The Non-Domestic Rating Bill implements a number of changes to the system of non-domestic rates (known as business rates) in England and Wales.
- We welcome that the Government is legislating for a package of measures alongside revaluations once every three years. We support measures to improve valuation accuracy and timeliness including new duties for ratepayers to notify the Valuation Office Agency (VOA) of information on the calculation of their rateable value.
- We welcome the clarification that the new online system for receiving information from ratepayers will enable the VOA to share information with billing authorities and that the VOA will test this functionality and share information with billing authorities as part of the soft launch of the new system.
- We supported the reforms to material changes of circumstances due to the COVID-19 pandemic and support the changes in the Bill which will mean that material changes of circumstances should relate to physical changes only.
- We look forward to early discussions on implementation of the new reliefs including how councils will be fully compensated for income foregone, as well as for any new burdens arising from the administration of these reliefs.
- We welcome the Government’s promise to consult on business rates avoidance and evasion. This could include:
- a review of exemptions such as where business happen to be located on farms.
- further clampdowns on business rates avoidance along the lines of those introduced in Wales and Scotland to ensure that the rules on reliefs such as empty property and charitable relief are applied fairly.
- We continue to support more fundamental changes to business rates. This could include:
- giving councils more flexibility on business rates reliefs such as charitable and empty property relief.
- giving councils the ability to set its own business rates multiplier, or at the very least be able to set a multiplier above and below the nationally set multiplier.
- consideration of alternative forms of income for local government including an e-commerce levy with the funding retained by local government.
- bringing forward changes in the basis of liability so that more is defined in statute; how this is framed should be the subject of a further consultation involving the LGA and councils. This is because many fundamental concepts such as beneficial occupation have been set by case law leading to results which may seem puzzling to the public, such as the fact that large vacant sites may not pay business rates.
Liability and mandatory reliefs
Clause 1 to 3 of the Bill consolidate existing mandatory relief powers and introduce two new mandatory reliefs; a one-year improvement relief and a relief for heat networks. They also allow reliefs for the central list.
- The LGA welcomes the assurance that local government will be fully compensated for all the business rates measures including the new reliefs.
- Applying the new relief will be a new burden for billing authorities including liaising with the VOA on the qualifying works certificate and carrying out the occupation check. The new burdens procedure should apply for this.
- We support allowing reliefs to be granted to properties on the Central List.
Clause 4 of the Bill will allow councils to grant discretionary reliefs without this being subject to a time limit over six months after the end of the financial year to which it relates.
- The LGA agrees with proposals to simplify the administration of discretionary rates relief. We agree with the repeal of the six month’s condition.
- We also consider that the rules on excepted hereditaments (paragraph 8A and 9 of section 47 of the 1988 Local Government Finance Act), which prevent authorities awarding reliefs to themselves or preceptors, should be repealed. These prevent authorities awarding relief to premises such as markets which they own. This was a particular issue in the 2020 Retail Leisure and Hospitality Relief.
Clause 5 of the Bill sets at three years the period at which non-domestic rating lists are compiled. Clause 6 removes the requirement that transitional arrangements are self-financing. Clause 7 reforms the procedure for completion notices after a building has been refurbished. Clause 8 reforms the procedure for transferring properties to the Central List. Clause 9 corrects a flaw in the wording of current legislation regarding credits to local government from the main non-domestic rating account.
- The LGA supports changing the revaluation period to three years on the basis that is accompanied by a requirement for ratepayers to provide more data – this is contained in clause 13 of the Bill.
- We support reforming the requirement for transitional relief to be self-financing on the basis that local government is fully compensated for transitional relief.
- We support the change to the completion notice procedure – this is an issue which local government officers had raised with the Valuation Office Agency and Government.
- The proposed reforms to the Central List, which concern the ability to make changes to the List without requiring a Statutory Instrument and allowing hereditaments within the list to receive relief are similar to those contained in the 2017 Local Government Finance Bill which did not achieve Royal Assent. We supported those measures then and would repeat our support.
Clause 10 of the Bill allows for greater sharing of information on the valuation of non-domestic properties from the VOA to ratepayers. Clause 11 applies to Northern Ireland only. Clause 12 allows for sharing of information from ratepayers to HMRC and from HMRC to and from billing authorities as part of arrangements to digitalise business rates. Clause 13 contains the new duties on ratepayers to provide information on valuation to the VOA and for an annual confirmation.
- The LGA supports these new measures on information sharing on the basis that the information shared with the VOA is also shared with billing authorities.
- The LGA supports the measures on digitalising business rates on the basis that they do not change the responsibility of local authorities for the collection of business rates. Such a service could also help billing authorities with both mandatory and discretionary reliefs as long as it gave billing authorities the ability to look at data for ratepayers with properties both in their own and other billing authorities.
- The LGA supports the new duties on ratepayers. As stated above, we welcome the clarification that the new online system for receiving information from ratepayers will enable the VOA to share information with billing authorities and that the VOA will test this functionality and share information with billing authorities as part of the soft launch of the new system.
Valuation and Multipliers
Clause 14 of the Bill clarifies that material changes of circumstances relating to valuation should relate to physical changes only. Clause 15 changes the calculation for uprating the business rates multiplier only so that they should relate to the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI). This has been Government policy since 2016. It also removes the requirement that the multiplier for a particular financial year has to be approved at the same time as the Local Government Finance Settlement.
- The LGA supported the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 which provided that COVID-19 was not a valid reason for a material change of circumstances (MCC). We support the proposal that MCCs should arise predominantly from physical changes of circumstances and that legislation, licencing changes or guidance should not be in scope for material change of circumstances (MCC) claims. These matters should be reflected at revaluations.
- We support the change contained in clause 15 to the provision that prevents the multiplier being confirmed until the final Local Government Finance Settlement is approved by Parliament as long as this means the multiplier is confirmed earlier in the calendar year than it is currently. It is vital that local government receives early confirmation as this enables correct bills for the forthcoming year to be issued in a timely manner.