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Part 2: Invalid Proposals and Invalidity Appeals – England

VO letters and forms which are not included as appendices are available as MS Word Templates


Legislation for the application of Appeals Direct in England can be found in

Statutory Instrument 2009 No 2269 The Valuation Tribunal for England (Council Tax & Rating Appeals) (Procedure) Regulations 2009 (SI 2009 No 2269)

and

Statutory Instruments 2009 No 2270 The Council Tax (Alteration of Lists & Appeals) (England) Regulations 2009 (SI 2009 No 2270).

2.1 Introduction

A decision on whether or not to serve a Notice of Invalidity must be made by the LO within 28 days of the receipt of the proposal form or of the letter purporting to be a proposal. Specific guidance is given in Section 3 part 1 and Appendices 3.2, 3.3 and 3.4.

A proposal should be considered as invalid where:-

i) it is served on the LO after any statutory time limit has expired; or

ii) it is made by a person who is not entitled to make a proposal; or

iii) it does not contain all the information statutorily required; or

iv) it is not made in any of the circumstances outlined in Reg 4 of the 2009 Regulations (2009 No. 2270) for England.

If the proposal is valid, except that a certain item of information is missing, it should not be treated as invalid but should be returned to the appellant with a request to complete the form. If it is returned completed, it should be registered as a valid proposal and dealt with in accordance with Part 3 if it then passes all other tests for validity.

All invalid proposals need to have had a code of grounds allocated to them, and added in manuscript to the appeal form in accordance with Section 3 part 1.16.

It should be noted, in the context of time limits, that for a proposal as a 'new taxpayer' to be accepted as within time to be valid (i.e. 6 months from becoming the taxpayer), the clock starts ticking from the date they first became liable (solely, jointly etc.) to pay council tax in respect of that dwelling, which may be later than the date they acquired an interest in the property. Occasionally the two dates may not tally. Where this becomes a particular issue advice should be sought from the Head of CT Technical.

2.1.1 Following the VTE decision in Alexander VO v Imperial Tobacco, certain principles were accepted concerning determining invalidity, and all advice in this section is subject to these principles. In summary, defects in proposals will come within four categories and this will determine LO action as follows:

1. Minor clerical error - does not require invalidity notice.

2. Significant omission - may or may not require notice depending on what is omitted.

3. Misleading information – in all cases where deliberate will require invalidity notice.

4. Fundamental error - does require invalidity notice, or can be raised at later date.

Only in category 1 will an invalidity notice never be served. Only in category 4 will a notice always be served. In categories 2 and 3, the deciding factor is, will the omission of poor information prejudice the LO’s case to arrive at a correct band?

In categories 2 and 3 the LO does not have the right to raise invalidity at a later date, where a notice could have been served within 28 days, using information available, but wasn’t.

Only in category 4 can a LO raise invalidity outside the time limit, or even at an appeal hearing, when it becomes apparent that a fundamental problem exists with the proposal, that could not have been determined earlier.

Examples of categories

Minor clerical errors: spelling errors, wrong post code, not signed but where name given

Significant omission: Where information statutorily required is omitted. In this case the onus is on the LO to make a judgement on receipt as to whether the omission will be detrimental or prejudicial to the LOs case or ability to maintain a correct list. An invalidity notice will not be required when

The date of the LON is missing and the date is known and within time limit.

The date of becoming new taxpayer is missing but LO knows from a transaction that proposal would be valid

Misleading or incorrect information: A judgement must be made on a similar basis to 2. above. Most usually misleading or incorrect information will be prejudicial to LO properly carrying out his/her duty. Deliberate attempts to mislead will invariably be treated as invalid. A proposal that claims a property has been subject to a physically changed locality, that is judged not to be so, will come under this category.

Fundamental errors:

Taxpayer not occupier of dwelling with no proposal rights.

Property mis-identified on proposal.

2.1.2 The following table gives examples of 2, 3, and 4 above with appropriate action

Significant Omission

May or may not require notice depending on what is omitted. Cannot raise at later date.

Where essential information is missing, return to taxpayer with Invalidity Notice, but draw attention to defect and give opportunity to amend and re-serve as a valid proposal.

Misleading Information

In all cases where deliberate and significant, will require invalidity notice. Cannot raise at later date.

Fundamental Error

Does require invalidity notice, or can be raised at later date.

A new taxpayer makes a proposal but doesn't write the date on which they became the taxpayer.

● If we know the date (we have a record of the transaction). We can make this valid if it is within the time limit.

Deliberate attempts to mislead will invariably be treated as invalid. When a knowable error is not spotted and we do not serve an Invalidity Notice, we cannot raise invalidity again at a later date, or at the hearing.

Examples might include:

● Change to the property as cited hasn't happened
● Physical Change to the locality that hasn't happened.

Lacks the name and address of the proposer, and the capacity in which the proposer makes the proposal.

● We must make sure that the proposer has a legal right to make the proposal.

A taxpayer makes a proposal against a notice but doesn't write the date of the notice;

● We will know the day - (look it up on the CDB). We can make this valid if it is within the time limit.

Does not correctly identify a relevant decision of the VTE or the High Court relates.

Fails to establish an essential link between relevant decision and their own property, but provides spurious reasons.

● The proposer does not need to provide the date of that decision; we can find that ourselves.

Does not identify the dwelling to which it relates; this need to be clearly identified.

● Make a reasonable attempt to match with the correct CDB entry before serving an invalidity notice. This may include returning the proposal for clarification or telephoning the taxpayer for more information.

If the balance of a composite has been changed and a proposal has been made without a date of the change being included. LO cannot alter list correctly without a date;

● Invalid return to taxpayer for completion.
● If the date is known to LO consider serving LON to correct list.

   

Proposal in letter form where it is clear what the taxpayer is seeking, though not all the information is present or in the statutory form;

● Accept as proposal where intention is clear, and substantially conforms.

   

A statement of the reasons for believing the list to be
Inaccurate;

● If it is clear from the context of the rest of the proposal then we can accept as valid.

   

Not telling us the date/description of the material increase or reduction. The date date/description will usually be key to us dealing with the case;

● Invalid - Return to Taxpayer for completion.

   

If the proposal disputes the day from which an alteration should have effect, a statement of the day proposed in its place.

● Invalid - Return to taxpayer for completion.

   

Does not identify the respects in which it is proposed the list be altered;
● Invalid - Return to taxpayer for completion.

● A statement or clear inference a band reduction is required, but a specific band not essential.

   

For more detail please see Appendix 3.3 to this section - Basic requirements for a valid proposal.

2.2 Recognising invalid proposals at point of receipt

2.2.1 Who may make a valid proposal?

An interested person who may be

● The taxpayer

● The occupier

● The owner (if neither the taxpayer or occupier) providing he has a material interest in the dwelling AND at least part of the property is not subject to an inferior interest ie has not been let out and part is retained available for occupation. (See definition of owner in LGFA 1992 S.6(5)).

If a proposal is not received by one of the above or an agent who has authority to act on their behalf, it will be invalid.

2.2.2. Proposals not subject to time limits

● Proposals on grounds of material reduction (see 2.23)

● Proposals requesting a new dwelling or deletion of a dwelling

● Proposals for a change in balance of domestic value in a composite dwelling, or becoming or ceasing to become composite

2.2.3 Proposals made on ‘material reduction’ grounds

There are three types of change that might lead to a 'material reduction':

(i) demolition in whole or part

(ii) any change in the physical state of the dwelling’s locality

(iii) works of adaptation for disabled person

In cases (1) and (iii) it is usually clear from the proposal whether demolition has taken place or whether there has been adaptation for a disabled person, but a validity decision in a change in the physical state of the dwelling's locality case can be difficult to make at the point of receipt.

The proposer has to be of the opinion that a material reduction has arisen. The actuality cannot be judged at point of receipt. However, where the grounds on the face of it do not satisfy the wording of the legislation the proposal should be declared invalid.

2.2.4 Explanation of ‘physical state of a dwellings locality’

The phrase ‘physical state of the dwelling's locality’ should be taken to imply something fixed and permanent, not something which is transient (i.e. subject to daily or weekly change). Increases in traffic and associated nuisance are not valid grounds, unless the local cause is rooted in some physical change to the fabric of the locality.

The Court of Appeal in Chilton-Merryweather v Hunt & others 2008 confirmed existing VOA understanding of the law. The appeal related to material reduction and the meaning of the words ‘physical state’ in relation to four validity appeals concerning traffic increase on the M61 and associated nuisance.

There are two elements to consider:

• Has there been a 'change in the physical state'?

• Is it within 'the dwelling's locality'?

change in the physical state...

In essence ‘a change in the physical state’ means a change in the physical landscape, buildings or infrastructure, and could include, for example, new telephone masts or pylons, new or widened roads, and new or extended buildings. An intensification of an exiting use (e.g. an increase in the volume of traffic) does not constitute a 'change in the physical state', but permanent alterations to a road layout would constitute such a change.

the dwelling's locality…

What constitutes the dwelling's locality will be a matter of fact and degree. In general, the smaller the 'change in the physical state', the smaller the locality within which it might have a value impact. An extension to 5 Acacia Avenue is a 'change in the physical state' and is clearly in the 'locality' of 3 Acacia Avenue, but is not likely to be in the 'locality' of 123 Acacia Avenue. A new sewage works close to Acacia Avenue is also a 'change in the physical state' and would most likely be perceived as being in the locality of all of Acacia Avenue (and beyond).

The general principles to be adopted are that a proposal may be accepted as valid where any 'change in the physical state' has occurred, and has been identified on the proposal, which could reasonably be said to be in 'the dwelling's locality'. The proposer only has to be of the opinion that the valuation list is inaccurate and the change has caused a material reduction in the value of the subject dwelling such that a lower banding is warranted. Whether we agree with this opinion is a matter for valuation, and does not affect validity of the proposal.

In accordance with Reg 5 (1) (d) (ii) of SI 2009 No 2270, the proposer must include a statement of the reasons they believe that a 'material reduction' has occurred. Where this involves a 'change in the physical state', that change must be identified. If that change is within the 'dwelling's locality' then the proposal is valid. Whether the change is band significant cannot often be determined at the point of receipt, but the fact that you don't think it has much affect at all on value is not a reason for challenging the proposal as invalid.

Examples of a change in the physical state of a dwelling's locality

There will be many possibilities, but the following examples may help:-

• The moving of a lamp post a few feet – invalid. This would not considered to be a change to physical state as there was a lamp post in the locality before.

• The completion of a new road layout close to the boundary of the property – valid

• The completion of a new road layout a mile from the property, which is said to cause extra traffic – invalid. (The new road layout is a 'change in the physical state' but would not reasonably be considered to be 'in the dwelling's locality'.

• Increase in noise and pollution since AVD due to general traffic increase – invalid

• The completion of a Nuclear Power Station, say a half a mile (or more) from the property – valid. (It would be difficult to argue that a change of that scale would not be considered to affect values in quite a wide locality. The issue will then be whether the affect is such that a lower band is warranted.)

• The discovery of contamination, which pre-existed the dwelling, and was present at AVD - invalid, no physical change to state of dwelling’s locality.

If at the point of receipt, it is not be possible to determine whether or not the change is in the dwelling's locality or not, the proposal should be treated as valid and challenged later when the contrary facts are known.

The examples above are illustrative only. The concept of 'locality' cannot be interpreted as a purely geographical distance. The size and scale of a physical change will influence how wide the 'locality' is and its effect on value. A small change may be value significant in a small locality, whereas a major change could well have impact over a greater distance.

Any change in the physical state of the locality has to be considered in terms of the economic and market conditions at the AVD of 1 April 1991. Whether such changes will be band significant will depend on the evidence. What is perceived to have an effect on value today may not have been relevant at the AVD.

2.3 Initial Registration

Every invalid proposal needs to be registered in the Council Tax application immediately following the decision on validity. Ensure that the case type (which defaults to ‘’P’’ in England) is overwritten with ’N’’ on each occasion. A working docket VO7456 should be requested on the day following registration and added to the originating proposal. Owing to the limitations of the application, it is not possible for this to be output on the same day as registration.

If Part D of VO7455 (Dwelling Details) has been completed, the opportunity should be taken to check the individual property details held against the address within Property Details, and to input/amend them as necessary.

2.4 Serving Notice of Invalidity

When a LO considers that a proposal is invalid, a notice must be served on the proposer under Regulation 7(1) (England) within 28 calendar days stating:-

i) why the proposal is considered to be invalid;

ii) the rights of the proposer, if he/she disagrees with the LO’s opinion.

Where the proposal is considered invalid for a reason other than being “out of time”, the proposer will have the option of submitting a further proposal on different grounds.

When a proposal is input as invalid, an Invalidity Notice will be generated automatically within the Council Tax Application (CDB). The Invalidity Notice gives a formal decision on the validity of a proposal and sets out the rights to appeal the decision to VTE.

2.5 Appeal against Notice of Invalidity

Following the introduction of ‘’Appeals Direct ‘’ under Statutory Instrument 2009 No 2270 The Council Tax (Alteration of Lists & Appeals) (England) Regulations 2009, the proposer, should he/she decide to appeal, is required to make this appeal directly to the VTE within four weeks from the date of the LO‘s decision.

2.6 Original Proposal now considered valid

Where the LO has reviewed their decision and considers that the original invalidity notice was incorrect, a fresh case for the valid proposal should be registered in accordance with Section 3, part 3. The date of the LO’s decision to treat it as valid should be input as the date of receipt. This will not affect the effective date of any alteration resulting from the appeal; this will still relate to the date the proposal was originally received. If a hardcopy register is maintained, it should be noted accordingly. Letter VO 7740 should be sent to the appellant to inform him/her that the Invalidity Notice has been withdrawn. This letter also provides the name of the caseworker. A copy should be kept with the papers and the whole cased up in accordance with Section 3 part 3. VO7740 is available from the Council Tax Appeals Direct Resource Kit

An acknowledgement letter VO7705 will be output automatically for the valid appeal. This is not required and should be destroyed; the acknowledgement is included in the VO7740. The working docket for the (now valid) appeal should be endorsed with the date of the VO7734 (letter to accompany Notice of Invalidity) as the date of acknowledgement.


Where a proposal is treated initially as invalid and the proposer successfully appeals, the VTE notifies the VOA that the proposal should now be treated as valid. A fresh valid proposal case must be raised (with a new case number) with suitable case remarks and reference to the previous 'invalid' case number and VT decision, with the date of the decision being input as the date received. The working docket for the (now valid) appeal should be endorsed with the date of the original VO7734 as the date of acknowledgement.

 

2.7 Examples of Changes to validity status - IT and VTE implications

It is not possible to convert a valid proposal to an invalid proposal (or convert an invalid proposal to a valid proposal) within the current IT. Essentially the IT handles proposal cases in such a way that once the validity of the case has been set, it is not possible to change it. This has always been the case and has not changed due to the implementation of appeals direct.

The following examples set out what to do when the decision on validity is changed, and clarifies the 'date received' to be used.

Example 1: Invalidity change within 28 days

Proposal received and considered at first to be validly made but, within the 28 day period for issuing an invalidity notice, and prior to issuing the substantive decision notice, it is identified that the proposal should have been treated as invalid.

The current 'valid' proposal must be cleared using code 13 (for the decision notice reason) with appropriate text entered along the lines of:

"this proposal was registered as valid, but is now considered to have been invalidly made"

On production of the decision notice, the notice should be shredded.

A fresh case must be raised but marked as invalid ('n') which will provide a new case number. The 'new' invalid proposal should be progressed in line with existing guidance on handling invalid proposals.

The correct date of receipt should be the date on which the proposal was first received.

Example 2 : Invalidity indentified after 28 days

Proposal received and considered at first to be validly made. After 28 days from the receipt of the proposal, and prior to issuing the substantive decision notice, it is identified that the proposal should have been treated as invalid. There is no provision for late service of an invalidity notice.

The list entry should be reviewed and dealt with in the normal way (as a valid proposal) in the decision notice. Code 13 should be selected and the following statement should be included:

"Having reviewed your proposal I do not believe that it was made within one of the limited circumstances in which a proposal can be accepted as valid. As a consequence, if you appeal this decision notice to the Valuation Tribunal, I will initially ask the Tribunal to determine whether the proposal has been validly made. If the Valuation Tribunal agrees with me that your proposal been invalidly made, it will not be possible for other aspects of your case to be heard."

No further work is needed unless the taxpayer seeks to appeal the decision to the VT. Case remarks should be recorded on the 'valid' proposal case to the effect that the VOA contend the proposal is invalidly made.

If the taxpayer appeals to the VTE, they must be contacted and advised:

● why the proposal was considered to be invalidly made

● that at the VTE hearing, the validity will need to be determined first

● that if the VTE agree the proposal was invalid, no consideration will be given to the banding decision

At the hearing, the validity will be considered first. In the event that the VTE find it valid, under regulation 33 of the VTE 2009 procedure regs, the VTE must not proceed to consider value without agreement of all the parties. If the LO has not prepared a valuation defense case previously, the clerk should be informed of the LO’s objection to the case proceeding to valuation stage.

There is no need to raise an additional invalid case, because the validity issue will have already been determined at VT.

Example 3: ‘Invalid’ proposal now considered valid

A proposal is received which is considered to be invalid and the appropriate invalidity notice has been issued. After the issue of this invalidity notice, through discussion with the taxpayer, it is considered that the invalidity notice was incorrect, and the proposal should have been treated as validly made. No appeal has been made to the VT against the Invalidity Notice.

Advise the taxpayer that there is no need to appeal our invalidity notice to the VT because we now agree that the proposal should have been registered as valid. The invalidity decision notice should be withdrawn. The letter vo7740 (0508) should be utilised to confirm the withdrawal of the invalidity notice.

Raise a fresh valid proposal case. In case remarks reference must be made to the 'invalid' proposal case number and a brief note as to why validity decision changed.

The list entry is considered and the appropriate decision notice is then issued.

The correct date of receipt for the new valid proposal will be the date on which the invalidity notice was withdrawn. The decision notice to be issued on the new valid proposal, must be issued within 2 months from this date (internal target).

Example 4: Invalid proposal made valid by VTE decision

An invalidity decision notice has been issued on an invalid proposal, and this decision notice has been appealed, by the taxpayer, to the VT. The appeal is given a full hearing by the VT who subsequently determine that the proposal had been validly made.

A fresh valid proposal case must be raised (with a new case number) with suitable case remarks and reference to the previous 'invalid' case number and VT decision

The new valid proposal should be progressed in the same manner as existing guidance.

The correct date of receipt for the new valid proposal will be the date when the VT arrived at their decision. The decision notice to be issued on the new valid proposal, must be issued within 2 months from this date (internal target).

2.8 Activity Codes

Under Appeals Direct, an Invalid Proposal no longer requires an activity code.

2.9 Invalidity hearing at Valuation Tribunal

‘VT Presentation for Invalidity Appeals’ (Appendix 3.9) has been designed to assist caseworkers prepare cases for invalidity hearings. The scenarios cover a range of invalidity possibilities, paragraphs, subject heads, and the relevant regulations are set out to cover the specific circumstances applicable to each case. Regulation 33 of the 2009 VTE procedure regs prohibits a VTE proceeding with the valuation hearing straight away without the agreement of all the parties.

2.10 Settlement by Valuation Tribunal England decision

When the VTE has issued its decision, the case should be cleared on the computer using settlement code 'I' or 'J' as appropriate.

When this decision is that the appeal is invalid, a review of the band should be carried out if this has not already taken place. If the review has already taken place, no further action need be undertaken. In both instances the papers should be kept with the LO Report.

When this decision is that the appeal is valid, a fresh case for a valid appeal should be created in accordance with Section 3 part 3, with the date of the decision being input as the date received. Letter VO7719 should be obtained from MS Word Template and issued instead of the automatically generated VO 7705; the latter should be destroyed. The working docket for the (now valid) appeal should be endorsed with the date of the original VO7734 as the date of acknowledgement.

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