Business Rates
Looking to the future
1) A New Rating List
A new Rating List will come into effect from 1.4.2017.
i)
This will be based upon rental values as at 1.4.2015.
ii) The Rate in the Pound (Non domestic multiplier) is not yet known.
iii) Transitional relief may result in the phasing of increases and decreases
in rate liability.
2) Small Business Rate Relief
With effect from 1.4.2017 all qualifying small businesses with rateable
values below £12,000 will be excluded from rate charge.
Tapered relief will continue to apply to qualifying small businesses with
rateable values that are between £12,000 and £15,000.
Small Business Rate Relief
From 1.4.2017 a lower multiplier will be applied to all qualifying small
businesses with RVs below £51,000.
3) Street Trading Test Case
On 25.5.2016 an appeal was run as a test case before the Valuation Tribunal
in respect of a collection of stalls which were operated under street trading
licences.
i) The Valuation Office Agency had assessed these collectively as a
market and premises.
ii) The stalls appeared every Wednesday on Station Road, New Milton,
which is a public highway.
Background to Test Case
Ordinarily it is District Councils who have the power to grant street trading
licences and to oversee street trading.
i) In this instance the District Council had delegated this power to the
local town council.
Background to Test Case
The town council had opted to enter into an agreement with a third party
under which the third party was to act as a “market operator”.
i) Under the terms of this agreement the “market operator” paid an
annual sum to the town council, and sought to recover this via weekly
charges to the stallholders.
Background to Test Case
The street traders provided their own stalls, which they were obliged to
remove at the end of each trading day.
The section of the street in question was cordoned off with barriers, but this
did not occur under a traffic management order.
Background to Test Case
The street had been highlighted as a “consent street” in the enabling
provisions.
All of the background documentation made reference to the Local
Government (Miscellaneous Provisions) Act 1982.
Comment on Test Case
This collection of street traders had the appearance of a market, but in
practice it was a collection of street traders.
Comment on Test Case
Traditionally, it has been recognised that the general public have
unrestricted rights of access over the public highway.
i) Consequently, occupations of a temporary nature which have appeared
on the public highway have not been assessed for rating.
ii) A previous decision by the Valuation Tribunal had held that a car park
operated on the public highway by another council was not capable of
being assessed for business rates.
Outcome of Test Case
The Tribunal determined that the street trading in New Milton did satisfy
the tests for rateable occupation, and, accordingly, it confirmed that the
existing Rating List entry was correct.
Follow Up to Decision in Test Case
It was decided not to appeal the decision to a higher court.
Instead a senior barrister was approached and was invited to write an
opinion on the test case and on similar scenarios.
Counsel’s Opinion
The barrister felt that the Valuation Tribunal had reached the correct
decision, but via an entirely wrong route.
He advised that cases of this nature sat close to the borderline between
rateable and non rateable, and he made it clear that each case was capable
of turning on its own individual circumstances.
Counsel’s Opinion
Counsel felt that, depending upon the facts, 2 possible scenarios were
present:
Either
that the council was doing no more than administering the provisions of the
Local Government (Miscellaneous Provisions) Act 1982 in so far that they
relate to street trading,
Counsel’s Opinion
Or
That the council was going beyond this to the extent that they were
exercising a sufficient degree of control over the surface of the highway,
and, accordingly, they must be regarded as being in rateable occupation of
it.
Counsel’s Opinion
In the circumstances of New Milton, Counsel felt that the presence of a
“market operator” and the charging arrangement between the town council
and the third party went beyond the mere administration of the law, and
was sufficient to make the situation capable of being assessed for rating.
Follow up to Test Case - The Position of the Valuation Office Agency
At the present time the Valuation Office Agency proposes to assess for
rating any group of street traders who appear on the public highway
repeatedly.
i) Only a small number of repetitions will be sufficient.
ii) Only a small number of traders will be sufficient.
iii) It will suffice for the trading to have the appearance of a market,
regardless of its legal status.
Follow Up to Test Case - Next Steps
Counsel’s advice has only been received recently by NABMA, and has yet to
be passed on to the Valuation Office Agency.
It is hoped that the Valuation Officer will abide by Counsel’s advice, but this
cannot be guaranteed.
Follow Up to Test Case - Advice
• There is no hard and fast rule. Each case will be judged on its own
circumstances.
• The closer that a council is to merely enabling street trading within the
terms of the Local Government (Miscellaneous Provisions) Act 1982, the
less danger there is of being assessed for rating.
Follow Up to Test Case - Implications for Xmas and Seasonal Markets
The principles that Counsel has applied to the street trading at New Milton
will apply equally to Xmas and seasonal markets.
Follow Up to Test Case - Implications for Xmas and Seasonal Markets
Xmas markets and seasonal markets are likely to occur less frequently than
the street trading at New Milton. However, Counsel states:
“In my view liability to rates cannot be avoided merely because the right is
annual rather than indefinite, or because it is only to hold only a once-weekly
market.”
Follow Up to Test Case - Implications for Xmas and Seasonal Markets
In the absence of a right to hold a regular market, the mere expectation of
future markets, based upon a previous history of markets having taken
place, is sufficient for the “sufficient permanence” test that rating applies.
4) Testing the Correctness of the Forthcoming Rating List
NABMA has been collecting rental evidence in respect of market
occupations.
This will be used to analyse and test the correctness of the rateable values
for markets in the forthcoming 2017 Rating List.
Contact
Graham Heilbuth, of Lambert Smith Hampton, is a specialist in business
rates and is the rating advisor to NABMA.
Graham can be contacted on:
Tel. 01908 787503
Mob. 07841 684877
Email: [email protected]
Street Trading on the Public Highway
Advice Designed to Avoid Assessment for Business Rates
Principles
1.
The street must be designated as a consent street.
2.
Control must not be exercised by a third party. Counsel drew a
distinction between a “superintendent” (not likely to bring the
occupation into rating assessment) and a "market operator", which in
his view went too far.
Principles
3. Councils must not provide stalls.
4. The stalls must be clearly portable, and must be provided by the street
traders
Principles
The stalls must be temporary in nature, not attached or fixed to the surface of
the highway, and must be capable of being easily removed without the need for
significant dismantling to take place.
Counsel expressed concern as to whether the stalls present in the New Milton
scenario could be regarded as being portable. Being capable of being dismantled
and carried away was not in his view sufficient to qualify as being regarded as
portable. (Counsel may have not been given sufficient detail on this point, as the
stalls at New Milton were in fact placed in position and removed by the street
holders, and so, could conceivably have qualified within the definition of the term
portable). Whether a stall is portable or not is likely to remain something of a
grey area, but the more substantial and elaborate a stall is, the less likely it is to
qualify as being "portable”.
Principles
5. If charging to the stall holders by the council is to occur, this "must be
referable to the cost of administering the scheme". Provided that the
charging does no more than cover the council's costs of administration
in relation to the street trading, and that this is demonstrable, then the
charging should not compromise the council's position and make the
occupation rateable.
Principles
6. If barriers are to be erected in the street, this should be done within the
terms of a traffic management order. If barriers are erected in the
absence of a traffic management order, there is a risk that this will be
regarded as a rateable act.
Principles
7. In general it must be demonstrable that the council is doing no more than
discharging the normal regulatory functions of a district council in the
public interest. It follows that there must be a close adherence to the
terms of the Local Government (Miscellaneous Provisions) Act 1982, in so
far that they relate to street trading.
Principles
If the council merely exercises its functions in the public interest under
Schedule 4 of the 1982, it will be regarded as acting as a "custodian for
the public", and will not be rateable.
Principles
In the alternative:
If the council goes sufficiently far beyond the exercise of these functions
as to assume ownership or occupation or control of a unit of property
recognisable as a hereditament then it is likely to be rateable.
Graham Heilbuth MRICS, Lambert Smith Hampton
19.9.2016