by Roger Cohen
The Local Government Finance Act 1988, which is now celebrating its first birthday, gives us the national non-domestic rate regime — but not on a plate. The Act confers on the Secretary of State for the Environment significant enabling powers to make regulations covering many aspects of the regime; without them, the legislative framework is incomplete. Some of those regulations are already in force. Further regulations are due to be published in the autumn. The Act itself will be amended when the Local Government and Housing Bill is passed, also in the autumn. This article reviews what has been done and what is in the pipeline.
In a nut shell
After March 31 1990, the General Rate Act 1967 ceases to have effect and is repealed. From April 1 1990 the national non-domestic rate (NNDR) will be payable by every occupier of a unit of property (a “hereditament”) shown in a non-domestic rating list. Each list is to be compiled by an Inland Revenue valuation officer and the rate is to be collected (but not set) by district and London borough councils. The rate will be set by central government. From beyond the grave, the 1967 Act will govern what property constitutes a hereditament and whether that property is “occupied” for NNDR purposes, although the rules may be adjusted by yet more regulations.
Dates for your diary
(1) The rateable value of a non-domestic hereditament equals the estimated rent at which it might reasonably be let from year to year, the tenant paying usual tenant’s rates and taxes, the cost of repairs and insurances and other expenses to maintain the unit to command that rent (see paragraph 2(1), Sixth Schedule, 1988 Act). For NNDR payable from April 1 1990, the day by reference to which a determination of that value is to be made is April 1 1988 (see The Rating Lists (Valuation Date) Order 1988 (SI 1988 No 2146)). Where any proposal is made to change a rateable value (for example, where the physical environment of the property has changed), the rateable value assessed as a result will take into account the environment and other relevant factors at the date of the proposal to change the rateable value but valued at April 1 1988, in respect of the non-domestic rating lists that will take effect on April 1 1990. In other words, properties will be valued according to “the tone of the list” (see DOE Consultation Paper dated March 28 1989).
(2) On February 15, 1989, the Secretary of State made a Commons statement announcing the Government’s intention to legislate for complex transitional provisions. These provisions will spread over five years the changes that will be experienced by ratepayers between their liabilities under the 1967 Act and the 1988 Act. Changes in current rateable values arising from proposals to amend the existing valuation lists made after February 15 1989 will not count for the purposes of the transitional provisions — a move designed to discourage “tactical” proposals. The provisions themselves appear in the Local Government and Housing Bill 1989.
(3) The DOE have published a number of consultation papers before introducing regulations. A further batch of consultation papers will be released during the summer.
(4) This autumn further regulations will follow. Watch out for the detailed rules on:
(a) the grounds for proposing changes to rateable values in the new non-domestic rating lists and the procedure to be followed before the newly constituted Valuation and Community Charge Tribunals;
(b) Also, as indicated above, the Royal Assent is scheduled for the Local Government and Housing Bill which will deal with various NNDR points including
- transitional provisions
- the valuation treatment of properties containing a mixture of domestic and non-domestic uses (“composite hereditaments”).
(5) Not later than December 31 1989 the proposed list for April 1 1990 for each area is to be copied by each valuation officer to the council concerned (see s41(5), 1988 Act).
(6) On April 1 1990 the new age begins.
(7) September 30 1990 is the projected deadline for proposals to amend rateable values shown in the new lists, as of right. After that date, a material change in circumstances arising after April 1 1990 will have to be shown. Rating advisers should enter September 30 1990 in their diaries — now!
Regulation round-up
To date, the regulations which have been made (but not referred to above) are:
- The Valuation and Community Charge Tribunals Regulations 1989 (SI 1989 No 439). These tribunals will deal with proposals to amend values shown in the new rating lists. They replace the local valuation courts. How? See The Valuation and Community Charge Tribunals (Transfer of Jurisdiction) Regulations 1989 (SI 1989 No 440).
- Special rules govern the valuation of plant and machinery; see The Valuation for Rating (Plant and Machinery) Regulations 1989 (SI 1989 No 441).
- The procedure for the collection of NNDR and the extraction of it from the reluctant payer is found in The Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 (SI 1989 No 1058).
- Charities and other non-profit-making organisations will hear of the grant or withdrawal of discretionary relief from NNDR under procedures in The Non-Domestic Rating (Discretionary Relief) Regulations 1989 (SI 1989 No 1059).
- The Non-Domestic Rating (Miscellaneous Provisions) Regulations 1989 (SI 1989 No 1060) contain a rag bag of measures; the information to appear in local rating lists, the valuation treatment of mines and quarries and the listing of property situated in the areas of more than one council.
1058 and all that
The regulations for collection and enforcement may be as far as some ratepayers will wish to be advised. Part II of the regulations deals with billing. Every ratepayer liable to pay NNDR whether in respect of occupied or unoccupied property (including charities paying a reduced rate) must be served with a demand notice in every chargeable financial year. Where the charging authority gives 100% relief to charitable, recreational and certain other non-profit-making occupiers under s 47 of the 1988 Act, no demand notice is required.
A single notice may relate to the NNDR payable by any one ratepayer payable in respect of more than one hereditament. The form of demand notice is not prescribed, but it must demand payment of the sum due or estimated to be due (regulation 6). Where the demand notice is issued on or before December 31 in any financial year the sum due is payable in up to 10 monthly instalments. If at the date of issue of the notice the number of whole months remaining in the financial year, less one, is less than 10, then that is the maximum number of instalments. Thus, if the demand notice is issued in November, the rate is payable in three instalments. The later the issue date, the fewer is the number of heavier instalments. Where the demand notice is issued between January 1 and March 31 in a financial year the rate is payable in a single instalment on a date specified in the notice. The demand notice shall be issued at least 14 days before the first instalment is due. If the demand notice is issued after the end of the financial year, it shall require payment of the rate for that year on the expiry of at least 14 days after the issue of the notice.
Now the good news
- No payment of NNDR need be made unless a demand notice is served.
- If the authority does not serve a demand notice before the financial year begins, the demand notice shall be served on or as soon as practicable either after April 1 in each financial year or the date that the ratepayer becomes liable (for example, by going into occupation). Delay by the authority may prejudice the ratepayer (eg, by requiring fewer, heavier instalments, or the time for payment may have expired between issue and service) and may be a defence to a claim for payment.
And the bad news
Where a ratepayer is in default with instalments a further notice can be served requiring payment of arrears in seven days. Further default will be followed with an application to the local magistrates’ court for a “liability order” which allows the authority to
- distrain for arrears
- apply for the bankruptcy or imprisonment of individuals who are ratepayers
- petition for the winding up of company ratepayers
unless payment is made. An application for a liability order cannot be challenged on the ground that the rateable value is too high.
As an alternative to the liability order procedure the authority may sue in the civil courts and, it would appear, add interest to the arrears.
More good news
Where a repayment is due to a ratepayer, the ratepayer can sue in the civil courts and again, it would appear, add interest to the claim.
One ornamental shellfish lands farmer with ratebill — shock
We reproduce an extract from the Local Government and Housing Bill, Schedule 5: “17 In paragraph 9 of Schedule 5 (exemption for fish farms) the following shall be inserted after subparagraph (4) —
“(4A) But an activity does not constitute fish farming if the fish or shellfish are or include fish or shellfish which —
(a) are purely ornamental, or
(b) are bred, reared or cultivated for exhibition.”
Roger Cohen is a partner in City solicitors Berwin Leighton
