Purpose of Report
To provide the Joint Committee with an update on current issues within non-domestic rates.
That the report be noted.
Alternative Options Considered and Rejected
Reason for Decision
The following updates were noted:
Supporting Small Business Relief Scheme – 2017/18 to 2020/21
Total awards as at 30 June 2018 for the City of Lincoln, North Kesteven and West Lindsey equated to £6,473, £23,684 and £19,926 respectively. For both the City of Lincoln and North Kesteven there had been a reduction of one hereditament since the last meeting of this Committee, which was due to an increase in the rate value for these properties.
Support for Pubs Scheme – 2017/18 to 2018/19
Total awards as at 30 June 2018 for the City of Lincoln, North Kesteven and West Lindsey equated to £23,975, £28,371 and £26,118 respectively. There had been no change in the number of awards since the last meeting of this Committee.
Discretionary Relief Scheme
During quarter one of 2018/19 officers had undertaken a number of exercises to correctly identify those ratepayers that may be entitled to relief and calculated the cost of relief for all businesses affected by the revaluation, whereby the 2018/19 charge had increased as a result. Since 2017/18, the number of accounts identified for all three districts had decreased and, as a result, the value of relief awarded was as follows:
· City of Lincoln – this was a banded scheme. The award had remained the same for all bands, with the exception of those facing an increase between £25 and £500. The relief to be awarded for 2018/19 had increased from 50% to 70%, providing additional support to those ratepayers;
· North Kesteven – this was a banded scheme. The award had remained the same for the first two bands but all others had reduced to 80% of the 2017/18 award;
· West Lindsey – this was a percentage reduction scheme, with all identified ratepayers receiving a 50% reduction. This was a decrease from 2017/18 of 80%.
Review of 2018/19 Awards
A review of awarded relief took place during November and December 2018. As a result, the schemes had been adjusted to ensure all funding was awarded up to 30 September 2019. The schemes had therefore been amended, as follows:
· City of Lincoln:
- increased the 50% award to 72.5% for those in the second band of the scheme;
- £85 to be awarded to all those in the third band of the scheme and above;
- this would result in an additional award of £14,623.
· North Kesteven:
- £50 would be awarded to all those in the second band of the scheme;
- £200 would be awarded to all those in the third band of the scheme and above;
- this would result in an additional award of £25,900.
· West Lindsey:
- increased the relief from 50% to 58%;
- this would result in an additional award of £10,075.
A comparison of the new Discretionary Relief Scheme for 2017/18 and 2018/19 was set out in the report and showed the number of accounts identified, together with the total cost of relief.
During quarter four of 2018/19 officers were undertaking a number of exercises to correctly identify those ratepayers that may be entitled to relief and calculated the cost of relief for all businesses affected by the revaluation, whereby the 2019/20 charge had increased as a result.
Business Rate Pilot – 100% Business Rates Retention in 2018/19 and 75% in 2019/20
Details relating to the Government’s announcements in relation to plans for 2019/20 Business Rates Retention Pilots were set out in paragraph 5.4 of the report.
The existing 2018/19 Lincolnshire pilot members had assessed the benefits and any risks associated with a 75% pilot. Local Government Futures had been commissioned to review the latest publicly available Business Rate projections in order to ascertain whether they were likely to reflect further growth in the business rate base or were predicting a decline in business rate collection. Initial projections of a 75% pilot based on the current pilot member authorities indicated that a further 9.9 million of business rates could be retained in the county during 2019/20. If the pilot bid was approved and these additional funds materialised, they would be available to be distributed across Lincolnshire and Greater Lincolnshire on an agreed basis.
Unfortunately a bid for 100% pilot status was not one of the 15 successful applications approved, therefore, both authorities would revert to being part of the Lincolnshire Pool in 2019/20 along with the County Council and other Lincolnshire Districts.
Recent Court of Appeal Decision – Automated Transaction Machines
Further to the update at the last meeting of the Committee, the Valuation Office Agency had submitted an application on 10 December 2018 for the right of appeal to the Court of Appeals ruling in respect of Automated Transaction Machines built into the front of a shop or petrol station having a separate business rates bill. Officers understood that the Supreme Court may take up until June 2019 to decide whether to hear the case, potentially adding a further 18 months to two years before a further decision was made.
Paragraph 6.1 of the report set out that there was concern that some owners of properties that were not genuine businesses may seek to reduce their tax liability by falsely declaring that the property was available for let. A question was asked as to whether there was any evidence to support this. No evidence had been gathered, but this had been raised as a concern as part of the pre-consultation process and was now being investigated by the Team Leader to establish whether or not this was an issue for the local authority.
With regard to the Automated Transaction Machine appeal process, members asked whether there had been any indication from the Government that it would provide support to local authorities should businesses be able to appeal. It was unclear at this stage whether the Government would reimburse local authorities and that local authorities were obliged to make provision for appeals as part of its budgeting. The Government may, therefore, expect local authorities to have made adequate provision as part of this process to cover the cost of any appeals businesses may submit in this respect. The issue for local authorities, however, could be with backdated claims. Lincolnshire Finance Officers had recently met and a fundamental review across the board would be undertaken to determine how much should be allocated for appeals given the potential outcome of the Supreme Court case. In light of the current 100% business rates pilot and subsequent review of business rates, the timing was not in local authorities’ favour to expect any assistance from Government.
A question was raised in respect of the support for pubs scheme and whether the relief only related to those establishments that were licensed. It was agreed that this matter would be clarified by officers and picked up outside of the meeting with the member who asked the question.
Clarification was sought as to whether charity shops received reductions in business rates and it was reported that registered charities would be entitled to discretionary and mandatory relief. There were also issues with the sale of charitable or ‘new’ goods from certain charitable establishments and this was something that the local authority actively investigated.
In relation to holiday lets, it was understood that a number of businesses were registered as holiday homes but opted to pay Council Tax as a single person dwelling. Clarification was provided that it would be up to the Valuation Office to determine whether a property was residential or commercial. If a holiday home fell under the category of a residential property a valuation and Council Tax banding would apply in the same way as it would with any other residential property.