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Local Taxation Flashcards

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1
Q

State some relevant law for Local Taxation

A

General Rate Act 1967
Local Government Finance Act 1988
Rating Valuation Act 1999

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2
Q

What is a UBR

A

It is a multiplier used to calculate business rates
Different multipliers apply to different geographical locations

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3
Q

What is the current uniform business rates for 2024/25

A

£0.499 for RVs of less than £51,000 (small business multiplier)
£0.546 for RV’s of £51,000 or more

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4
Q

When was the new rating list published

A

1st April 2023

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5
Q

When is the antecedent valuation date for the new list

A

1st April 2021

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6
Q

What are the four essential factors for rateable occupation

A
  1. Beneficial occupation
  2. Exclusive occupation
  3. Actual occupation
  4. Transience or permanence
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7
Q

What are the 6 rules to satisfy the definition of a hereditament

A
  1. Single rateable occupier
  2. In a billing authority
  3. Be capable of separate occupation
  4. Single geographical unit
  5. Single use
  6. Single definable position
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8
Q

What is the rateable value

A
  • 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
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9
Q

What are the 7 assumptions of hypothetical tenancy

A
  1. Vacant
  2. Available to let on an annual tenancy
  3. FRI terms
  4. In good repair
  5. Tenant pays rates
  6. Current use
  7. No alterations may be made
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10
Q

What is the rating list

A

A rating list identifies each relevant non-domestic property in the area, and assign a rateable value, based on a rental valuation of the property.

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11
Q

What is transitional relief

A

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

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12
Q

What is the professional code in regards to local taxation

A

RICS Professional Standard: Rating code of Practice 2024

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13
Q

What is a completion notice

A

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

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14
Q

What is an appeal process

A

Check, Challenge, Appeal
Heard by the Valuation tribunal

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15
Q

Are partially vacant buildings exempt from paying business rates

A

Temporary exemption from rating of partly occupied buildings, by apportionment, at the discretion off the local rating authority

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16
Q

What is the business rates supplement act 2009

A

Gives local authorities the power to implement business rates supplements

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17
Q

What is stated in Rating (Empty Properties) Act 2007 Rules

A

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 13 weeks and then empty again, it qualifies for the relief

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18
Q

What property types are exempt from paying rates

A
  • 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
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19
Q

What are anti-avoidance measures

A

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

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20
Q

What is business rates relief

A

In existence with different amounts of relief for different properties such as: retail, hospitality and leisure relief, small business rate relief

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21
Q

Key rating cases

A

Makro Properties Ltd v Nuneaton and Bedworth Borough Council 2012
Woolway v Mazars 2015

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22
Q

Tell me about the Woolway V Mazars case

A

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

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23
Q

What is the rental method used for

A

Used for rental properties - office/retail/industrial

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24
Q

What is the contractors method used for

A

Specialist properties - Universities/hospitals

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25
What is the receipts method used for
Trade-related properties - Hotels
26
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
27
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
28
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
29
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
30
What is meant by transience
Only last for a short period of time i.e. portaloos at a festival
31
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
32
What other types of properties get rating relief
Vacant listed buildings Charities Amateur sports clubs Companies in administration RV's less than 2.5k
33
What is the role of the VOA
Set the rateable values
34
What is the role of the billing authority
Responsible for billing & refunds
35
When do you liase with the VOA/BA
VOA - CCA process BA = rates demand, refunds, liabilty
36
How do you calculate business rates liabilities
Rateable value x UBR = Rates liability
37
Are there any supplements added on business rates liabilities
Crossrail supplement (across all of London) City of London supplement
38
What is the precedent from Lotus & Delta v Culverwell
Sets out the hierachy of evidence when analysing rents
39
What is the precedent from Newbign v Monk
Building undergoing substantial refurbishment - is incapable of beneficial occupation
40
Are you aware of any other rating case law
Woolway v Mazars - contiguous assessment
41
What is CCA
Process of appealing the rateable value of a property
42
What is required at check stage
To confirm the facts of the property
43
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
44
What is required at the appeal stage
Supply evidence for the Valuation Tribunal £150 fee for small proposer - £300 fee for a large proposer
45
How would your fee structure change when at an appeal stage
Cannot be on a performance related fee - change to an hourly rate
46
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
47
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
48
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
49
What is a split
Splitting the assessment due to the lease surrender
50
When is a split appropriate
When an assessment is no longer contiguous
51
What do you need to inspect in terms of a split
Confirm the facts - ensure there are no discrepancies with the split
52
What is the material date
Date of check served - confirming facts
53
What is the effective date
Date that the CCA is effective from: - MCC - commencement of works - Split - date of surrender
54
What is a check decision notice
Document from VOA - giving reference to check submitted and decision attached
55
What is a deletion
Deleting a property from the rating list
56
What constitutes a scheme of works
A genuine scheme of works - which means the building is no longer capable of occupation
57
Do you have to notify the VOA of the schemes completion
No - it is not your duty to do this
58
What is meant by beneficial occupation
Rights to use the property for its beneficial use
59
How are refunds issued?
From the commencement date - via the billing authority
60
What is an MCC
Material change in circumstances
61
What is it meant by compiled list appeal
An appeal challenging the main rate of assessment
62
How is the RV of a retail assessment displayed
In terms of Zone A (ITZA) rate
63
when did the 2017 rating list end
31/3/2023
64
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
65
What is the AVD
Antecedent Valuation Date - fixed valuation date to base RV's off for certain list
66
How do you measure a Zone A Rate
6.1m zones back from the primary retail frontage
67
what is a merger
When two or more properties are combined
68
What are the benefits of merging two or more properties
Increases the square footage - could be eligible for quantum allowance
69
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
70
What do you understand by a rateable occupier?
The person that pays the rates. 4 tests to see if someone is in rateable occupation which is set out in Lang & son vs Kingswood
71
Is there anything that defines what a hereditament is?
Six rules of what a hereditament is
72
What is a hereditament
Another word for the physical space that is occupied
73
Would you look at any other evidence outside of the rating list?
Look at lease renewals and rent reviews in the area
74
Who sets out the memorandum of agreement
The government
75
If the works have finished and then your client tells you about the works, can you still get a reduction?
You can backdate to the date the works began to the date the works finished
76
How is rates liability calculated?
RV x UBR + supplements and then discounts and assumptions
77
How can you tell is a building is listed?
Check the government website
78
Do you have to continue paying your business rates when going to appeal?
Yes but if the RV is reduced you will get the overpayment as a refund.
79
What is a memorandum of agreement?
80
If there was a new building on site, do you have to tell the VOA? What course of actions would you take?
Yes you would when submitting a check Duty to notify
81
How would you do a contractors valuation?
Estimate site replacement cost Asdjust for age and obsolescne and flat roof discount to get adjusted replacement costs Estimate site value Application of the statutory decapitalisation rate 2.6%
82
What is quantum
A hypothetical tenant would get a discount on their rent when taking more space.
83
Talk me through how merging the floors would get a lower RV?
Merged floors – large size – can then get a quantum allowance
84
What was the quantum discount?
5%
85
Why did you follow up with the Billing authority to confirm the accuracy of the bills?
To confirm that the clients refund had been granted .

Optional competencies (5 decks)

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