses.
What is the thought process that should be applied to every rating valuation?
- Is the property rateable
- Identify the hereditament
- What physucal factors do we take into account of
- Value the property at the valuation date, reflecting the physical circumstances as above
- Apply the correct effective date for the entry in the rating list
- Is there any follow up action required
What is a hereditament?
- Property which is or may become liable to a rate being a unit of such proeprty which is or would fall to be shown as a separate item in the valuation list.
- Single rateable occupier – there can only be one rateable occupier for an hereditment. If there are two rateable occupiers then there will be two hereditaments
To be rateable a property must be capable of?
producing a rent
What was determined by Woolway v Mazars
Determined 4 rules to identify a rateable hereditament
How do you identify a rateable hereditament
- Definable Position
- Single Occupation
- Single Use
- Sigle Geographical location
What did John Laing & Son v Kingwood Assessment Committee and others (1948) set out?
Rateable occupation
What does AVD stand for?
Antecedent Valuation Date
What is rateable occupation?
For a hereditament to be rateable, there must be rateable occupation of it. Case law indicates 4 essential ingredients that must be satisfied for there to be rateable occupation.
o Actual Occupation – There must be actual occupation or an intention to occupy
o Beneficial Occupation – The occupation must be beneficial to the occupier
o Exclusive Occupation – The occupation must be exclusive for the particular purpose of the occupier
o Transient (not too transient) – there must be a degree of permanence to the occupation
Wat is the Material Day?
The day on which certain matters have to be considered and taken into account for valuation purposes when contemplating an alteration to the rating list
What is the Effective date
Is the day when the rate liability starts, stops or changes, it is often confused with material day
LGFA 1988 – Schedule 6, Paragraph 7 – gives 6 factors to consider at the material day - what are they?
- Matters affecting physical state or enjoyment of the hereditament
- Mode or Category of occupation
- Quantity of minerals/substances extracted
- Quantity of refuse permanently deposited on hereditament
- Matters affecting physical locality in which the hereditament is situated
- Use or occupation of surrounding properties
What is the AVD?
The antecedent valuation date is the date set by parliament on which all valuations are based. For example for the 2023 rating list the AVD was 1st April 2021 and for the 2017 rating list the AVD was 1st April 2015
What Section in LGFA 1988 does it mentioned VO Duty to compile and maintain rating list
Section 41
what are reasons for alterations to the rating list
- Splits and Mergers
- Extensions
- Demolition
- Changes in locality e.g. Road Works
What Section in the LGFA relates to exemptions?
Schedule 5
What are exemptions for Non-Domestic Rating?
- Parks
- Places of worship
- Agricultural premises
- Property used for the disabled
- Fish harms and Plant Nurseries
- Lighthouses
- Sewers and Drains
What are Reliefs for Non-Domestic Rating?
- Small business rates relief – no business rates with RV of £12,000 or less, relief phased from £12,001 to £15,000. Small business rates multiplier for proeprties with RVs below £51,000 (49.9p and standard multiplier is 51.29)
- Charitable rate relief – 80% relief and can be topped up to 100% through discretionary relief
- Empty building relief – shops and offices buildings zero rated for 3 months of being empty, 6 months for industrial. Listed buildings are zero rated
- Severe Hardship
- Enterprise Zone Relief
- Stud farms
what is the difference between reliefs and exemptions
- Exemptions – determined by the VO and No Entry in the rating list
- Reliefs – determined by the billing authority and Entry in the list remains unaltered
What is the De Minimis Principle?
- Where there is a de-minimis (i.e. minor in relation to the whole) use for a non-exempt purpose, this may not prevent exemption
- For example, where an exempt property is used for a non-exempt purpose for a short amount of time or where a very small part of an exempt property is used for a non-exempt use, the whole property may still be exempt
What is partially exempt hereditaments?
Some parts of a hereditament could be exempt whilst the remainder is assessed for rates. For rating purposes, we would ignore the parts of the hereditament exempt from rating due to its use, but we will put a value on the parts not used for the same purpose. The entry in the rating list would be described as ‘part exempt’.
What is Rebus sic Stantibus
- The concept of Rebus Sic Stantibus can be translated as ‘Taking things as it stands’
- For rating purposes, we must value a property as it stands i.e. Rebus sic stantibus
o Any development potential is ignored in rating valuations
o Only the existing mode and category of use is considered
What is the Physical Limb and the Use Limb of Rebus?
When valuing for rating purposes, the development potential is ignored. Instead two different aspects or limbs of rebus (taking the property as it stands) must be considered:
- The physical limb
a. Matters affecting the physical state or physical enjoyment of the hereditament
b. Size, construction, location, etc of the actual property - The use limb
a. The mode or category of occupation of the hereditament
b. The type of use to which the actual property is put to by the occupier
What is the Check Stage?
- To ensure factual matters are validated and agreed as far as possible
- 12 month deadline
- If VO misses deadline, IP has right to challenge.
- Deadline for challenge is 4 months from deicison notice (16 months for MCC)
What is the Challenge Stage?
- Allows ratepayers to challenge valuation matters and conclude any outstanding factual matters. Must set out alternative valuation and supporting evidence/reasoning.
- 18 months deadline
- If VO misses deadline, IP has right to Appeal and VO will have probably be barred.
- Deadline for appeal is 4 months from decision notice
How many grounds are there for challenges?
12
What are the grounds for challenges?
- Compiled List Challenge - IPP disputes accuracy of RV in the Rating List
- RV inaccurate by way of VO alteration
- Effective date is incorrect
- Disputes RV because of a Material Change of Circumstances
- Assessment should be deleted
- Assessment should be deleted - Domestic/exempt
- Assessment should be deleted - other
- Assessment should be split
- Assessment should be merged
- New assessment should be added to the list
- Assessment incorrect following tribunal/court decision
- list entry includes incorrect statement/statement is omitted
What is the Appeal Stage?
- Allows ratepayers to appeal to VTE. Both sides present arguments to Tribunal. Tribunal provides binding results. Can be appealed to Upper Tribunal, followed by supreme court. VOA has 2 weeks to comply with order
- Invalid if – appeal does not include VO Decision, copy of proposal/evidence discussed at challenge, fee for VTE, if out of time for appeal
- Fee - £150 for small proposer, £300 otherwise.
- NO Fee if VO missed 18 month deadline. If list altered, fee is refunded
What is the decap rate?
- Rate applicable to hospitals, education and defence hereditaments – 2.6%
- Rate applicable to all other hereditaments – 4.4%
What is Transitional relief?
- Designed to limit large increases/decreases in non-domestic rates bills resulting from revaluation
- Transitional arrangement scheme England only
- Transitional certificate to inform the BA what the rateable value should have been at the specific date. BA needs to be able to calculate the correct rates bill
- The non-domestic rating (chargeable amounts) (England) Regulations 2009 s1 2009 no3343 as amended
- Transitional certificate is required whenever the RV is incorrect on either the first or last day of the rating list and the VOA is restricted from making a rating list alteration effective from that date. Restrictions will often apply where a rating list is closed. (ie, 2010 Rating list)
- Most common types of certificates are Regs 16, 17, 18
What is Regulation 17 Notice?
- This refers to a Regulation 17 Notice (Procedure Regs SI 2009/2269).
- Internally, we usually use the term “Reg 17” to refer to the table of supporting rental evidence supplied in your Initial Response.
- Regulation 17 also gives the IP the power to serve a counter notice (Reg 17 (4) to request to view additional RALDS. Reg 17 also gives the IP a right to view the RALDs that we have quoted in our IR (Reg 17 (6).
What are the steps of Lotus and Delta
- Actual Rent - Starting point
- How much weight to attached on subject rent
- Rental evidence of similar properties
- Assessment evidence
- Decide if rateable value we have placed is correct
- if there is no useful rental evidence on similar proeprties, it will be harder to reject evidence on the subject rent
What was Lotus and Delta case about?
- Retail shop and premises - the prime shopping street in the heart of the central shopping area of Leicester £13,750 gross value
- 21 year full repairing lease from August 1973
- Rent of £11,000 pa for shell with periodical rent reviews
- Ratepayer spending £22,000 on fitting out the premises
- £13,000 was accepted as relevant expenditure related to the rateable hereditament
What was the case law for Ranking Evidence?
lotus and Delta v Culverwell (VO) & Leicester City Council, 1976
What case law was for Post AVD Evidence?
Specialise v Felgate 1992
What was Specialise v Felgate?
Involved how much weight should be applied to post AVD evidence in a rapidly moving market. Determination was very little weight should be attached. Also weight for adjoining shops was reduced as they had been agreed between one landlord and one firm of surveyors – effectively one transaction.
What are the CCA Dates?
Check = 12 months for VOA to respond,4 months from deicsion appellant can submit challenge
Challenge = 18 months for VOA to respond, 4 months from decision appellant can submit an appeal
What are the hereditament tests?
- Geographic test - Do they touch? or touch via common area?
- Functional Test - 2 hereditaments may be seperate but shared by occupiers for the same use
Which act regulates CCA?
Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009
What are the 3 assumptions for RV?
- The tenancy begins on the day by reference to which the determination is to be made
- Immediately before the tenancy begins, the hereditament is in a reasonable state of repairs which a reasonable landlord would consider uneconomical
- The tenant undertakes to pay all usual tenants rates and taxes and to bear the costs of the repairs and insurance and other expenses necessary to maintain the hereditament in a state to command the rent mentioned above.
What are the basic steps for CCA?
Check = Factual Issues
Challenge = Valuation issues
Appeal = Do not agree with challenge outcome
What is Woolway v Mazars?
Woolway v Mazars 2012 - Relates to the 2nd & 6th floors of an office, occupied by the same tenant. Supreme court deemed as seperate due to not being contigious or essential to one another (functional)
What is the Jackson v Canary Wharf case?
David Jackson (VO) v Canary Wharf Ltd 2019 - Landlord would strip out office after vacation of a tenant, would be replaced when new tenant ready. Deemed incapable of beneficial occupation therefore not a hereditament, therefore, not to be in rating list. No Schedule of works needed
What are the Valuation Tribunal Fees?
£100 for small proposers
£300 for everyone else
What is the Newbigin V Monk Case?
Office had cooling system, ceiling, raised flooring and toilets removed to construct new assessments, had a schedule of works, deemed not capable to beneficial occupation - Nominal rateable value
What is small business relief?
- RV Less than £12,000 pay no rates
- RV between £12k and £15k pay tapered relief
- RV between £15-£51 pay small business uniform business rate (UBR)
What is the small business UBR?
49.9p
What dies UBR stand for?
Uniform Business Rate
What is the standard business UBR?
51.2p
How long do you recieve empty rates relief?
3 months (6 months for industrial_ - reset by 6 weeks of occupation
What is PICO?
Property is common Occupation Act 2018 - Reversed Mazars, assessments contigious either vertically or horizontally can be considered as one assessment. Space owned by landlord are to be considered contigious
what are the 6 rules of Unit of Assessment?
- Be within one or more billing authorities
- have a single rateable occupier
- Capable of seperate occupation
- Single geographical unit
- Be put to a single purpose
- Have a single definable position
What is charitable relief?
If proeprty is used for charity purposes, they get 80% rates reduction. (BA can give 100%)
What are the MCC Matters?
Local Government Finance Act 1988 (Schedule 6, para 7)
a) Matters affecting the physucal state or enjoyment
b) Mode or category
c) waste disposal
d) matters affecting locality, but not physical
e) matters affecting use or occupation of other premises in locality
What is Fir Mill Ltd v Royton Case?
a case concerning the rebus assumptions. Held by the LT that a cotton mill must be valued as a factory and not a cotton mill as contended by the ratepayer – mode or category of occupation must be conceived as the same mode or category as the actual occupier. Provided it is not so substantial as to change the mode or category of use, the possibility of making a minor alteration of a non-structural nature, which a hypothetical tenant may have in mind when making his rental bid, is a factor which may be properly taken into account.
Where do you find the definition of Rateable Value?
LGFA 1988, Sch 6, Para 2
What is the units of assessment case law?
Gilbert (VO) v Hickenbottom & Sons 1956
What case law relates to Rebus Sic Stantibus?
- Fir Mill Ltd & Royton & Jones 1960
- Scottish & Newcastle Ltd v Williams 2000
What case law relates to rateable occupation?
Laing (J) & Son v Kingswood 1949
What case founded the AVD?
K Shoe Shops Ltd v Hardy (1983)
Oxford shops with differing rateable value due to valuation date.
What legislation relates to Material Day?
The Non-Domestic Rating (Material Day for List Alterations) Regulations 1992
What RICS guidance relates to Local Taxation?
RICS Rating Consultancy, Code of Practice, 4th Edition, march 2017
Users should act professional, not giving misleading statements regarding individuals business rates, set out mandatory terms of enagement for an instruction
What other legislations relate to Local Taxation?
- Non-Domestic Rating (Alterations of lists and Appeals) (England) (Amendments) Regulations 2017
- The Valuation Tribunal for England (Council Tax and Rating Appeals) (procedures) (Amendments) Regulation 2017
What case law relates to Material Day?
Barlow & Sons Ltd v Wellingborough Council & James 1980
New shopping mall affected values, had they been there at the AVD
RE The Appeal of Kendrick 2009
9/11 - London Airport lounge, nothing physically manifested in the locality to affect the property values.
What case relates to the tone of the list?
Obrien v Harwood 2003
What is an expert witness?
Duty is to the court, when giving factual evidence, when answering questions.
What RICS Guidance relates to expert witness?
RICS Surveyors Acting as Expert Witness, 4th Edition, August 2020
What RICS Guidance relates to advocates?
RICS Surveyors Acting as Advocates, 2nd edition, February 2017
What is an advocate?
Duty to client, when giving an opinion, when asking questions
What is the central list?
Rating list for national utilities, gas pipelines, pylons etc
What are the restrictions for making a challenge?
- One compiled List challenge (Tone)
- One Challenger Per MCC)
- One Challenge to VON
