Agenda item

Business rates (national non domestic rates or NNDR) are a tax on properties which are not used for domestic purposes.  The Council has the power to grant local discretionary discounts where it is in the interests of the council tax payer.

This policy details the criteria and process against which the Council will consider applications for discretionary rate relief.  The policy is reviewed periodically to ensure that it complies with current legislation and the Council’s priorities and will be due for ratification again in December 2019.

Recommendation

The Executive is requested to consider any observations and comments passed on from the Corporate Overview and Scrutiny Committee and recommend to the Council that:

1.      the policy for the granting of discretionary rate relief for the period 2016/17 to 2019/20 remains the same as the current policy;

2.      the policy on the use of the provision for granting discretionary rate relief to any body other than those currently included in the approved policy is to do so on a case by case basis, provided that any proposed reductions are clearly in the wider interests of all Waverley’s council tax payers;

3.      in relation to recommendation 2, delegation be given to the Director of Finance and Resources, in consultation with the Finance Portfolio Holder, to make decisions about such applications and only if an objection is received would the Executive be asked to consider the case, and the Scheme of Delegation be amended accordingly;

4.      in relation to Community Interest Companies, each case should be taken on its merits in the same manner as cases under section 69 of the Localism Act 2011 (delegation to the Director of Finance and Resources, in consultation with the Finance Portfolio Holder, and only if an objection is received would the Executive be asked to consider the case); and

5.      in relation to recommendation 4, consideration be based on the condition that relief can only be granted where it would be reasonable to do so having regard to the interests of all Waverley’s taxpayers.

The Executive has agreed to RECOMMEND to the COUNCIL that:

1.      the policy for the granting of discretionary rate relief for the period 2016/17 to 2019/20 remains the same as the current policy;

2.      the policy on the use of the provision for granting discretionary rate relief to any body other than those currently included in the approved policy is to do so on a case by case basis, provided that any proposed reductions are clearly in the wider interests of all Waverley’s council tax payers;

3.      in relation to 2 above, delegation be given to the Director of Finance and Resources, in consultation with the Finance Portfolio Holder, to make decisions about such applications and only if an objection is received would the Executive be asked to consider the case, and the Scheme of Delegation be amended accordingly;

4.      in relation to Community Interest Companies, each case should be taken on its merits in the same manner as cases under section 69 of the Localism Act 2011 (delegation to the Director of Finance and Resources, in consultation with the Finance Portfolio Holder, and only if an objection is received would the Executive be asked to consider the case); and

5.      in relation to 4 above, consideration be based on the condition that relief can only be granted where it would be reasonable to do so having regard to the interests of all Waverley’s council taxpayers.

[This item is recommended to the Council for approval and is not subject to the call-in procedure]

[Reason: to periodically review the discretionary rate relief policy]

88.1    There are two types of business rate relief – Mandatory and Discretionary. The Local Government Finance Act 1988 requires local authorities to grant Mandatory rate relief to the following categories of Business Rates payer:

·                      Registered charities – 80%

·                      Registered Community Amateur Sports Clubs (CASCs)- 80%

·                     Village Post Offices, general stores, specialist food shops, public houses and petrol filling stations – where they are in a designated rural settlement. (Rural Rate Relief)  - 50%

88.2    The Local Government Finance Act 1988 also gives local authorities the power to grant Discretionary rate relief as follows:

·                      To make a further award, a top up of Mandatory relief up to 100% (of rateable value) to those categories listed above; and also up to 100%:

·                      In respect of sports grounds and clubs;

·                      To other non-profit making organisations;

·                      To other rural businesses situated within a designated rural settlement.

88.3    The Discretionary rate relief policy is reviewed on a four-yearly cycle, following the election of a new Council.  All organisations currently receiving discretionary business rate relief were given a year’s notice in March 2015 that the existing relief terminates with effect from 31 March 2016 and they will need to reapply under the new policy guidelines.

88.4    Discretionary Rate Relief Guidelines operated by Waverley is given in Annexe 1 and a full list of the organisations currently receiving discretionary rate relief is included at Annexe 2.  Waverley’s policy is to grant discretionary rate relief as follows:

i)          Charities receiving 80% mandatory relief will not normally receive any additional discretionary relief, except for 58 organisations that currently receive 20% discretionary relief. The amount of discretionary relief given in 2015-2016 under this category is £66,177.

ii)         80% discretionary relief is granted for non-profit making organisations whose objects are charitable, philanthropic or religious or concerned with education, social welfare, science, or for the purpose of recreation and who are not in receipt of mandatory relief. In 2007 the Council agreed to include Waverley’s leisure centres under this heading as they are operated under a ‘commercial trust’ model by DC Leisure (now Places for People Leisure Partnerships) which meets the rate relief criteria. The amount of discretionary relief given in 2015-16 under this category is £474,148.

iii)       Where a sports club within Waverley is not allowed to register with the Inland Revenue as a Community Amateur Sports Club (CASC) and therefore be entitled to mandatory relief, the Council has awarded 50% discretionary relief (currently 5 in Waverley). The amount of discretionary relief given in 2015-16 under this category is £13,188.

iv)        Discretionary rate relief for properties in rural settlements is considered only for sole general stores, post offices or chemist shops.  The amount of discretionary relief given in 2015-16 under this category is £10,874.  Applications from a number of other businesses in rural settlements have been considered by Members, but no relief has been granted.

88.5    Community Interest Companies (CICs) are a type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company.  This means that a CIC cannot be formed or used solely for the personal gain of a particular person, or group of people. CICs can be limited by shares, or by guarantee, and have a statutory ‘asset lock’ to prevent assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset locked organisation, such as another CIC or charity. A company that is a charity cannot be a CIC, unless it gives up its charitable status.

88.6    A CIC is a limited company and is liable to pay Corporation Tax just like any other company. It is eligible for any reliefs which are available to all companies but there are no CIC specific tax exemptions/reliefs available.

88.7    There are a number of options available to the authority for discretionary business rate relief:

a)    To continue with the current policy and consider new requests for discretionary rate relief under the provisions in the Localism Act on a case by case basis including CIC’s;

b)    To withdraw some categories of the existing discretionary rate relief policy;

c)    To withdraw the discretionary rate relief to those organisations receiving a  20% top-up to mandatory relief they receive – this would save Waverley £13,235;

88.8    In considering the options, Members are asked to consider a number of factors:

-          Other financial and service pressures

-          Consistency of application of the Council’s discretion across organisations

-          The need for clear and robust policy guidelines that enable the Director of Finance and Resources to fulfil his delegated authority to consider applications for relief, minimising the risk of challenge and objection

-          Waverley’s aims, objectives and priorities

88.9     With regard to an appeals process, it is proposed that delegation will continue to be requested for the Director of Finance and Resources, in conjunction with the Finance Portfolio Holder, to make discretionary award decisions and that any objections will be considered by the Executive.

88.10  The Executive now

            RECOMMENDS that

39.    the policy for the granting of discretionary rate relief for the period 2016/17 to 2019/20 remains the same as the current policy;

40.    the policy on the use of the provision for granting discretionary rate relief to any body other than those currently included in the approved policy is to do so on a case by case basis, provided that any proposed reductions are clearly in the wider interests of all Waverley’s council tax payers;

41.    in relation to 40 above, delegation be given to the Director of Finance and Resources, in consultation with the Finance Portfolio Holder, to make decisions about such applications and only if an objection is received would the Executive be asked to consider the case, and the Scheme of Delegation be amended accordingly;

42.    in relation to Community Interest Companies, each case should be taken on its merits in the same manner as cases under Section 69 of the Localism Act 2011 (delegation to the Director of Finance and Resources, in consultation with the Finance Portfolio Holder, and only if an objection is received would the Executive be asked to consider the case); and

43.    in relation to 42 above, consideration be based on the condition that relief can only be granted where it would be reasonable to do so having regard to the interests of all Waverley’s council taxpayers.

[Reason: to periodically review the discretionary rate relief policy]