NON DOMESTIC RATES WALES RETAIL RELIEF SCHEME REPORT OF CORPORATE DIRECTOR - RESOURCES AGENDA ITEM: 8 PORTFOLIO : CORPORATE SERVICES AND PERFORMANCE

Transcription

1 CITY OF CARDIFF COUNCIL CYNGOR DINAS CAERDYDD CABINET MEETING:12 JUNE 2014 NON DOMESTIC RATES WALES RETAIL RELIEF SCHEME REPORT OF CORPORATE DIRECTOR - RESOURCES AGENDA ITEM: 8 PORTFOLIO : CORPORATE SERVICES AND PERFORMANCE Reason for this Report 1. The purpose of this report is to request that the Council adopt the attached Welsh Government Scheme (Appendix A) which will allow local businesses who occupy qualifying retail properties the opportunity to apply for up to 1,000 business rate relief. Background 2. The retail sector is changing, particularly due to internet shopping and many high streets now need to adapt to changing consumer preferences in the way people prefer to shop. This relief aims to support businesses in Wales to respond to the challenges that result from this changing retail environment. It is also aimed at contributing to the development of sustainable and vibrant town centres. 3. The Welsh Government has announced that it will provide relief of up to 1,000 against the business rates bill of qualifying retail properties for the financial year 2014/15. Issues 4. The Council will be reimbursed by way of a grant for any relief that is awarded under the scheme and will therefore need to keep accurate financial records in order to claim back the correct amount of money. 5. The Council will also be expected, where relevant, to ensure that the amount of relief awarded to any ratepayer does not contravene European Rules on State Aid. 6. The relief is going to be an application based scheme and WAG have provided local authorities with a model application form. (Appendix B). It is planned to update the information we make available on our website to publicise the scheme. It is also planned to liaise with the Cardiff Business Council to explore other opportunities to promote the scheme. Page 1 of 2

2 Reasons for Recommendations 7. The recommendation is being made so that the Billing Authority can award financial assistance to qualifying retail properties. Legal Implications 8. There are no legal implications arising from this report other than as identified in paragraph 5. Financial Implications 9. The Welsh Government has indicated that it will reimburse local authorities for the local share of the discretionary relief through a grant award using Section 31 of the Local Government Act The Authority has been offered a grant of 1.7 million to fund the scheme and will need to monitor spend during the year to ensure that the grant total is not exceeded. If this looks likely consultation with the Welsh Government would be required to ensure that all spend is fully covered by the grant. 10. The relief is calculated on a daily basis with the maximum relief granted for the whole year. Where the relief is granted for part of the year the grant will need to be apportioned. There is provision for a higher discretionary award to be made but this would need to be funded 100% from the Council budget. There is no provision within the Council budget to grant additional relief in these cases. RECOMMENDATIONS Cabinet is recommended to adopt the scheme as detailed in Appendix A. CHRISTINE SALTER Corporate Director 6 June 2014 The following Appendices are attached: Appendix A - Scheme details Appendix B - Model Application Form Page 2 of 2

3 Wales Retail Relief Appendix A How will the relief be provided? 1. As this is a temporary measure, we are providing the relief by reimbursing local authorities that use their discretionary relief powers (under section 47 of the Local Government Finance Act 1988). It will be for individual local billing authorities to decide to grant relief under section 47 but the Welsh Government will reimburse local authorities for the relief that is provided in line with this guidance (using a grant under s31 of the Local Government Act 2003). How will the scheme be administered? 2. Local authorities will be asked to to identify the total amount of relief provided under the scheme in their National Non Domestic Rate Return 3 (NNDR3) return. A line will be provided in the NDR3 return for this purpose. 3. Due to the State Aid requirements, the Scheme will be application based. Local authorities are responsible for providing ratepayers with clear and accessible information on the application process. Which properties will benefit from relief? 4. Properties that will benefit from the relief will be occupied hereditaments with a rateable value of 50,000 or less, that are wholly or mainly being used as retail premises, that is, shops, restaurants, cafes and drinking establishments. 5. We intend that, for the purposes of the scheme, shops, restaurants, cafes and drinking establishments will mean as follows (but subject to the other criteria in this guidance): i. Hereditaments that are being used for the sale of goods to visiting members of the public: Shops (such as: florist, bakers, butchers, grocers, greengrocers, jewellers, stationers, off licence, newsagents, hardware stores, supermarkets, etc) Charity shops Opticians Pharmacies Post offices Furnishing shops/ display rooms (such as: carpet shops, double glazing, garage doors) Car/ caravan show rooms Second hard car lots Markets Petrol stations Garden centres Page 1 of 6

4 Art galleries (where art is for sale/hire) ii. Hereditaments that are being used for the provision of the following services to visiting members of the public: Hair and beauty services Shoe repairs/ key cutting Travel agents Ticket offices e.g. for theatre Dry cleaners Launderettes PC/ TV/ domestic appliance repair Funeral directors Photo processing DVD/ video rentals Tool hire Car hire Cinemas Estate and letting agents iii. Hereditaments that are being used for the sale of food and/ or drink to visiting members of the public: Restaurants Drive through/drive in restaurants Takeaways Sandwich shops Cafés Coffee shops Pubs Wine Bars 6. To qualify for the relief the hereditament should be wholly or mainly being used as a shop, restaurant, café or drinking establishment. This is a test on use rather than occupation. Therefore, hereditaments which are occupied but not wholly or mainly used for the qualifying purpose will not qualify for the relief. 7. The list set out above is not intended to be exhaustive as it would be impossible to list the many and varied retail uses that exist. There will also be mixed uses. However, it is intended to be a guide for authorities as to the types of uses that the Welsh Government considers for this purpose to be retail. Authorities should determine for themselves whether particular properties not listed are broadly similar in nature to those above and, if so, to consider them eligible for the relief. Conversely, properties that are not broadly similar in nature to those listed above should not be eligible for the relief. Page 2 of 6

5 8. As the grant of the relief is discretionary, authorities may choose not to grant the relief if they consider that appropriate, for example where granting the relief would go against the authority s wider objectives for the local area. 9. The list below sets out the types of uses that the Welsh Government does not consider to be retail use for the purpose of this relief. i. Hereditaments that are being used wholly or mainly for the provision of the following services to visiting members of the public: Financial services (e.g. banks, building societies, cash points, bureau de change, payday lenders, betting shops, pawn brokers) Medical services (e.g. vets, dentists, doctors, osteopaths, chiropractors) Professional services (e.g. solicitors, accountants, insurance agents/ financial advisers, tutors) Post office sorting office Tourism accommodation such as B&Bs, hotel accommodation and caravan parks Sports clubs Children s play centres Day nurseries Outdoor activity centres Gyms Kennels and catteries Show homes and marketing suites Employment agencies ii. Hereditaments that are not reasonably accessible to visiting members of the public 10. Accordingly, if a hereditament falls within paragraph 17(i) or (ii) it will be ineligible for relief under the scheme even if there is ancillary use of the hereditament that might be considered to fall within the descriptions in paragraph 13(i), (ii) or (iii). How much relief will be available? 11. The total amount of government-funded relief available for each property for 12 months under this scheme is 1,000. The amount does not vary with rateable value and there is no taper. There is no relief available under this scheme for properties with a rateable value of more than 50,000. Local authorities may however use their discretionary powers to offer further discounts outside this scheme. 12. The eligibility for the relief and the relief itself will be assessed and calculated on a daily basis. The following formula should be used to determine the amount of relief to be granted for a particular hereditament in the financial year: Page 3 of 6

6 Amount of relief to be granted = 1000 x A B Where: A is the number of days in the financial year that the hereditament is eligible for relief; and B is the number of days in the financial year 13. Wales Retail Relief can be provided in addition to Small Business Rates Relief and relief provided under the Open for Business Scheme as well as any hardship or discretionary relief awarded by the local authority. The relief will be applied against the net bill after the other reliefs have been applied. 14. Where the net rate liability for the day after all other reliefs but before retail relief is less than the retail relief, the maximum amount of this relief will be no more than the value of the net rate liability. This should be calculated ignoring any prior year adjustments in liabilities which fall to be liable on the day. 15. Ratepayers that occupy more than one property will be entitled to relief for each of their eligible properties, subject to State Aid de minimis limits. Splits, mergers, and changes to existing hereditaments State Aid 16. The relief should be applied on a day to day basis using the formula set out above. A new hereditament created as a result of a split or merger during the financial year, or where there is a change of use, should be considered afresh for the relief on that day. 17. State Aid law is the means by which the European Union regulates state funded support to businesses. Providing discretionary relief to ratepayers is likely to amount to State Aid. However Wales Retail Relief will be State Aid compliant where it is provided in accordance with the De Minimis Regulation (1407/2013). 18. The De Minimis Regulation allows an undertaking to receive up to 200,000 of De Minimis aid in a three year period (consisting of the current financial year and the two previous financial years). Local authorities should familiarise themselves with the terms of this State Aid Regulation, in particular the types of undertaking that are excluded from receiving De Minimis aid (Article 1), the relevant definition of undertaking (Article 2(2)); the conditions related to splits and mergers, the requirement to convert the aid into Euros and the necessary administrative procedures that need to be put in place to compy with the Regulation. 19. Desk instructions covering the administration of De minimis schemes are available at: Example Calculations Page 4 of 6

7 Example Calculations 2014/15 Example 1 An occupied shoe shop with a rateable value of 40,000 Rateable Value = 40,000 Rates due (excluding any reliefs) = 40,000 x = 18,920 Minus 12 months Wales Retail Relief = 18,920-1,000 = 17,920 Rates due (including Wales Retail Relief) = 17,920 Example 2 A shoe shop with a rateable value of 40,000 that is unoccupied between 1 April 2014 and 30 September 2014 and is then occupied until 31 March Rateable Value = 40,000 Rates due (excluding any reliefs) = 40,000 x = 18,920 Minus 3 months (no empty rates payable) = 40,000 x x 91 = 4, Minus 6 months Wales Retail Relief (01/10/14-31/03/15) = 1,000 x 182 = Total due for year = 13,704 Example 3 An occupied shoe shop with a rateable value of 10,000 that is in receipt of small business rate relief of 473 per year. Rateable Value = 10,000 Rates due (excluding any reliefs) = 10,000 x = 4,730 Minus small business rate relief of 10% = 4, = 4,257 Minus 12 months Wales Retail Relief = 4,257-1,000 = 3,257 Rates due (including all reliefs) = 3,257 Example 4 A shoe shop with a rateable value of 30,000 that has occupied premises previously used as a jewellers shop that was empty for more than 12 months immediately prior to occupation. Rateable Value = 30,000 Rates due (excluding any reliefs) = 30,000 x = 14,190 Minus reoccupation relief of 50% = 14,190-7,095 = 7,095 Minus 12 months Wales Retail Relief = 7,095-1,000 = 6,095 Rates due (including all reliefs) = 6,095 Page 5 of 6

8 State Aid Template de minimis declaration forms are included in the State Aid Desk Instructions which are available at: Sample paragraphs that could be included in letters to ratepayers for about Retail Relief The Welsh Government has announced that it will provide a relief of up to 1000 to all occupied retail properties with a rateable value of 50,000 or less during 2014/5. Awards such as Wales Retail Relief are required to comply with the EU law on State Aid. In this case, this involves returning a declaration to this authority if you have received any other De Minimis State Aid, including any other Business Rates Relief you are being granted for premises throughout the European Union other than the one to which this bill and letter relates, and confirming that the award of Retail Relief does not exceed the 200,000 an undertaking1 can receive under the De Minimis Regulations EC 1407/2013. Please complete the declaration and return it to the address above. In terms of declaring previous De Minimis aid, we are only interested in public support which is De Minimis aid (State Aid received under other exemptions or public support which is not State Aid does not need to be declared). If you have not received any other De Minimis State Aid, including any other Retail Relief you are being granted for premises other than the one to which this bill and letter relates, you do not need to complete or return the declaration. Under the European Commission rules, you must retain this letter for 3 years from the date on this letter and produce it on any request by the UK public authorities or the European Commission. (You may need to keep this letter longer than 3 years for other purposes). Furthermore, information on this aid must be supplied to any other public authority or agency asking for information on De Minimis aid for the next three years. 1 An undertaking is an entity which is engaged in economic activity. This means that it puts goods or services on a given market. The important thing is what the entity does, not its status. Thus a charity or not for profit company can be undertakings if they are involved in economic activities. A single undertaking will normally encompass the business group rather than a single company within a group. Article 2.2 of the de minimis Regulations (Commission Regulation EC/ 1407/2013) defines the meaning of single undertaking. Page 6 of 6

9 Appendix B Application for Wales Retail Relief 2014/15 1. Account details for which relief is being claimed Account Number if known Full Name of Ratepayer.. 2. Address of property for which relief is being claimed Ratepayer s address (if different to above) Please confirm how the property is used, e.g. butcher, travel agent etc I can confirm that my property/properties is/are wholly or mainly used for one of the categories listed on the Wales Retail Relief Guidance. Yes No If your property is not used for one of the purposes listed in the Wales Retail Relief Guidance, but you believe that you may still qualify for the relief, please detail below the type of business that is conducted from the property. It may be necessary for the council to inspect your property to clarify this Page 1 of 2

10 6. Has your company or business received more than 200,000 in state aid including Retail Relief in the last three years? Please tick the relevant box. YES NO 7. State Aid De Minimis Declaration The award of this relief must comply with the EU law on State Aid. Under the De Minimis Regulations (EC 1407/2013) the ratepayer named overleaf should not receive more than 200,000 in total of De Minimis aid, including any retail relief awarded for this property, within the current financial year or the two previous financial years. Please give details of any De Minimis aid received below: Amount of De Minimis Aid Period aid granted for Organisation providing aid Nature of aid Should your circumstances change and you no longer meet the qualifying criteria, you must notify us so that the Retail Relief can be reviewed from the date the change occurred. 8. Declaration: By signing the form you agree that, to the best of your knowledge, the information contained on the form is complete and is not false. Wilfully making a false statement on the application form is an offence and may result in us taking action legal against you. I declare that: I am authorised to sign on behalf of the ratepayer named overleaf. The form is completed correctly, to the best of my knowledge. The ratepayer named overleaf shall not exceed its De Minimis threshold by accepting any retail relief granted. Full Name... Signature..... Date... Position in Organisation... Telephone Number... Please return this application to: Wolverhampton City Council, Business Rates Section, PO Box 250, Address... Wolverhampton, WV2 1AX. Please return the completed form to:. Page 2 of 2