Administration and expenditure of the Chancellor's departments, 2008-09 - Treasury Contents

Letter from Penny Ciniewicz, Chief Executive, Valuation Office Agency to the Chairman of the Sub-Committee


  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.


  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:


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.


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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