Rating Manual - Volume 2 - Section 10 : Valuation Officers and Local Authorities

Section Contents

1 Introduction

1.1 Valuation officers (VOs) have a statutory duty to compile and maintain Rating Lists for each billing authority area. Billing authorities (BAs) are responsible for the calculation and collection of rates payable. The statutory rights and obligations around these duties result in the necessity for a good working relationship between VOs and BAs.

1.2 The purpose of this section is to set out the relationship between VOs and BAs. Although much of the content will apply equally in England and Wales, the Rates Retention Scheme, Renewable Energy Projects and Enterprise Zones relate solely to England.

2 The Rates Retention Scheme

2.1 The Local Government Finance Act 2012 (LGFA 2012), which received Royal Assent on 31 October 2012 and took effect in England from 1 April 2013, further encouraged local authorities (LAs), both BAs and precepting authorities, and VOs to work effectively together. LGFA 2012 is part of the government’s Localism Agenda and introduces the Rates Retention Scheme. The scheme means that LA budgets will be directly affected by increases and falls in rates collected. This has not been the case since prior to 1990 and increases the need for LAs and VOs to work effectively together.

2.2 Under the Rates Retention Scheme, LAs are required, for budgeting purposes, to forecast changes to the rates collection over the forthcoming year. LAs will require information from VOs to assist with their understanding of potential risk and likely growth and will want to proactively assist VO’s in their statutory duty to maintain a fair and accurate list.

2.3 To develop and foster good working relationships with all LAs, the Valuation Office Agency (VOA) has appointed Relationship Managers who form part of the VOA Rates Retention team. Relationship Managers will:

  • Build and manage strong working relationships with LAs, usually with finance departments; providing information that will feed into strategic decisions that local authorities will be making over their budgeting and spending.
  • Promote engagement and support from LAs in helping VOs maintain accurate lists. For example, by encouraging use of e-BARS (electronic BA reports), provision of occupier lists, schedules of rents, BA reference numbers and serving of completion notices.

2.4 To further support LAs, a dedicated webpage on the VOA corporate website provides links and pointers on the information and assistance that is available to authorities including a dedicated Rates Retention team inbox for enquiries – ratesretention@voa.gsi.gov.uk

2.5 This section examines the relationship between VOs and LAs, with particular reference to statutory obligations on both parts. Whilst the scheme only applies to England, any caseworkers in Wales involved in settling appeals in England will also need to be aware of the Rates Retention scheme and Renewable Energy Certificates.

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5 VO and provision of information

5.1 All enquiries from local authorities received by VOs in connection with the Rates Retention Scheme, particularly in relation to outstanding proposals or appeals, should be directed to the Local Authority Relationship Manager via the Rates Retention inbox (ratesretention@voa.gsi.gov.uk).  The appropriate Relationship Manager will then liaise with the Business Unit in order to respond to the enquiry.

5.2 Under s18(1) of the Commissioners for Revenue and Customs Act 2005 (CRCA), the VOA, as an executive agency of the HMRC's, is required to treat all ratepayer specific information (including information about their property) as confidential unless (s18(2)) disclosure relates to one of the VO’s statutory functions. Supply of information to LAs about specific proposals or appeals or other ratepayer information must comply with CRCA along with the Freedom of Information Act 2000 (FOIA) and Data Protection Act 1998, where appropriate.

5.3 Requests for information from LAs dealt with by the VOA Rates Retention team generally fall into the following categories:

5.3.1 Anticipated changes in RV – it is important that VOs do not speculate about possible changes in RV. The possibility and extent of alterations to a list should not be discussed with local authorities, or any other third parties, until the VO has made a written offer to settle a proposal, whether by agreement or withdrawal, to the ratepayer or their agent. This equally applies where the alteration may or may not be carried out by VO notice.

5.3.2 Specific details of a proposal or appeal – a broad description of a proposal or appeal can be provided such as the general grounds of appeal including information contained within the proposal as this is a public document available for inspection on request. Much of this information is already available via the Rating List on the VOA corporate website. However opinions of possible RV reduction or any evidence provided by the ratepayer or their agent, including the ratepayer’s valuation, can not be disclosed.

5.3.3 Request for programming information – formal programming details (excluding draft or holding programmes) relating to individual proposals or appeals may be provided, such as start and target dates and what these dates represent. General information about VOs formal programmes may also be provided, but not lists of the proposals included within the programmes.

5.3.4 Requests for statistical information (such as counts of proposals and appeals, average changes to rating lists, average time taken to clear) – VOA statistical data is the responsibility of VOA Analytical Services and is regulated by the Code of Practice for Official Statistics. Official statistical are published on the VOA corporate website. Requests for statistical information beyond that already published should be referred to Analytical Services via the Statistics inbox statistics@voa.gsi.gov.uk. It is important that statistical information is supplied through the proper channels and not from ad hoc downloads from operational databases.

5.3.5 Requests for data (such as rating lists and summary valuations) - should be referred to the Information Management and Disclosure Team via their inbox imd@voa.gsi.gov.uk

5.4 This is by no means an exhaustive list of possible enquires. As a general rule, if there is any doubt whether the enquiry could be Rates Retention Scheme related or what can be disclosed in response, the enquiry should be forwarded to the Rates Retention team via the Rates Retention inbox ratesretention@voa.gsi.gov.uk.

6 BA duties to assist in maintaining rating lists

6.1 BAs have statutory obligations to assist VOs in maintaining a fair and accurate list for their authority area. The following sets out these responsibilities:

6.1.1 Billing Authority Reports (BARs) – Schedule 6 (1) of the Local Government Finance Act 1988 (LGFA 1988) states that 'if in the course of the exercise of its functions any information comes to the notice of a billing authority which leads it to suppose that a list requires alteration it shall be the authority’s duty to inform the valuation officer who has the duty to maintain the list.' This duty is exercised by issuing BARs to the VO.

6.1.2 Completion Notices - Schedule 4A para 1(1) LGFA 1988 states that 'if it comes to the notice of a billing authority that the work remaining to be done on a new building in its area is such that the building can reasonably be expected to be completed within 3 months, the authority shall serve a notice under this paragraph on the owner of the building as soon as is reasonably practicable unless the valuation officer otherwise directs in writing.' This applies to a whole building or part of a building and to existing buildings converted into different units of occupation.

Further details relating to completion notices are covered in RM 2:8 Unoccupied Hereditaments and Completion Notices.

6.1.3 Forms of Return – Under LGFA 1988 Sch 9, para 5(1) a VO may serve a notice on a person who is an owner or occupier of a hereditament requesting the supply of information which the VO reasonably believes will assist him in carrying out functions conferred or imposed on him by or under this Part.

Where a LA occupies or is the landlord to a number of hereditaments, the information required by the VO can be supplied under the Valuation Office Rating Contact scheme (VORC). This allows the information to be provided electronically and by schedule rather than via individual forms.

6.1.4 Occupier Lists – Para 5H, schedule 9 LGFA 1988 allows for the provision of occupier information by BAs to VOs in connection with Forms of Returns and associated penalty notices.

6.2 There is no reciprocal provision that allows VOs to provide occupier information to BAs. Provision of such information is prohibited by CRCA s18(1) – see 5.2 above.

7 Billing Authorities requesting copies of Proposals

Under regulation 9 of the Non-Domestic Rating (Alteration of Lists and Appeals) (England) Regulations 2009 a billing authority (BA), as a relevant authority, can request copies of a specific class or classes of proposal. Where such a request is made, within six weeks of the receipt of a proposal falling within the class or classes specified, the VO shall send a copy to that Authority.

Further details on who should receive copies of proposals under Regulation 9 are contained within RM 2:2:8.

Relevant authorities who wish to receive copies of proposals under Regulation 9 should serve notice in writing via the appropriate Unit inbox. There is no requirement for a specific form of words to be used, however class or classes of proposals required should be stated.

When a request is received into a Unit inbox, the Local Authority Relationship Manager should be contacted via the Rates Retention inbox - ratesretention@voa.gsi.gov.uk.

The Rates Retention team will agree a procedure with the BA and the Local Office for supply of the proposals.

Usually copies of proposals (both received electronically and hardcopies stored within EDRM) will be printed and posted to the BA once a week. This should be followed by an email to the BA contact and copied to Rates Retention inbox to confirm numbers of proposals to be sent, or a nil return as applicable.

It is worth noting that billing authorities are currently provided with lists of outstanding proposals on a regular basis and, depending on the reason for request, this may prove to be of greater assistance.

8 BA rights to make Proposals

8.1 A LA is able to make a proposal to alter the rating list where they are an ‘interested person’; that is, that they have an interest in the hereditament such as being the occupier or landlord.

8.2 A BA is a ‘relevant authority’ if the hereditament is situated within the BA's area. In these circumstances the BA has limited rights to make proposals to alter the list. Grounds on which Billing Authorities (BAs) may make proposals as a ‘relevant authority’ are covered in RM2:2 para 3.4.

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10 VO and estimates of Rateable Value

10.1 An estimated assessment for a new non-domestic property, or for an existing non-domestic property to which alterations or improvements are proposed, may be provided by VOs. There is no statutory obligation to provide such estimates but VOs may assist where adequate information (usually including a plan) is provided. VOs should treat a request for an estimate from a BA in the same way as a request from a potential ratepayer. Further details are covered in RM3:4: RV Estimates.

11 Renewable Energy Certificates (Applicable only in England)

11.1 The Non-Domestic Rating (Renewable Energy Projects) Regulations 2013 SI No. 108 permits a BA to disregard rate income from certain renewable energy projects in calculating the amount it needs to send to central government; it is, thereby, able to retain these sums for its own and precepting authorities’ use. They therefore retain all of the rates income from certain renewable energy projects.

11.2 The classes of hereditaments that qualify under the scheme are:

Class A: New renewable power stations entering a list on or after 1/4/13

(all the rates will be retained locally),

Class B: Existing renewable power stations

(growth in rates post 31/3/13 will be retained in full locally)

Class C: Renewable power stations created from class B hereditaments

(again growth in rates post 31/3/13 will be retained in full locally)

Class D: Energy from waste plants

(the rates on any renewable energy plants which have been in use since on or after 1/4/13 will be retained in full locally)

Class E: Other hereditaments used (at least in part), for the purpose of generating electricity on or after 1/4/13 (the rates on new renewable energy plant parts will be retained in full locally)

Class F: Cables and sub-stations associated with off shore generating plants entering the list on or after 1/4/13 (all the rates will be retained locally).

11.3 Following consultation in the summer of 2011, the government decided that local authorities should be responsible for identifying qualifying projects. Therefore, VOs have no formal responsibility for identifying the projects falling within these classes. Nevertheless, the definitions used in the classes are based upon previous and existing rating regulations and it is recognised that VOs have considerable expertise in this area. Therefore, it is expected that the VOA will work with local authorities in helping to identify qualifying projects.

11.4 In addition to the usual responsibilities of a VO to value and enter hereditaments in the relevant rating list, there is now an additional responsibility to issue certificates for classes D and E when requested by the BA.

11.5 Class D: Energy from waste plants

11.5.1 These are hereditaments comprising land, plant or buildings where the sole or primary function is either:

(i) generating electricity where the primary source of power for that purpose is the burning of waste; or

(ii) burning waste, where the hereditament is also used for generating electricity and the primary source of power for that purpose is the burning of waste.

11.5.2 The certification required is to certify the proportion of RV which appears to the VO to be attributable to any part of the hereditament which is:

a) used or is intended to be used wholly or mainly in connection with the generation of electricity; and

b) has been in such use or intended for such use since on or after 1st April 2013.

11.5.3 Whilst the wording ‘since on or after 1st April 2013’ may appear a little ambiguous the wording is intended to mean certification will only apply to electricity generation use which started on or after 1st April 2013.

11.6 Class E: Other hereditaments used for the purpose of generating electricity

11.6.1 This class concerns hereditaments which have some plant and machinery (P&M) used for generating electricity from renewable sources but are neither primarily renewable power stations nor energy from waste plants i.e. do not fall in classes A-D. They comprise any hereditament that:

(a) includes separately identifiable rateable P&M used or available for use for the purpose of generating electricity and

(b) the rateable P&M uses as its primary source of energy –

i. wind;

ii. water;

iii. solar;

iv. the burning of biomass;

v. the burning of gas from biomass; or

vi. the burning of gas from a landfill site; and

(c) the rateable P&M started to use one of the above sources of energy to generate electricity on or after 1st April 2013.

11.6.2 The plant needs to be both separately identifiable and rateable.

11.6.3 The regulation permits P&M not actually used but available to be used to be certified and this will apply, for example, to any stand by plant which satisfies the definition of Class E or such plant in vacant hereditaments.

11.6.4 The certification required is to certify the proportion of the hereditament’s RV which appears to the VO to be the separately identifiable impact on the RV attributable to the Class E plant and machinery and to any associated land and buildings.

11.7 Plant and Machinery

11.7.1 The P&M therefore needs to be both separately identifiable and to have a separately identifiable impact on the rateable value.

11.7.2 The Government’s summer 2012 consultation on rates retention recognised that many small scale or integrated renewable technologies had no impact on rateable values and that the renewable retention scheme was, in this respect, focussed on larger separately identifiable projects on other hereditaments. It said:

‘5.8 Renewable technologies spread much wider than renewable power stations. In many cases, small scale renewable technologies installed on conventional properties will not result in any increase in their business rates bill. This is because the value of the micro generation is generally de-minimis in comparison to the rateable value of the property. However, in some cases, a large installation of renewable technology on a property used for other purposes could increase the rateable value and, therefore, rates bill on that property.

5.9 The Government proposes that where a new renewable technology has had a separately identifiable impact on the rateable value of a property then the Valuation Officer should certify the proportion of the total rateable value which is attributable to the renewable technology and any associated land and buildings.’ (Local Government Resource Review: Proposals for Business Rates Retention. Technical paper 8: Renewable energy.)

The resulting wording of the regulations, again subject to consultation, followed from this.

11.7.3 Where P&M is separately valued as part of the VO’s valuation calculations it will have a separately identifiable impact on the rateable value: where the particular P&M is treated as reflected or included in the overall value per M2 of the valuation it will not have a separately identifiable impact.

11.7.4 A wind turbine capable of generating 100KW/hr installed at a factory on or after 1 April 2013 may require an addition to the rateable value to reflect it being an improvement to the existing hereditament. The P&M is rateable and will be both separately identifiable and have a separately identifiable impact on the rateable value. In contrast an office building erected with special exterior panels which comprise the exterior skin of the building as well as also being capable of generating 100KW/hr but where the building is simply valued on a £/M2 basis by comparison with other Grade A office buildings in the locality will neither have separately identifiable P&M nor P&M having a separately identifiable impact on the rateable value.

11.7.5 Equally where a small micro-generation plant is added to a hereditament but it is found, when the notional RV is added to the existing arithmetical total of rateable value, the additional amount is not sufficient to justify increasing the actual rateable value due to the effect of ‘rounding’ then there will not be a separately identifiable impact on the rateable value because the RV has not changed. This does not mean that with a new hereditament the micro-generation can be ignored if its value is less than the rounding of the whole. The point only applies where the RV is not altered as a result of the addition of the plant.

11.7.6 In practice, for non-separately assessed power generators very little P&M installed to generate electricity on or after 1 April 2013 will immediately come within Class E. This is as a result of Regulation (2A) of The Valuation for Rating (Plant and Machinery) (England) Regulations 2000 SI No 540, as amended, which applies to any plant and machinery installed on or after 1 October 2008 which has “microgeneration capacity”. This requires any value attributable to the microgeneration capacity (50 KW) of a hereditament’s P&M to be ignored until the next revaluation (or when the capacity ceases if earlier). Rateability will only apply to P&M which exceed the limits of microgeneration. As this P&M is not included in the rateable value of the hereditament it cannot be apportioned out.

11.7.7 The effect of Regulation (2A) is covered in more detail in RM4:3 PN8.

11.7.8 The general treatment of renewable energy installations for local taxation purposes is covered in RM4:3 PN10 Renewable Energy Installations.

11.8 Associated Land and Buildings

11.8.1 For some generating plant there will be associated land and buildings. This might be the land upon which a free standing wind turbine stands forming part of the hereditament or the sub-switching station building associated with the turbine.

11.8.2 What is and is not ‘associated’ will depend on the facts of the case but the wording also requires the ‘associated land and buildings’ to have a ‘separately identifiable impact on the rateable value’ and so it is not a simple matter of apportioning the value of a building which has other uses. Either there needs to be a separate addition to the value of the land or buildings for the use in association with the P&M or the land and buildings need to be solely so used for there to be a value to certify.

11.8.3 In most cases the rateable value placed on the electricity generating equipment, (solar photo voltaic or wind turbine), will be calculated using a receipts and expenditure method. The value attributable to any associated land and buildings will not therefore have a ‘separately identifiable impact’.

11.9 Certificates

11.9.1 The VO is required to certify the values as soon as reasonably practicable after receiving the request.

11.9.2 Whilst the need to certify follows a request, VOs should be conscious of this and ensure potentially certifiable buildings and P&M are identified during inspection.

11.9.3 Class D Energy from Waste plants will need certification if they are not wholly used for generating electricity. VOs should identify these (in association with the NSU Mineral Valuer) and be ready to respond to requests from BAs following 1 April 2013.

11.9.4 The certificate has effect from the date the circumstances requiring the certificate first arose until it is replaced or superseded by a later certificate due to changed circumstances.

11.9.5 Unlike a transitional certificate, which relates to a set date, a renewable energy certificate has effect from the date the circumstances requiring the certificate first arose until it is replaced or superseded by a later certificate due to changed circumstances

11.9.6 The actual certificate must be retained by the VO and a copy sent to the BA. There is neither requirement nor need for a copy to be sent to the occupier or ratepayer as the certification has no effect on liability for rates.

11.10 No applicable renewable energy to certify

11.10.1 If a request for a renewable energy certificate has been received and the VO considers there are no items which meet the requirements of the regulations VO 7348 (found within the EDRM case folder) should be used to explain the reason for no certification.

11.11 Replacement certificates

11.11.1 If the VO forms the opinion a certificate is now inaccurate then a fresh certification should be made. This might be because the rateable value of the hereditament is corrected following discussions on a proposal. The new certificate replaces the old one and will have the same effective date as the original.

11.11.2 The only two exceptions to this are where the reduction is in relation to an MCC and there is a direct value effect on the P&M, in this case the date of the reduction should be used. Secondly where the item of certified renewable energy has been removed; in this instance the VO should issue a nil value certificate from the date the item(s) were removed.

A copy must be sent to the BA.

11.12 Revaluation

11.12.1 New certificates will be needed following a general revaluation. The billing authority will need to request these.

11.13 Billing Authority Requests

11.13.1 BAs should only request certificates where they reasonably believe there to be separately identifiable P&M used for generating electricity or a need for a Class D apportionment. The responsibility is with the BA to identify relevant hereditaments. A blanket request for a certificate for all new hereditaments should not be entertained; requests need to be made individually with details. The BA needs to identify both the hereditament and P&M in its request otherwise the request should be returned.

11.14 Form of certificate

Certificates should be issued using VO 7344 (Class D) or VO 7346 (Class E) both can be found within the EDRM case folder.

11.15 Recording of certificates

A record should be kept of certificates issued or not required by adding remarks to the RSA case.

11.16 Retention of certificates/letters

Certificates or letters should be retained in the case file on EDRM.

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