Recovery of business rates – Demand notice – Claimant council failing to serve notices on defendants for payment of rates as soon as practicable after 1 April in relevant years – Whether late service rendering notices invalid so that no business rates payable for relevant years — Claims dismissed
The claimant council brought proceedings for unpaid national non-domestic rates (business rates) against the three defendant companies, which all used the Royal Portbury Docks for the import and export of vehicles. The claim was for the period 19 November 2002 to 22 February 2005, pursuant to notices issued on 6 November 2007.
The defendants contended that the demand notices on which the claimants were suing had not been served in accordance with the provisions of regulation 5 of the Non-Domestic Rating (Collection and Enforcement)(Local Lists) Regulations 1989, which required that a notice should be served on or as soon as practicable after 1 April in the relevant year. The relevant year was the chargeable financial year to which the notice related.
The defendants submitted that a failure to serve the notice as required rendered it invalid, so that business rates were not payable for that year. The defendants contended that they had suffered substantial prejudice as a result of the delay and that it would be unconscionable or conspicuously unfair to enable the claimants to enforce liability for the disputed rates.
The claimants denied that the defendants’ contentions and disputed their argument that the notices had not been served as soon as practicable. The problem has arisen because the claimants’ system of inspections had broken down so that they had been unaware that the sites in question were in rateable occupation or had failed to obtain the identity of the occupiers were. The claimants argued that the correct approach was to treat a failure to serve a notice as soon as practicable as having no legal effect on the ability of authorities to enforce the recovery of outstanding business rates unless the ratepayer could demonstrate that it would be unconscionable for the authorities to do so or could show some other public law basis on which to deny recovery.
Held: The claims were dismissed.
A failure to serve a regulation 5 notice as soon as practicable did not result in automatic invalidity. The court would have regard to the length of the delay and its effect on the ratepayer in the context of the public interest in collecting outstanding rates. The greater the prejudice to the ratepayer, the more likely would be the conclusion that parliament had intended invalidity to follow. Prejudice was different from inconvenience; the prejudice relied on had to be substantial and not technical or contrived. The countervailing public interest concerned the collection of taxes, the interests of other taxpayers and the revenues of the local authority. The consequence of a failure to comply with a statutory requirement should considered by reference to imputed statutory intention. It was important to place the time limit in the context of the statutory scheme and, in particular, consider why the time limit had been imposed and whether the contention was for total invalidity for failure to comply or invalidity in the circumstances and facts of the given case: Wang v Inland Revenue Commissioner [1994] 1 WLR 1286, Charles v Judicial and Legal Service Commission [2004] UKPC 34, R v Soneji [2005] UKHL 49; [2006] 1 AC 340 considered.
If non-compliance with regulation 5 gave rise to automatic invalidity it would increase the burden on other ratepayers and taxpayers even when the individual ratepayer was not prejudiced. It would also deprive the local authority of revenue because of the nature of centralised pooling of business rates. Many ratepayers, far from being prejudiced by a late notice, might benefit. Most businesses would make some provision for business rates. The instant case was unusual in that each of the defendants was unaware of a potential liability. A late demand could improve cash flow, either by enabling interest to be earned on money put aside for business rates or by delaying the payment of interest on borrowed money. A billing authority could not apply interest to rates that were belatedly demanded. Importantly, invalidity that was consequent on a breach of a requirement to serve a notice “as soon as practicable” would introduce uncertainty because of the imprecision of that term. In some cases, the delay in the service of the notice would be so lengthy as to be clear that the notice had not been served as soon as practicable: London & Clydeside Estates Ltd v Aberdeen District Council [1980] 1 WLR 182, Wandsworth London Borough Council v Winder (No 1) [1985] AC 461 and Boddington v British Transport Police [1999] 2 AC 143 considered: Encon Insulation (Nottingham) Ltd v Nottingham City Council [1999] RA 382 and Regentford Ltd v Thanet District Council [2004] EWHC 246 (Admin); [2004] RA 113 applied.
Strict invalidity would encourage disputes, given the potential benefit to ratepayers of showing that a notice was served even a few days beyond a practicable date. Parliament could not have intended that ratepayers might be relieved of an obligation to pay tax as a result of what might be no more than a minor administrative error. More generally, although the requirement to serve a notice as soon as practicable was imposed in part to provide certainty and protection for the ratepayer, it also operated in the public interest to ensure that rates were collected and paid promptly: JJB Sports plc v Telford and Wrekin Borough Council [2008] EWHC 2870 (Admin); [2009] RA 33; [2008] PLSCS 311, R (on the application of Waltham Forest London Borough Council) v Waltham Forest Magistrates’ Court [2008] EWHC 3579 (Admin); [2009] RA 181.
In the instant case, the court was satisfied that, by reason of the late service of notices, viewed in the light of the intention to be imputed to parliament in requiring such notices to be served as soon as practicable on or after 1 April each year, the claims against each of the three defendants failed.
Richard Drabble QC, Christopher Lewsley and Sasha Blackmore (instructed by Pinsent Masons LLP, of Birmingham) appeared for the claimants; Hugh Mercer QC and Jessica Wells (instructed by DLA Piper LLP) appeared for the first defendant; Robert Fookes (instructed by Duane Morris) appeared for the second defendant; Daniel Kolinsky (instructed by Carla Hull Solicitors) appeared for the third defendant.
Eileen O’Grady, barrister
