Ratepayers (including both owners and occupiers) should be aware of new legislation as it will affect both liabilities and the ‘red-tape’ administration in England.
Following a series of consultations between 2020 and 2022 and following the COVID pandemic, Parliament has now moved to reform some rating processes with direct implications for estate management and a series of amendments which could affect rates payable for certain ratepayers in some circumstances.
The new Act (Non-Domestic Rating Act 2023) runs to 60 pages of text. Here, we seek to highlight some of the main and significant clauses.
IMPROVEMENT RATE RELIEF
The new law includes a clause which aims to remove any additional liability created following certain ‘qualifying improvement works’ undertaken on a property. The relief will last for 12 months after the works are complete, with the regime set to be in place until 1st April 2029.
The new relief will apply from 1st April 2024 and will apply to works completed by 31st March 2028. The ratepayer must be in occupation of the property on each day since the works commenced in order to qualify for relief. The relief will, therefore, not apply where a landlord improves a vacant building.
Local Billing Authorities will have the power to apply, at their discretion, a small business multiplier to ‘large’ hereditaments (by ignoring the rate supplement). As matters stand, the ‘supplement’ amounts to 1.3p for large assessments of £51,000 RV or higher (about 2.5% of liability).
Rural rate relief will continue but become mandatory for qualifying village shops.
Discretionary rate relief will not now be subject to a retrospective bar on application. This replaces a restriction on discretionary reliefs up to 6 months after the end of the relevant financial year. Applications for section 47 relief made after 1st April 2022 can be made with retrospective effect, but they will still be at the discretion of the Local Billing Authority.
RATING LIST DURATION
Rating lists are now at three yearly intervals rather than five, subject to any further additional legislation to extend a particular revaluation period. The change from 5 to 3 yearly revaluations paves the way for even shorter revaluation periods with the possibility of annual revaluations in the future.
Transition is no longer required to be ‘revenue neutral’. In effect, the upward phasing of liability at a revaluation will no longer need to be funded by a downward transitional scheme (although it still can be). The change facilitates the removal of downward phasing (as we are already experiencing under the 2023 rating list).
COMPLETION NOTICES FOR ‘NEW’ BUILDINGS
The Completion Notice procedure has now been expanded to allow for a notice to be served on any assessments which were deleted from the rating list during refurbishment works, regardless of whether structural alterations have been made (closing a previous lacuna). A further amendment will bring extensions to existing hereditaments into the scope of the Completion Notice procedure.
These changes are due to take effect in December 2023.
ACCESS TO VALUATION OFFICE DATA
Ratepayers will be able to request information from the VOA where that information relates to the ratepayer’s assessment or if the VOA has had regard to information in setting the ratepayer's rateable value.
The access is restricted at the discretion of the VOA or under the provisions of the Data Protection law.
RATEPAYER IDENTIFICATION DATA
The ratepayer will be expected to update their unique identification details used to access the Government Gateway Portal (VAT registration number, National Insurance reference or Unique Tax Reference number) within 60 days or face a fine.
DUTY TO NOTIFY
Certain ‘notifiable information’ will need to be provided to the VOA within 60 days. In effect, any ‘material change’ to a non-domestic property should be notified.
This includes anything which would affect the existence of a rating assessment, the extent of a ‘hereditament’ or the rateable value of a property.
A ‘ratepayer’ includes actual ratepayers or a person who would be a ratepayer if a property was not assessed or exempt.
Notification of a change will be required within 60 days of a change through a new online portal. The VOA may serve notice on an owner or occupier specifying a reason for believing that a relevant change has occurred.
In addition, ratepayers will need to complete an online annual return within 60 days after 30th April confirming ‘no change’ or specifying any changes not notified.
There are fines for non-notification, and false information is treated as a criminal offence. An appeals process is available.
The compliance regime is expected to come into force in 2024/25, and Montagu Evans will provide further detailed information in respect of the obligations that it will bring as matters evolve over time.
MATERIAL CHANGE PROVISIONS
Following the precedent set during COVID, the new law precludes with immediate effect certain ‘matters’ from being treated as a ‘Material Change in Circumstances’ between rating revaluations. These include:
- Matters affecting the ‘physical enjoyment’ of the hereditament, and
- Matters ‘physically manifest within the locality’ as a result of:
- Advice or guidance from any public authority
- Provisions under legislation
- Anything done with a view to complying with any of the above.
AVOIDANCE AND EVASION CONSULTATION
The Treasury has separately launched a Consultation document (July 23) with a view to limiting legal tax (rates) avoidance schemes, including empty rates. We will be contributing to the consultation process, although it is clear that the Government’s aspiration is to change the rules and seek to protect the rates yield across long-term commercial and industrial building voids.
OUR CONCLUDING THOUGHTS
Most of these changes have been anticipated and are the result of consultations over the last two to three years. A large section of the law is a matter of tidying up the relief regime. This is regarded as a much-needed update.
The change to the Completion Notice procedure is considered by some to be a long overdue amendment closing a well-known lacuna. Montagu Evans will be happy to assist ratepayers who receive completion notices in respect of new additions or traditional developments. It will, however, be important for us to know from you where a notice is received. The window for appeal is short (28 days), and time is of the essence.
The section covering ‘improvement relief’ is important and subject to certification. We will be in a position to advise, negotiate and mitigate where improvements take place.
The two main areas of concern are around the ‘duty to notify’ of changes and the amendments to ‘Material Change’. These changes are demanding and require very careful and professional consideration, particularly where you, as the ratepayer, seek to extend your buildings or sites or are adversely affected by changes within the locality of one of your sites.
The move to shorter rating lists is supported by the hope that rateable values will become more closely aligned with actual market rents.
Our surveyors will be able to advise further as to the consequences of the new law across your estate or on a case-by-case basis.