Local Tax Flashcards
(21 cards)
What is the legislative framework of business rates?
Business rates is governed by the Local Government Finance Act 1988.
How is business rates defined?
The local government finance act defines business rates as the estimated rental value of a property at the AVD assuming a hypothetical tenancy which has many assumptions. Assumptions including the property having to be vacant to let, in a good state of repair, FRI, in its current use, and no alterations made.
What does the Professional Standard RICS Rating Consultancy Code of Practice 5th Edition 2024 state?
It guides agents on how they should conduct themselves when seeking instructions. One of the things it highlights is that agents are not allowed to critiscise another firm and individuals to make themselves appear better.
What are the four principles of rateable occupation?
The four principles of occupation was set out in the case of John Lang and Son v Kingswood Assessment 1949. It states that these are:
Beneficial Occupation
Exclusive Occupation
Actual Occupation
Not too transient - there must be a degree of permanence.
What is the process of the Check stage?
When submitting a check you are stating the facts present at the property. The VOA have 12 months to respond to your check. After that they issue a decision notice. Depending on the check you have 4 months for a normal check and 16 months for an external MCC to reply with a challenge.
What is the process of Challenge?
At challenge you are proposing that the RV is incorrect and should be revised. This includes proposing a new RV. The grounds for challenge. If it available stating what the current rent is. You’d also include any supporting evidence.
What is the appeal stage?
Once the challenge has come back and the VOA have rejected it. The ratepayer has the right to appeal this by going to the valuation tribunal. This involves presenting your case to a judge.
What are the differences between England and Wales in Business Rates?
I’m aware that there are two multipliers in England 55.5 pence for standard and 49.9 pence for small businesses. In Wales there is only one multiplier at 56.8 pence.
England small rates relief is available for properties up until £12,000 and then tapered off to £15,000. Wales small rates relief is available for properties up until £6,000 and then tapered off up to £12,000.
Both countries have had the same revaluation year but that’s not always the case. During this revaluation England saw an increase in 7.3% and Wales saw an increase of 1.3%. Showing the different market conditions.
What is Empty Rates Relief?
Empty rates relief - gives businesses 100% relief for up to 3 months for retail and offices. 6 months for industrial. Properties need to be let for 13 weeks before they can use this relief.
What is Transitional Relief?
It softens the blow of an RV being increased or decreased from last rating list. Downards transition has been discountinued in this list.
What is Improvement Relief?
Improvement Relief is giving a 12 month rates holiday for any qualifying improvements made at the property, such as increasing the size of the property, adding new features such as CCTV. It was introduced April 2024 and ends in 2028. The ratepayer has to be in the property to qualify.
What is a MCC?
Material Change of Circumstance - A significant change in the property or its locality that is affecting the rateable value and busienss rates liability. This can be road closures, demolitions nearby, etc. These all impact the property’s business.
What is the case law that supports MCC’s?
What is a hereditament?
The general rate act 1967 defines it as a property, or assessment on the rating list that is liable to pay business rates.
What constitutes a hereditament?
There are 6 rules to satisfy a hereditament:
- Single rateable occupier
- In a billing authority
- Single geographical unit
- Single use
- Single defineable position
What is an effective date?
The day the change in rateable value takes effect.
What is material date?
When the physical state of the property and its surroundings are assessed for valuation.
Can the effective date and material date be the same?
Yes they can be the same.
What is the Non Domestic Rating Act 2023?
Received royal assent in October 2023.
It introduced Improvement Relief - 12 month rate holiday for any qualifying improvements.
Introduced exemption of P&M used for generation of renewables for occupiers.
Has Duty to Notify - Any changes made to the property that can affect the assessment must be reported within 60 days - not adopted yet.
Completion notice - Came into effect December 2023, prevents developers from avoiding paying business rates by not completing construction. There is a right to appeal though within 28 days.
What recent case law are you aware of?
The Mayor and Commonality and Citizens of the City of London v 48th Street Holding Limited and Principled Offsite Logistics Limited.
Court confirmed that the common way businesses avoid paying rates is by resetting the empty rates relief clock. The City of London was arguing that this was a form of tax evasion. They also argued that the brief occupation wasn’t considered to be beneficial as it only benefitted avoiding paying rates.
The judge disagreed and said it wasn’t illegal. The judge also stated that making a fee from this was a benefit for the occupier.
For now it is okay to keep doing this loophole. The City of London also has the righ to appeal this decision.
What was set out in the case of Newbigin v Monk?
The VOA won an appeal for a building who’s RV was reduced to zero during construction.
It was later overturned by the supreme court through the case of Canary Wharf v Jackson. It held that if a property is not capable of beneficial occupation it does not count as a hereditament and should be deleted from the list.
