In this section
Council Tax Manual - Practice Note 2 - Paragraph 2
The definition of a composite hereditament is contained in S.64(9) of the Local Government Finance Act 1988. It provides that:
"A hereditament is composite if part only of it consists of domestic property"
(Hereditament is defined in S.64 (1) of the Act by reference to S.115 (1) of the General Rate Act 1967, whilst the definition of domestic property is contained in S.66 of the 1988 Act, as amended)
Composite properties fall into two main categories, namely:
(a) those that include a non-domestic element which appear (or will appear) in the non-domestic rating list (the majority), and
(b) those that include a non-domestic element which is exempt from rating and for that reason do not appear in the non-domestic rating list (the minority)
When dealing with address changes the following codes should be used:
CR12 Address Change (LON not issued)
CR14 Postcode, number or name amendment only
Code CR12 (Address Change) cannot be used for the addition or deletion of a composite indicator. This is a List Alteration and a LON should be served for the change. Instead, Reason for Report CR09 should be used which will result in a LON being generated and this should be sent.
For public houses, the name of the pub should be entered in the address before the road number. If the word ‘The’ is included in the pub name it should be in the Rating List as well. The address of composite dwelling accommodation at pubs should be the same as the pub, but in some cases it may be necessary to include extra information e.g. if there is more than one domestic banding - Flat 1 and Flat 2, or Manager’s Flat and Staff Flat.
The correct procedure for creating new addresses is set out in the Central Database Best Practice Guide. Please note that for a Public House, the name should be entered first, followed by the street number.
If dealing with a public house name change by means of a one to one recon, please use the attached guide:
The best source of information on occupiers is the billing authority, but care should be taken not to overburden BAs with queries, and it may be best to send schedules to them from time to time to verify if certain properties are still composite.
When dealing with CR12 changes for CT, it is not considered necessary to make any contact. If it is possible to make an alteration from the desk, and if that alteration is likely to have a significant effect on liability, then it would be prudent to send an explanatory letter with the notice.
The latest advice is contained in CTRE IA 110405
CT – The effective date is the date of the event. The date of change of either becoming or ceasing to become composite or a change in balance between domestic and non-domestic is the correct effective date.
The designation ‘composite’ merely indicates that the assessment or banding relates to the use of only part of a property, it does not have any effect on the level of charging for Council Tax or NDR purposes.
Council Tax Manual Practice Note 2: Appendix 2 deals with the valuation of farmhouses for Council Tax.
If a composite farmhouse has been sold separately from the farmland, it will be necessary to delete the composite designation and to review the band if necessary. This procedure should only be followed if there is some certainty that a sale has taken place, the main source of information will be PD/SDLT forms. No investigation should be carried out in other cases, because we should not be seen to be carrying out exercises which could be in the nature of a Revaluation.
The effective date will be the date the circumstances first arose, but in the absence of any indication that the change took place prior to a sale, the date of sale should be taken as the effective date.
Becoming or ceasing to be composite
The Council Tax list will need to be altered if a dwelling ceases to be a composite. Whilst this will always result in a list alteration because of the need to add or remove a composite identifier, it will not always result in a band change.
A ‘composite’ hereditament is a dwelling (LGFA 1992 Section 3(3)) which has domestic and non-domestic parts, specifically one where an appropriate entry will appear in both the Council Tax and Rating List.
Material increase provisions apply to all dwellings (LGFA1992 Section 24(10), whereby there needs to be a relevant transaction (RT) before physical change can be reflected in the banding.
Thus a new extension for wholly domestic use added to a composite dwelling will not fall to be valued until a RT takes place. However, the Council Tax (Alteration of Lists and Appeals) Regulations 1993 (Wales) and the Council Tax (Alteration of Lists and Appeals (England) Regulations 2009 state that where the domestic part of a composite increases or decreases, the list can be altered.
Questions have arisen as to the working of these two provisions in practice and the following advice gives guidance on how to apply the provisions.
Material increases: extensions to domestic accommodation
It has not been past practice of LOs to alter the list where, for example, an extension to a farm house takes place, where the house is actually part of a composite (the non-domestic farm being exempt). It is considered that this is correct where the extension to the living accommodation is newly built and not a conversion of part previously used for non-domestic purposes.
Where there is a conversion of previous non-domestic space:
If, however, an ‘extension’ involved increasing the domestic space at the expense of the non domestic space, then that would fall within the provision of regulation 4(1)(iv) where the list can be altered … “ in the case of a dwelling which continues to be a composite hereditament, there has been an increase or reduction in its domestic use.” In these circumstances the new domestic proportion will fall to be taken into account in the banding. The effective date of such a change will be the date of the change of circumstances (Reg 14(4))
Previous extension followed by change in proportion of domestic use:
There may be circumstances where a separate new domestic extension has been previously built and treated as a material increase, and subsequently there is an increase (or decrease) in the domestic use of the rest of the composite. It is considered that the legislation provides only limited protection against list alteration, and that in this case, then all the domestic part of the dwelling would fall to be valued, under 4(1)(iv) including the extension, as the relevant date for the physical state of the dwelling will be the date of the change under the Council Tax (Situation and Valuation of dwellings) Regs 1992 6(1)(d) and (5A) (b) and (5B)(c). The physical state of the dwelling at the relevant date will include the extension and falls to be valued.
Contact should be made with BAs to clarify if they are content to use the same reference number as before, if an address is changed or if they would prefer a new reference number.
The following information from the CT Referencers Guide Section 5 is reproduced below. Please note the requirement to complete a VO7413 for each new composite.
Where a dwelling is part of a composite property (i.e. a property used for both domestic and non-domestic purposes regardless of whether the non-domestic part is subject to non-domestic rating) you should complete the survey particulars as far as possible in respect of the domestic part only.
A special ‘Composite Property’ form (VO7413) was devised for recording details of composite properties and a set should be maintained at each location. You should complete a VO7413 for each new composite property and add it to the existing set. This is in addition to amending the existing dwelling survey or creating a new one.
A note should be taken of the rateable non-domestic part and a survey made if this is thought to be appropriate. If the referencing of the non-domestic part is thought to be beyond the scope of the visiting caseworker, the inspection should be abandoned after an explanation is made to the occupier, and the whole case passed to a more experienced referencer. The aim must be to avoid the need for two visits to be made to what is, as far as the occupier is concerned, a single property.
However, referencers should be aware before they make arrangements for an inspection that a non-domestic part will require referencing, and the case passed to a suitably experienced referencer. Therefore, occasions when an inspection will be abandoned will be extremely rare.
The following codes should be used on all council tax surveys and should be entered on the individual property details:
Agricultural property: Main Farmhouse