Local Taxa)on Update. Jan Alexander IRRV (Hons) Professional Services Manager. Ins)tute of Revenues Ra)ng and Valua)on

Transcription

1 Local Taxa)on Update Jan Alexander IRRV (Hons) Professional Services Manager Ins)tute of Revenues Ra)ng and Valua)on

2 Business Rates Business Rates Avoidance.

3 Business Rates Kenya Aid Programme v Sheffield City Council (QBD) 2013 Occupying an otherwise empty property on the basis of a financial arrangement between landlord and tenant to the mutual benefit of each. Kenya Aid Programme are a registered charity Usage of the first property at 30-35% and the second unit at 25-30%

4 Business Rates KAP received a payment relatng to 20% of the NDR liability together with a further donaton of 17,000 from the landlord Lease was for a peppercorn rent capable of terminaton on seven days notce The charity stored furniture for export to Kenya but it was spaced out. The magistrates court held that the way the furniture was stored and spaced out suggested that a more efficient approach to furniture storage would compress the space taken substantally.

5 Business Rates On appeal the charity contended that the magistrates court was wrong to enter into consideratons of the extent of use of the premises by the charity. The wholly or mainly phrase should they said be construed as referring to the purpose of the use rather than to the amount or extent of the actual use made of the premises.

6 Business Rates Treacy LJ.. in my judgement the District Judge was wrong to take account of the efficiency or otherwise of the furniture storage use at the premises and also the necessity for Kenya Aid Programme to occupy both premises. Similarly to the Makro case, the fact that councils may consider such schemes as rate avoidance is irrelevant. Tracy LJ stated clearly that it is the functon of the court to interpret the legislaton; the success or otherwise of what may be tax planning measures connected with the arrangements is not of direct concern to the court.

7 Business Rates Public Safety Charitable Trust (PSCT) v Milton Keynes and others - An appeal against the original magistrates court decisions was heard in the Royal Courts of Jus)ce on 1 st May. Milton Keynes Council were responding to an appeal by PSCT along with South Cambridgeshire DC. Chester West and Chester Council were appellants. Case related to whether the premises are wholly or mainly used for charitable purposes. Bluetooth transmiker in a large assessment.

8 Business Rates PSCT said they are the only use so it is wholly or mainly used for charitable purposes. HC found in favour of the local authori)es. Sunderland CC v STrling Investment ProperTes Presence for 6 weeks of a small piece of apparatus sending Bluetooth messages amounted to rateable occupa)on of an otherwise empty warehouse so as to re- start the 6 month exemp)on period for a qualifying industrial hereditament under the non- domes)c ra)ng (Unoccupied Property) regs The Court held that the District Judge who had declined to issue a liability order, had not erred in law.

9 Business Rates Many issues relatng to avoidance Government response. Working groups set up to look at the issues.

10 Business Rates Working groups now up and running. Issues to be looked at:- Repeated short periods of occupaton (Makro) Bluetooth broadcastng for 6 weeks (Sunderland) OccupaTon of vacant propertes e.g. retail warehouses or shops by charites evidence of actual occupaton- minimal use of premises (Kenya Aid)

11 Business Rates Vacant property being leased to a charity and it is proposed that when next in use the property will be wholly or mainly used for charitable purposes the charites do not have clear plans for occupaton or intended use- remain zero rated Le[ng vacant property to off the shelf companies which then immediately enter in to a members voluntary liquidaton Appealing the RV a\er deliberately damaging a property

12 Unfinished buildings Business Rates Companies that cease to trade then open up in a different company name. Transferring part of a business to another company in order to obtain SBRR.

13 Business Rates New Build Empty Property Technical ConsultaTon Government will exempt all newly built commercial property completed between 1 October 2013 and 30 September 2016 Purpose to s)mulate the construc)on industry Construc)on decisions take into account the risk of paying empty rates reducing the risk may incen)vise some commercial property projects to go ahead, helping to s)mulate the construc)on industry.

14 Business Rates It is a temporary measure ExempTon is provided by reimbursing local authorites that use their discretonary relief powers under S.47 LGFA to grant relief in prescribed circumstances. It is for local government to decide when to grant the relief but government will fully reimburse local authorites for the local share (within the rates retenton system) of the discretonary relief by way of a grant under S.31 LGA 2003.

15 Business Rates ProperTes that will benefit: All unoccupied non domes)c hereditaments that are wholly or mainly comprised of qualifying new structures.

16 Structures means: Business Rates A) founda)ons and/or B) permanent walls and /or C) permanent roofs New means: A) completed less than 18 months previously, and B) completed a\er 1 October 2013 and before 30 September 2016

17 Business Rates New structures are to be considered completed when ready for occupaton for the purpose it was constructed unless a completon notce has been served in respect of such a building or part of a building in which case it would be the date specified in that notce.

18 Business Rates Wholly or mainly comprised of qualifying new structures mainly is to mean more than half of the hereditament Scheme not intended to capture proper)es that have been refurbished but is intended to capture those that have been the subject of substantal structural constructon, so for example those proper)es that are built on exis)ng founda)ons or built around a retained façade are likely to benefit from the relief.

19 Business Rates Split, mergers and changes Same principle to apply must be wholly or mainly comprised of new structures completed within the necessary )meframes to benefit from the exemp)on. Ratepayers do not benefit merely because the property has split or merged

20 Business Rates Ratepayers must however have the ability to adapt their propertes without losing the relief. Complexity/confusion arises when structures that are wholly new merge with structures that are not new. Relief will only be funded where the new hereditament wholly or mainly comprises qualifying new structures.

21 Business Rates Relief will run with the property so changes of ownership will not affect enttlement. Developers will therefore be able to sell (or lease) the property with the benefit of the remaining term of the relief.

22 Business Rates State Aid implicatons Financial support from a public or public funded body which has the poten)al to distort compe))on and affect trade between member states of the EU. Discre)onary relief is likely to be classed as state aid.

23 Business Rates De- minimis rules state total amount of funding received must not exceed a prescribed limit currently 200,000 euros calculated over a three year period the calculaton of which is cumulatve. Government will not fund any relief over this level!

24 Business Rates New build property exempton will apply for 18 months aper completon CompleTon must be aper 1 October 2013 but before 30 September months is to include the 3 or 6 month unoccupied exempton period ProperTes will be permiqed to switch between unoccupied and occupied

25 Example given: Business Rates New shop initally unoccupied for 8 months and becomes occupied for 4 months but becomes unoccupied again for 6 months will be as follows: 3 months no rates payable 5 months new build empty property relief 4 months property occupied rates payable 3 months no rates payable 3 months new build empty property relief

26 Business Rates At the end of the 18 months the funding of the relief will end. Consulta)on gives more complex examples on splits and mergers.

27 Council Tax Council Tax Empty homes premium guidance for propertes for sale and lerng. While the decision to make a determina)on under sec)on 11B of the local Government Finance Act 1992 is for billing authori)es to make the government would expect that due considera)on is given to the health of the local housing market when making determina)ons.

28 Council Tax The governments inten)on behind the decision to provide billing authori)es with the power to charge a premium was not to penalise owners of property that is genuinely on the housing market for sale or rent. The government expects billing authori)es to consider the reasons why proper)es are unoccupied and unfurnished including whether they are available for sale or rent and decide whether they want such proper)es to be included in their determina)on.

29 Council Tax When considering the reasons authori)es may want to take account of the following: On average how long are proper)es in their area been available for sale or rent before comple)on/occupa)on What is the average price/rent in the local area?

30 Council Tax Changes to Council tax Referendum LegislaTon The Government introduced the Local Audit and Accountability Bill into the House of Lords on 9 May Clause 39 of the Bill amends the council tax referendum legisla)on put in place by the Localism Act It changes the main trigger for a council tax referendum so that it takes account of increases in levies issued by levying bodies.

31 Council Tax It does this by changing the defini)on of relevant basic amount of council tax so that this includes levies issued as well as the council tax set by a billing or major precep)ng authority. The Coali)on Government state they have priori)sed the protec)on of council tax payers since taking office and wish to ensure that levying bodies are subject to the same financial discipline and accountability as other council tax- se[ng bodies.

32 Council Tax Subject to parliamentary approval and the Parliamentary )metable it is hoped to have the amended system in place in )me for the round of council tax- se[ng. Overall approach will remain the same but clause 39 will mean the relevant basic amount of council tax will include any levies issued to a billing or major precep)ng authority.

33 Council Tax Therefore when determining whether council tax is excessive an authority will have to consider the total band D amount it has set that is its own council tax plus levies. This mirrors the posi)on under the old capping system where the measure of excessiveness took account of levies.

34 Council Tax DCLG are currently working on the best way of achieving this. The Bill is due to go before the Lords CommiKee on 31 st July with Royal Assent scheduled for January 2014.

35 Enforcement Reforms Ministry of JusTce 25 th January 2013 MOJ released The Government s Response to last year s consulta)on. Government believes that taken as a package their proposals simplify and clarify the enforcement process, improving the accountability of enforcement agents and addressing unnecessary or inappropriate enforcement ac)vity.

36 Enforcement Reforms The response sets out that they will seek parliamentary )me to address the inadequacies of part 3 of the TCE Act. They will produce a final set of regula)ons to enable them to implement the provisions in Part 3 of the Act including regula)ons that set out the fee structure and the enhanced cer)fica)on procedure as well as developing suppor)ng rules of court.

37 Enforcement Reforms They intend to have a full set of regulatons prepared by summer AnTcipated implementaton date April 2014 New NaTonal Standards will be issued later this year MeeTngs are taking place with all stakeholder groups advice sector, industry group, debtors group, Interdepartmental group and Local Government.

38 Enforcement Reforms Local Government Group Have met with MOJ twice and two more meetngs are planned The first drap regulatons have now been circulated amongst the group for comment Main issues:

39 Enforcement Reforms Proceeds of Sale Recycling of cases VAT on fees TransiTonal provisions NoTce period 7 days Minor changes/clarificaton of wording to the list of exempt goods

40 Enforcement Reforms MOJ are keen to find a way of colla)ng data on fees now to compare with year one (2014/15) to see if there are any unintended consequences.

41 Enforcement Reforms Ombudsman Billing AuthoriTes must maintain control There is a lack of awareness of knowing what their bailiff is doing

42 Enforcement Reforms DCLG published this week Council Tax guidance to local councils on good practce in the collecton of council Tax arrears.

43 Enforcement Reforms Guidance replaces the previous ODPM guidance on Council Tax Collec)on Good Prac)ce published in 2005 Publica)on focuses on the role of Local Authori)es and is part of a wider coordinated programme of work across Government that includes: Updated version of the NaTonal Standards UpdaTng informaton available to the public on GOV.UK Proposals to reform and modernise the bailiff industry

44 Enforcement Reforms Guidance focuses on working with Debt Advisers agree affordable and sustainable payment plans At least three statutory communica)ons! Charges for the court summons and for liability orders Local Authori)es are reminded that they are only permiked to charge reasonable costs for the court summons and liability order.

45 Enforcement Reforms In the interest of transparency, local AuthoriTes should be able to provide a breakdown on request showing how these costs are calculated. The Court may wish to be satsfied that the amount claimed by way of costs in any individual case is no more than that reasonbably incurred by the authority. Fees should be open to public scrutny!!!

46 Enforcement Reforms Working with bailiffs Local Authori)es retain responsibility to ensure bailiffs are working within the law and the Local Authority can be held accountable if they are not. Local Authori)es should be ac)vely managing their contracts with bailiffs. LA s should remain prepared to deal directly with individuals at any point it is within their gi\ to call ac)on back from the bailiffs at any )me.

47 Enforcement Reforms It is inappropriate for authorites to receive extra payment or profit- sharing from the use of bailiffs and the charging of fees.

48 Enforcement Reforms Contracts should not involve rewards or penaltes which incentvise the use of bailiffs where it would not otherwise be justfied.

49 Complaints Enforcement Reforms Ombudsman s report on bailiff complaints Any breach of the Na)onal Standards or an agreement between the Local Authority and bailiff will be considered maladministraton Reference made to phantom visits The Government consider that any fraudulent prac)ces should be reported to the police as a criminal offence under the Fraud Act and that Local Authori)es should terminate any contract with companies whose ac)vi)es are proved fraudulent.

50 Enforcement Reforms Government want beker contract management Concerns over current prac)ces Concerns over the impact on debtors with low balances paying Council Tax for the first )me.

51