Rating and Council Tax Pocket Book

Matthew Cain Ormondroyd

• Éditeur: Routledge
• Année: 2017
• ISBN:
  9781317243359
• Édition: 1
• Sujet: Negocios y empresa
• Sous-sujet: Propiedad inmobiliaria

The Rating and Council Tax Pocket Book is a concise, practical guide to the legal and practical issues surrounding non-domestic rates and council tax. An essential tool for busy tax collection practitioners in local authorities and private practice, it will also be suitable for a range of non-specialist property professionals who may have to deal with rates and council tax matters as part of their practice.

This handy pocket guide is accessible to specialist and non-specialist alike, covering everything from key concepts through to liability, exemptions, procedure and completion notices. The book encompasses both English and Welsh law, and includes all the relevant statutory provisions. With detailed discussion of key cases, this is a book that no one with an interest in rating and council tax should be without.

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1

Introduction

  1.1   This book aims to provide a clear, concise and practical guide to the law of rating and council tax in England and Wales. Liability to the taxes, in the broadest sense, and collection of them is the focus. As such the book does not deal with valuation or related matters. Nor does it deal with administration in the sense of internal administration of the billing authority or the setting of levels of taxation.

  1.2   This introduction introduces the relevant legislation, explains the structure of the book and then provides a short summary of the law relating to rating and council tax, which is intended to assist those who may be unfamiliar with these areas of law to find their way around the detailed discussion contained in the following chapters.

GOVERNING LEGISLATION

  1.3   The primary statute governing non-domestic rating is the Local Government Finance Act 1988, which is referred to hereafter as LGFA 1988. The other key piece of legislation from the point of view of collection is the Non-Domestic Rating (Collection and Enforcement)(Local Lists) Regulations 1989. These regulations are referred to as the NDR Collection Regulations 1989 and are dealt with in some detail in Chapter 5.

  1.4   The corresponding provisions for council tax are to be found in the Local Government Finance Act 1992, or LGFA 1992, and the Council Tax (Administration and Enforcement) Regulations 1992, or CT Enforcement Regulations 1992.

  1.5   All of these pieces of legislation have been amended multiple times over the years. All references in the text or footnotes to this or other legislation are to the up-to-date amended version.

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STRUCTURE OF THE BOOK

  1.6   The book is split into two parts. The first part deals with the law of non-domestic rates. The second deals with council tax.

  1.7   One important reason for this structure is that the council tax provisions are, to a large extent, either dependent upon or derived from rating provisions. For example, the definition of a ‘dwelling’ (the taxable unit of property for council tax purposes) is tied to the definition of a ‘non-domestic hereditament’ (the taxable unit of property for rating purposes). The provisions on collection of council tax in the CT Enforcement Regulations 1992 shadow those on non-domestic rates in the NDR Collection Regulations 1989. It is therefore difficult to understand the council tax provisions without having some degree of knowledge of the rating provisions. Reasonably comprehensive cross-referencing is provided, however, for the reader who wants to focus on the sections dealing with council tax.

  1.8   It should also be noted that although the systems are in some respects similar, there are several large differences between them when it comes to collection of the two taxes. Perhaps the most significant for present purposes is the structure of different routes of appeal and challenge. Decisions on liability to rates can be challenged in the Magistrates’ Court, whereas the equivalent decisions in respect of council tax must be challenged by making an appeal to the relevant valuation tribunal. These are the Valuation Tribunal for England (or VTE) and the Valuation Tribunal for Wales (or VTW).

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SUMMARY OF THE LAW OF RATING

  1.9   Central to the very ancient system of rating law is the concept of the ‘hereditament’. This is a technical term which really means no more than a unit of property. In general it will equate to the area which is occupied by one occupier. If the area occupied is not contiguous (if, for example, the occupier occupies several buildings in the same street, or several floors in an office block which do not directly intercommunicate), then it will normally be treated as more than one hereditament, unless one part is necessary for the effectual enjoyment of the other. Similarly, if one part of a contiguous area in one occupation is used for a wholly different purpose from the rest, it may be treated as a separate hereditament on that basis. There are a number of specific statutory provisions which apply to modify these tests in respect of certain sorts of property.

1.10   A hereditament cannot generate a liability to rates unless it is included on either the local or central list, maintained by Central Government. In order to be included in the list, it must be both ‘relevant’ and ‘non-domestic’. Relevant hereditaments comprise lands, mines, advertising rights and rights to operate meters. Lands include buildings and anything above or below the surface of the earth, so most physical units of property will be caught by this definition. Non-domestic hereditaments are all those which are not exclusively made up of living accommodation or ancillary elements such as garages and outbuildings. This is again subject to specific statutory provisions covering certain classes of property (e.g. domestic renewable energy installations, short-stay accommodation, caravans and boats).

1.11   A hereditament included in the list will have a ‘rateable value’ attributed to it. The ratepayer will be liable to pay rates on a daily basis at a certain fraction of that rateable value. If the hereditament is occupied, then the occupier will be liable to pay rates. If it is unoccupied then, in general, the owner will be liable. Both of these terms, ‘owner’ and ‘occupier’, are subject to specific definitions. The owner does not mean the freehold owner, but the person entitled to possession of the hereditament. Occupation must be actual, beneficial, exclusive and not too transient if it is to be considered as rateable occupation. Each of these requirements is subject to extensive discussion in the case law. All of the concepts mentioned so far are discussed at length in Chapter 2, whereas the rules on liability are set out in Chapter 3.

1.12   The normal position as to liability may be modified by a number of exemptions, which remove property from the scope of rating altogether, and reliefs, which result in a reduction in the amount of liability. It is difficult to summarise the effect of these exemptions and reliefs shortly because they form a miscellaneous assortment which has no particular unifying principle. Exemptions relate, for example, to agricultural property, places of worship, parks and highways. There are also exemptions specific to unoccupied property, which encompass listed buildings, hereditaments of low value, and hereditaments which have only recently become unoccupied. Relief is available at the discretion of the billing authority in various specific cases, and there is also a general power to grant relief. All of the exemptions and reliefs are dealt with in Chapter 4.

1.13   The rating lists are maintained by Central Government in the person of the relevant Valuation Officer. Collection of rates is by and large dealt with by district councils, known in this context as ‘billing authorities’. The collection procedure involves serving a demand notice or bill on each ratepayer. If the bill is not paid, further notices follow and proceedings can be taken in the civil courts or, in the vast majority of cases, in the Magistrates’ Court. Successful proceedings in the Magistrates’ Court lead to the granting of a liability order which can be enforced further in a number of ways. There are limited routes by which a liability order once made can be appealed or set aside. All of these matters are covered by Chapter 5.

1.14   A discrete function of billing authorities is the service of completion notices, which have the effect of deeming new buildings complete and therefore eligible to generate a liability to non-domestic rates. The relevant principles and the procedures for making and challenging these notices are outlined in Chapter 6. Chapter 7 deals with the means available to a ratepayer who wishes to recover rates from a billing authority when he believes he has made an overpayment.¹ The NDR Collection Regulations 1989 provide an automatic right to a refund where rates have been demanded and the amount paid is found to be in excess of the amount properly payable. There is also a right to sue the billing authority in restitution if, for various technical reasons, the right to a refund in the NDR Collection Regulations 1989 is not available.

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SUMMARY OF THE LAW OF COUNCIL TAX

1.15   Council tax is payable in respect of ‘chargeable dwellings’. A dwelling is effectively a domestic hereditament, and the extent of the dwelling will generally depend on the same principles as to the identification of hereditaments as apply in rating law. However, there are specific provisions which deal with aggregation (i.e. treating several dwellings as one dwelling) and disaggregation (i.e. treating one dwelling as several dwellings). The former are automatic when the criteria are satisfied, whereas the latter depend on the discretion of the listing officer, who maintains the list of chargeable dwellings. A dwelling will not be chargeable, and therefore will not generate any liability to council tax, if it is exempt. A large number of dwellings, categorised in Classes A to W, are exempt in this way. These provisions, which set the scope for the council tax, are dealt with in Chapter 8 (which also includes discussion of the completion notice regime for dwellings).

1.16   Chapter 9 deals with liability to council tax. There is a hierarchy of liability which sets out who will be liable in descending order. Liability will fall on the resident who has the strongest title to occupy the dwelling. If there are no residents, it will in normal circumstances fall on the owner. Regulations make provision in certain circumstances for the owner to be liable whether or not there are residents of the dwelling. ‘Owner’ and ‘resident’ are both given statutory definitions. A person is resident in a dwelling if he is 18 or older and ‘has his sole or main residence in the dwelling’.

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1.17   The amount of liability will depend on which valuation band the dwelling is in. These valuation bands are set by reference to capital values in 1991. The amount of liability will be modified in certain circumstances, however. The most common is council tax ‘discount’, which in general has the effect that dwellings with one resident benefit from a 25 per cent discount, and dwellings with no resident attract a 50 per cent discount (although these amounts can be altered by billing authorities in certain cases). In calculating the number of residents for these purposes, certain classes of persons are to be disregarded (e.g. students, care workers, patients in care homes).

1.18   An increasing move towards localism has seen the removal of council tax benefit, and in its place billing authorities are required to make a ‘council tax reduction scheme’ aimed at helping low-income council taxpayers. Similarly, billing authorities have powers to increase levels of council tax in respect of dwellings subject to forms of use or ownership apparently regarded as undesirable. They also have a general discretion to reduce council tax liability in specific cases or classes of cases.

1.19   The provisions on collection of council tax, set out in the CT Enforcement Regulations 1992, are in outline very similar to those in respect of rates. They are dealt with in detail, and relevant similarities and differences between the two regimes are pointed out, in Chapter 10, which also covers the provisions on obtaining repayments of council tax.

Notes

  1    Throughout this text references to ‘he/his’ are not intended to be gender-specific and can equally be read as ‘she/her’.

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Part I

Non-domestic rating

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2

Key concepts in rating law

2.1 There are a number of key concepts at the heart of rating law: the hereditament, the list, rateable value, the domestic/non-domestic distinction, ownership and rateable occupation. These concepts are dealt with in this chapter, and t...