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Cert L3 Non Domestic Rating Law Scotland Examiners Comments

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					                          IRRV CERTIFICATE
                         IN LOCAL TAXATION
                            AND BENEFITS
                              (Scotland)
                              June 2011




              NON-DOMESTIC RATING LAW
                     Scotland
Wednesday 8th June 2011
09.25am–12.30pm (including 5 minutes for reading)


                             Time allowed: 3 hours



                              Answer SIX questions
                          All questions carry equal marks

                  Candidates should illustrate their answers with
                  reference to appropriate case law and legislation.

                  Where questions are divided into sections, marks
                  will be allocated equally unless otherwise
                  indicated.

                               Maximum marks: 300
1. A local factory owner operates in renewable energy and has written to you requesting
   details of the Scottish Government's scheme to reduce rates for companies like his.
   Draft a response explaining the renewable energy rates relief scheme.

2.   Explain the statutory provisions for the rating of empty properties.

3.   The portfolio holder for Finance and Support Services is concerned at the low level of
     collection of non domestic rating and has asked for a briefing note on the recovery
     process for unpaid rates.

     Prepare the briefing note.

4.   Explain the types of properties that are:

     (a) exempt from the valuation of rates; and              (30 marks)

     (b) exempt from assessment of rates.                     (20 marks)

5.   Describe the three methods of valuation used by the Assessor to determine rateable
     values giving examples of the types of property where each method could be used.

6.   Detail what information must be included in a demand notice for rates and describe the
     various methods and associated rules on how these notices can be served.

7.   Your Council's website has not been updated for a number of years with regard to
     rates. You have been tasked with replacing the section headed Small Business Rates
     Relief Scheme with the new scheme Small Business Bonus Scheme.

     Draft the content for this section.

8.   Explain the term ‘seasonal occupation’.

9.   As a member of a team developing an on-line training manual for non-domestic
     rates staff, you have been asked to provide a draft for the module entitled
     ‘valuation appeals’.

     Draft the content of the module.

10. Your Revenues Manager has asked you to draft a report that explains the
    statutory provisions and administrative process for the award of rebates of
    rates where properties are used for the care or employment of disabled persons.

     Draft the report.
                          Cert Non-Domestic Rating Law Scotland
                                  Examiners Comments
                                       June 2011


This paper was attempted by 9 candidates (although 1 failed to turn up) and going by the
marks 4 other candidates shouldn't have bothered as well. The paper was passed by only 3
candidates with 1 candidate having a marginal fail. The others were so obviously not
prepared.

I will continue with what I would expect to be present in good answers and where possible
describe how the question was attempted.

Again some general comments on the papers:

1) Read the question and answer only what is asked. If I am asking for the valuation
methods used by the assessor, candidates will score no marks for given me chapter and verse
on the powers and duties of the Assessor and only waste their valuable time.

2) Again candidates failed to complete six questions, whilst in some cases this may be
irrelevant as quite obviously they had just walked in from the street to sit the exams, but for
others answering all six questions could make the difference between a pass and a fail.

3) Answer the whole question, especially if it is in two parts. Once again I asked for the
content of a demand notice and how the demand is served (see Q6 below). It is no good
giving a perfect answer to part 1 and nothing for part 2 as you are not likely to achieve pass
marks. Marks were even available to say you could post demands.

4) When a rateable subject is empty it does not receive a discount or exemption from rates
(as happens in Council Tax). In rates a 50% charge is levied.

5) Know the differences between valuation and assessment appeals, they are different
questions.

 The average mark for this paper was a very poor 130/300 with no candidate achieving over
                                           200 .
Question 1 – Renewable Energy Relief

This question will reappear as it is the newest form of relief, yet not 1 candidate made an
attempt which I felt was disappointing but may reflect the tutors or college.

A good answer would have included the following: -
The Non-Domestic Rates (Renewable Energy Generation Relief) (Scotland) Regulations
2010 (SSI 2010/44).
Effective from 01/04/2010
Renewable energy providers who are solely involved in energy production of heat and power
Must fall in to one of the following categories:
      a. biomass;
      b. biofuels;
      c. fuel cells;
      d. photovoltaics;
      e. water (including waves and tides, but excluding production from the pumped
          storage of water);
      f. wind;
      g. solar power;
      h. geothermal sources;

heat or power produced by Combined Heat and Power (CHP) systems is not classed as
renewable, unless that system uses only sources of energy described in sub-paragraphs (a)
to (h) and has an electrical capacity of 50 kilowatts or less.

RV of combine properties in Scotland
Relief awarded at following rates:
RV up to £145,000                  100%
RV £145K to £ 430K                  50%
RV £430K to £ 860K                  25%
RV £860K to £4million               10%
RV over £4million                   2.5%
State Aid deminimus level applies
Relief applies after other reliefs
Application process
Appeals
Neatness clarity letter style.
The Non-Domestic Rates (Renewable Energy Generation Relief) (Scotland) Regulations
2010 (SSI 2010/44).
Effective from 01/04/2010
Renewable energy providers who are solely involved in energy production of heat and power
Must fall in to one of the following categories:
      i. biomass;
      j. biofuels;
      k. fuel cells;
      l. photovoltaics;
      m. water (including waves and tides, but excluding production from the pumped
          storage of water);
      n. wind;
     o. solar power;
     p. geothermal sources;

heat or power produced by Combined Heat and Power (CHP) systems is not classed as
renewable, unless that system uses only sources of energy described in sub-paragraphs (a)
to (h) and has an electrical capacity of 50 kilowatts or less.

RV of combine properties in Scotland
Relief awarded at following rates:
RV up to £145,000               100%
RV £145K to £ 430K               50%
RV £430K to £ 860K               25%
RV £860K to £4million            10%
RV over £4million                2.5%
State Aid deminimus level applies


Question 2 – Empty Rate

This question was attempted by 3 candidates, one passing and the other two not. The
average mark was 21/50.

Good answers will included the following: -

154 and 155 of 1994 Act
Authorities required to levy 50%
Unoccupied for continuous period of 3 months or more
Applies only to unified business rate
Determined by vacant start date being more than 3 months previous
3 months deemed to be 92 days
If occupied again for less than 6 months before becoming vacant again the occupied period
ignored
Effective from 1/4/1995
Unoccupied properties regs. 1994
Exemptions
Listed buildings
Ancient monuments
Industrial property (other than retail)
Property constructed or adapted for
       Manufacture repair adaptation of goods or materials
       Subjection of goods or materials to any process
       Storage
       Mineral processing or working
       Generation of electricity
Retail means where all or part of any building is used for the retail provision of goods or
services
RV less than £1700
Person entitled to possession is trustee for creditors, trustee under award of sequestration,
executor of an estate
Liquidation
The property is owned by a company which is being wound up
Owner is prohibited by law from occupation or they are being kept vacant because of
government or LA action which will lead to prohibition of occupation
Mandatory relief can continue to apply against the empty rate.
Assessor can be asked to apportion rates
Neatness clarity etc.




Question 3 – Recovery of unpaid rates

A popular question attempted by 7 candidates. 2 candidates scored very good passes whilst
the other 5 did not pass. The average mark was 21/50.

Answers to include the following: -

Section 247 of the 1947 Act
Debtors (Scotland) Act 1987/BAD Act
Authority will petition to court plus certificate
With relevant fee
to say
14 day notice served and that
14 days expired and full or part amount still unpaid
Sheriff must grant warrant
per Act of Sederunt

No court appearance
Warrant can only be set aside by court of session
Addition of 10% fee automatic when warrant signed
Allows recovery by any lawful diligence
Attachment
Procedure and limitations
Exceptional Attachment
Procedure and limitations
Earnings arrestment if in employment
Scale of deductions
Remains in force until debt satisfied
Arrestment and action of furthcoming and sale
Normally bank or Build Soc. Account
Funds frozen until release
Usually released by voluntary mandate
Action of furthcoming if not released voluntarily
Description of individual legal actions for payments:
Must set aside warrant
Small claims action
Summary Cause Action
Ordinary Action
Effect of each
Description of legal actions leading to bankruptcy



Question 4 – Exemptions from Valuation and Assessment
Not a popular question attempted by 3 candidates, however, two achieved very good passes
and the other needn't have bothered trying to guess the answer. The average mark was
27/50.

I was looking for the following in this straight forward question: -

Exempt from Valuation

Dwellings (LGFA 1992)
Agricultural lands and heritages
If only used for this purpose
Includes any buildings used for the purpose
Includes
Woodlands, Market Gardens, Orchards, Reed Beds, Allotments
1956 act


Sewers etc. Section 8 1956 Act

Crown properties
Visiting forces and International Headquarters S7 LG and Rating Act 1997
Atomic Energy Commission Sec6 Atomic Energy Act 1954



Public Parks
Parks, Recreation Grounds etc vested in or in the control of a Local Authority form
which a profit is not derived.
Any buildings in the park are not exempt unless they are used solely in connection
with the park etc. section 19 1963 Act.
Subjects below the Low Water mark.
Public Road Toll Bridges lying wholly or over the sea bed.
Offshore installation below the low mark
Pipelines below the low water mark
Valuation and Rating Order 1977

Moorings
Fish farms
Fishings and Shootings
Effective 1995
Salmon Fishery Board may ask Assessor to value and enter Salmon Fishery in roll
but no rates payable.
Shopping Malls
The common area of covered shopping malls
Exempt From Assessment
Territorial Army –
Sorn Report/Contribution in Lieu
Occupied by Foreign Powers –
Diplomatic Privileges Act 1964
Lighthouses, Beacons & Buoys –
Commissioners of Northern Lighthouses
Elections –
Representation of the Peoples Act 1983
Churches, chapels etc
Occupied and Trustees of the R C Archdiocese of Glasgow v Pinkerton
Enterprise Zones
Neatness clarity etc


Question 5 – 3 valuation methods

It was pleasing to see a valuation question being attempted by all 8 candidates. Quite
amazingly 4 candidates scored exactly 25 to obtain passes. The others did not. The
average mark was 18/50 which really shows how well the others did.

Good answers would have included:
Comparative principle
Most common
Based on examination of actual rent passing
Adjustments may be needed to reflect nature of lease – where insuring and repairs included or
excluded
Rents may have to be time adjusted for a common valuation date
Best if comparable in size, character and situation
Expressed as floorage rate or rate per square metre
Allowance may have to be made for size character and location
Shops, factories, offices, hotels etc.
Contractors principle
Used where no actual rental evidence or suitable comparisons found
Used as last resort
Expresses return on investment rather than rental
Capital value arrived at first
Capital value where new build is cost of acquisition and construction less unremunerative
expenditure
Capital value if existing building reference to sale prices of similar property or updating original
new build cost to reflect age and condition


Question 6 – Demand Notice - content and issue.

Joint top in terms of all 8 candidates attempted it. Two managed to pass with very good
marks as they answered both parts of the question. Two others obtained nearly half marks
by answering only the first part on content. The others - didn't do so well. The average
mark was 23.


Good answers would have included:
Section 237 of 47 act
Schedule 9 of 73 act
Section 8 of 75 act
In demand
Name and address of occupier or the phrase ‘the occupier’
Address and description of rateable property
Rateable value
Rate poundage
Period over which rates levied
Total rates due for the year
Deductions in respect of any relief
Dates on which monthly instalments payable
Amount of each instalment
Instalments of like amount may be rounded to nearest 5p

Issue of the demand
Normal Postage - rules for service (s192 1973 Act)/must be auditable
Electronic Service - 2006 Order
Must be agreed and proper electronic address notified to council
Publish on secure website/sent by email (secure)
Taken as received 2 days after published or electronically sent
Legible in all material particulars
Can withdraw agreement at any time
Can also issue paper demands
Neatness, clarity other relevant issues etc
Question 7 – Small Business Bonus Scheme

Usually the most popular, however, only attempted by 4 candidates. 3 scored really well and
the other didn't. The average was the highest for any question at 30.

I was looking for the following: -

Effective from 01/04/2008
Non Domestic Rates (levying)(Scotland) Regulations 2008
Relief from rates for genuinely small businesses
Calculation of Relief:
Thresholds and relief rates for 2010-11
Regulations set reductions to 2010-2011
Reduction thresholds may change following 2010 revaluation
Combined RV of all properties in Scotland
Application Process
No need to reapply but LA must review within 5 years
Duty places on ratepayer to notify changes
Rate Supplement still charges at 0.4p for those with RV of above £35,000
No longer grant 5% automatic relief for small properties
De minimis limit for state aid - 200,000 euros
"better buy" situation with other reliefs (named)
Effect of 2010 revaluation on SBBS
Neatness, clarity etc

Effective from 01/04/2008
Non Domestic Rates (levying)(Scotland) Regulations 2008
Relief from rates for genuinely small businesses
Calculation of Relief:
Thresholds and relief rates for 2010-11
Regulations set reductions to 2010-2011



Question 8 – Seasonal Occupation

Answered by 1 candidate so I cannot give the fact that the average for this question was
3/50.



A good answer would include:
Item
Extension of reserved occupation
Not in actual occupation but held for use
Unoccupied rate not levied
Rent fixed on the basis of seasonal variation and this reflected in RV
If rated only during peak period benefit would be gained twice
Mackie V Assessor for Renfrewshire - detailed
Midlothian V International Harvester Co- detailed
Impact on liability
Arbuckle Smith and reference to English cases
Warehouses and industrial building not used
Rating Appeal Case
Clydesdale Bank Ltd to Lothian
Neatness and clarity



Question 9 – Valuation Appeals

Attempted by 4 candidates but answered by only 1, who achieved a good pass. The
average mark for this question was a disappointing 17. I suspect for a number this was
question 6 out of 6.


A good answer included:

Item
Proprietor tenant or occupier can appeal to the VAC to have property deleted from VR because
they are domestic – or not to do so
Proprietor tenant or occupier can appeal if aggrieved in any respect at an entry in VR to the VAC
Current Valuation Timetable (Scotland) Order
Late appeal may be competent in exceptional circumstances
Where a person becomes the proprietor, tenant or occupier of a property he has same right of
appeal as if the last valuation notice had been sent to him.
Right of appeal lasts for 6 months after he becomes proprietor, tenant or occupier whether or not
there is any previous appeal by another party
Appeal must be lodged with the assessor in writing and must specify the valuation which the
appellant thinks should be substituted
Electronic submissions
Val roll open to public inspection
After expiry of timescale for appeals appeal is competent on grounds of
                Material change of circumstances
                There has been an error
Valuation Appeal Committee (Procedure in appeals under the valuation acts)(Scotland)
regulations 1995
Where unable to reach agreement with assessor appeal my be made to the VAC for the area
Any party may seek referral by the VAC to the LT 14 days before a hearing and up to 6 months
before disposal date for appeal if
                Facts complex or highly technical
                Evidence complex or highly technical
                Law uncertain or difficult to apply
                Likely to cause precedent
                Property cuts across more than one valuation area
VAC have 42 days after application to decide and will notify within 14 days



Question 10 – Disabled Rate Relief

Answered by 6 candidates, one of whom gave an almost perfect answer. The other 5
struggled. The average was 21/50.
Good answers would included: -

Item
In respect of institutions occupied by LA or other body
Half or more of floor area used exclusively one or more qualifying purpose
Residential accommodation for care or after care of persons with illness
Facilities for training or keeping suitably occupied persons with illness
Residential accommodation for disabled persons
Facilities for training or keeping suitable occupied disabled persons
Provision of welfare services for disabled persons
Facilities under section 15 of Disabled Persons (Employment) Act 1944
Provision of workshop or other facilities under section 3(1) of Disabled Persons (Employment)
Act 1958
The rebate is the amount of rates attributable to the part of the property used exclusively for the
qualifying purpose
Assessor required to certify the RV for the relevant part of the property
Any mandatory or discretionary relief on the whole property is calculated after taking into account
disabled rebate
Application must be made to the local authority
Rebate will be granted for a period not exceeding a financial year and applications for each year
are needed
Possible to backdate by up to one year in exceptional circumstances
Rebate takes the form of reduction in rates payable
If rebate refused applicant can appeal to sheriff
In first instance refusal should be discussed with the authority and if not resolved applicant can
have statement as to reasons for refusal to enable appeal to sheriff
Appeals against the certificated value by the assessor are dealt with as if they were valuation
appeals
90% of the cost of the rebate is covered by government grant
Neatness clarity and style of report

				
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