Death, taxes, and business rates—the only three certainties for the British shopkeeper. Business owners will be familiar with NNDR – National Non-Domestic Rates.
General Background to the Collection and Enforcement of Rates
Local councils (charging authorities) are entitled to apply various charges to individuals and businesses, known as the ratepayer, who maintain residence within their local area[1].
The origins of this system can be traced to the Poor Relief Act 1601, which created a poor law system in England and Wales. It formalised earlier practices which arose out of the breakdown of mediaeval social charitable systems. The underlying principle in the new system was that a “poor rate” which is the equivalent of the modern non-domestic rating, applied to occupiers of premises within the local parish.
The amount which each person was to be rated was determined by overseers and until 1836 was not a universal measure. However, the Parochial Assessments Act 1836 clarified that this would be made upon “an estimate of the net annual value of the several hereditaments rated thereunto”.
Valuation Lists
Even at that point, though, there was no standing document to determine the annual rate and the overseers ascertained anew each rate as it was made.
The Union Assessment Committee Act 1862 provided for the first time for the making of a valuation list. This went through a series of iterations until it reached the form currently used under the Local Government Finance Act 1988, s 52(1).
Prior to 1 April 1990, rates were calculated by applying a uniform amount per £ (the rate) to the rateable value of every hereditament. The rate was set by local authorities.
The ratepayer becomes liable to the non-domestic rate per chargeable day if his name appears on the rating list.
Three-part formula
From 1 April 1990, the rateable value was retained, but the rate was replaced by a multiplier. The multiplier is generally uniform save for specific cases. The essential formula to calculate the chargeable amount is
rateable value × multiplier
The ratepayer becomes liable for the non-domestic rate on a day-by-day basis per financial year, a period of 12 months beginning 1 April[2], known as the chargeable day[3]. This is the 3rd limb of the formula to decide the chargeable amount. The formula is therefore
rateable value × multiplier
Number of Chargeable Days
Difference between ratings and enforcement jurisdiction
Two distinct systems are in place which deal separately with ratings and enforcement.
Jurisdiction of magistrates (Valuation Tribunals)
These powers stem from LGFA 1988. Sch 9, para 1 empowers the Secretary of State to make regulations providing for the collection and recovery of amounts in respect of rates which persons are liable to pay under ss 43, 45 and 54.
Where notice requirements are satisfied, the charging authority may apply to the magistrates’ court for a liability order against the person served with the notice in question[4].
Justices have to inquire whether the defendant is the occupier[5], that there is such a rate as alleged, that the party summoned is named in the rate, and that he has not paid[6]. The duty of the court on an application for a liability order is to make the order if it is satisfied that the sum has become payable by the defendant, and has not been paid[7].
Rating Jurisdiction (VOA)
There are separate rating lists including local lists, central non-domestic rating lists and rural settlement lists.
These are managed[8] by a “valuation officer”. In practice, the valuation officer is nowadays represented by the Valuation Office Agency (VOA).
There are systems for England and Wales in place should an occupier wish to challenge the rate applied to a hereditament. Any such challenges would be dealt with by the VOA[9].
Future Articles
- Necessary Ingredients of Rateable Occupation
- Liability Orders
- Costs
- Remedies
- Statement of Case
- Relief for various types of hereditaments such as
- charities
- rural settlements
- small businesses
- discretionary relief
- exempt hereditaments
- Other relief including
- improvements rates relief
- heat networks rates relief
- public lavatories rates relief
- rural rate relief
- Unoccupied hereditaments
- Billing: demand notices
- Validity of Rating Lists
- Iteration of Rating Lists
- Alteration of Rating Lists
The materials herein comprise of my personal views; they do not constitute legal or other professional advice.
Notes
[1] The Local Government Finance Act 1988 (LGFA 1988)
[2] LGFA 1988, s 145(3)
[3] LGFA 1988, s 43(1), s 43(2), s 43(3), SCHEDULE 4ZA
[4] SI 1989/1058, reg 12(1)
[5] ex p May
[6] In the exercise (inter alia) of these powers, the Secretary of State has made the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 (‘the C and E Regulations’) SI 1989/1058
[7] SI 1989/1058, reg 12(5)
[8] LGFA 1988, s 41(1)
[9] Although this is the case of practice, strictly speaking it is left open whether a claim to exemption can be set up in distress proceedings Evans v Brook and Shillito v Hinchliffe
