Letter from Penny Ciniewicz, Chief Executive,
Valuation Office Agency to the Chairman of the Sub-Committee
VALUATION OFFICE
AGENCY—PORTS
NON-DOMESTIC
RATING
The Sub-Committee has requested a progress report
on the actions taken this year to address concerns regarding the
ports review, raised in their report on the Administration and
expenditure of the Chancellor's departments 200708, First Report
of Session 200809.
FAST TRACK
ARRANGEMENTS
From 24 November 2008, the Valuation Office
Agency (VOA) put in place special fast track arrangements for
ratepayers affected by the review of ports who wished to question
or challenge their new rating assessments. We have written to
all the occupiers, explaining the process to them and are liaising
with them, where necessary, to ensure we can reach a resolution
as soon as possible.
Cases involving backdated rate liabilities in
ports are given priority attention at all stages by the Agency,
which:
Reviews all initial enquiries and responds within
5 working days, unless a site visit is requested or required
in which case it may take up to 10 working days.
Gives an initial response to points raised in
any appeal within 10 working days and aims to confirm a final
decision shortly after that? in any event a decision will be issued
within 2 months in all but the most complex cases.
Refers appeals to the independent Valuation Tribunal
(VT), where agreement can't be reached and a ratepayer wants to
pursue the case, requesting that the tribunal list the appeal
for hearing as soon as possible.
Turning to the specific questions raised by
the Committee:
How many formal appeals have you taken from port
occupiers under the new fast track arrangements?
As at 4 November 2009, the VOA has applied
the fasttrack arrangements to 758 proposals (appeals). 314 of
these proposals were made prior to and were still outstanding
on 24 November 2008 when the PreBudget Report (PBR)
was made. The remaining 444 have been made since the PBR
announcement.
Of these appeals, how many did you respond to
within five days (10 days where an inspection is required)?
The undertaking to respond within 5 days
(10 days where an inspection is required) is in respect of
initial enquiries. The service standard for proposals (appeals)
is to respond within 10 days. 314 ratepayers who had
outstanding proposals prior to the PBR announcement were contacted
in November 2008 informing them that their proposals would
be dealt with under the new fasttrack arrangements. As at 4 November
2009, of the 444 received after PBR, 436 required a
response within ten working days, of these 423 or 97% had
received a response within time and for the remainder a response
was provided shortly thereafter.
How many have been resolved?
At 4 November 2009, 464 of the 758 proposals
have been resolved. In the remaining 294 cases, discussions
are continuing to establish whether a settlement is possible.
Where agreement clearly cannot be reached the matter will be determined
by independent Valuation Tribunals.
How many of the appeals have resulted in a change
to your assessment?
146 of the 464 proposals have been
settled by agreement, well founded or heard at independent Valuation
Tribunal resulting in a change to the assessments. The remaining
318 proposals have been withdrawn or dismissed at tribunal.
How many of the appeals have been referred to
the independent Valuation Tribunal?
Of the 294 proposals still outstanding,
237 have been transmitted as appeals to the Valuation Tribunal
following issue of the Valuation Officer's considered decision.
The presumption is that early hearings will follow subject to
the other parties' views on timing. In practice although ratepayers
and their agents have been invited to support early listing dates,
very few have taken this up. Of these 237 cases, 70 have
a hearing date on or before 16 December 2009.
How many of the independent Valuation Tribunal
hearings have upheld your assessment?
Fifteen cases have been heard before independent
Valuation Tribunals. In each case the Tribunal has either upheld
the assessment or case of the Valuation Officer or dismissed the
proposal for lack of prosecution evidence. It is hoped that these
decisions will provide clarity to enable resolution of other appeals
made on similar grounds.
What are your legal costs for independent Valuation
Tribunals involving port occupiers?
The total cost incurred by the VOA in obtaining
legal advice and carrying out legal proceedings in connection
with backdating business rates for some port companies through
to 2 September 2009 was approximately £35,500.
This includes Counsel's fees and other disbursements associated
with Tribunal hearings, as well as the costs of time spent by
HMRC's legal staff on behalf of the VOA.
Valuation Officers are required to maintain
accurate rating lists. They are not responsible for calculation
or collection of actual rate liability, which is the responsibility
of the local (billing) authority. I have therefore taken the opinion
of the Department for Communities and Local Government for the
answers to the other questions raised by the committee:
BACKDATED LIABILITY
How many ports occupiers have agreed to spread their
liability under this arrangement?
As at 8 October 2009, Local Authorities
have reported that 200 business properties within ports in
England had been granted a schedule of payments.
Has the Welsh Assembly introduced similar arrangements
for Wales?
Yes—the Welsh Assembly brought in a similar
scheme.
How many port occupiers have gone insolvent since
being notified of their backdated liability?
We do not hold information on port occupiers
that may have gone insolvent since being
notified of their backdated liability.
How much backdated liability has now been paid,
and what proportion is this of the total liable?
As at 8 October 2009, Local Authorities
in England have reported that a total of £21,246,973 in
backdated liabilities had been collected with a further £67,860,027 outstanding.
PAYMENTS BETWEEN
PORTS OCCUPIERS
AND OPERATORS
To what extent have port owners taken on backdated
liability identified by the VOA as payable by port occupiers?
The backdated liability remains solely the responsibility
of the occupying business that incurred the rates. We do not hold
information on individual port owners that may have taken on backdated
liability via an agreement.
Do negotiations between port owners and port occupiers
remain ongoing and, if so, is the VOA prepared to await the outcome
of such negotiations before requiring payments from port occupiers?
Valuation Officers are required to maintain
accurate rating lists (they are not responsible
for billing). When they become aware a change is
needed, such as at the ports, they must
make the alteration and also specify the date from
which the change should be effective
for rates charging purposes.
At the time of the Ports Review the requirement
to backdate liabilities was set out in 14(2) of The NonDomestic
Rating (Alteration of Lists and Appeals) (England) Regulations
2005. Regulation states that "where an alteration is made
to correct any inaccuracy in the list or on after the day it is
compiled, the alteration shall have effect from the day on which
the circumstances giving rise to the alteration first occurred."
The date of the change is now governed by regulations
(The Non-Domestic Rating (Alteration of Lists and Appeals) (England)
Regulations 2009) and where the correction is to insert property
that existed at or prior to the compilation of the list, these
require the alteration to be made from the start of the rating
list (backdating), which in this case is 1 April 2005. Valuation
Officers are not given any discretion on the effective date.
Once a hereditament is entered onto the rating
list, it becomes incumbent on the relevant local authority to
bill the relevant occupier. This is because local authorities
are required under the rating legislation to collect the rates
that fall due and have no discretion to vary or amend this liability.
They must act diligently in collecting the rates, and to this
end they have ultimately the power to pursue payment through the
courts if the rates remain unpaid.
It is important to note here that where local
authorities cannot demonstrate that they have pursued payment
for any amounts diligently, the authority is required to make
up the deficit.
The Department for Communities and Local Government
has always advised local authorities that whilst the vigorous
enforcement of debt recovery is important the rigid use of enforcement
procedures may not always be appropriate, for example in cases
of hardship. However, the ultimate decision on what action to
take on each individual case rests with the local authority and
neither the VOA nor any of the Government Departments have powers
to intervene.
In order to avoid the standard system whereby,
if a local authority did not take the steps currently available
to collect the immediate payments form backdated liabilities in
the current financial year it would be faced with paying that
liability into the pool itself, the eight year schedule of payments
was introduced.
13 November 2009
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