Welsh Government response to consultation on non-domestic rates avoidance

New powers for Local Authorities

16 October 2018

Share this

The Welsh Government has issued a statement setting out its intentions following the Consultation on Tackling Fraud and Avoidance of Non-domestic Rates in Wales. Mark Drakeford, Cabinet Secretary for Finance issued a written statement on 16th October 2018, saying that evidence suggested between £10m and £20m of non-domestic rates revenue is lost every year as a result of avoidance.

He outlined a number of measures including:

  1. A new legal obligation on ratepayers to notify their local authority (LA) of a change in circumstances which would affect their rates bills;
  2. A new legal power for LAs to request information from ratepayers and third parties to aid the billing and collection function;
  3. A new legal power for LAs to enter and inspect non-domestic properties (hereditaments) to verify information relevant to the billing function;
  4.  Lengthening the period of temporary occupation of empty property, which leads to repeated cycles of rates relief, from 42 days to six months. Zero-rating on empty properties will be removed if it appears that when next in use they may be used for a charitable purpose. LAs will have local discretion to grant zero rating in genuine cases where a charity needs to own or lease an empty building and not make use of it;
  5. Working with LAs to publish a list of ratepayers in receipt of rates relief (subject to GDPR compliance);
  6. LAs which make efforts to maximise compliance will be allowed to keep a percentage of the additional revenue collected.

Jane Shankland, Rating Director at Cooke & Arkwright commented, “In response to the first two measures mentioned in the response, I think these powers need careful drafting to ensure that they are proportionate, that ratepayers clearly understand what information needs to be provided, and that the timescale for return is reasonable.

“Looking at the third measure, the objective is laudable to improve the information base for non-domestic rate billing, but I question whether authorities have the resources to enter and inspect properties with staff cutbacks as a result of austerity.

“On point 4, increasing the reset period from 42 days to six months is particularly harsh for owners of difficult-to-let property where the only potential tenants may be short term or seasonal lets.

“As part of the RICS (Royal Institution of Chartered Surveyors) response, we had advocated along with the majority of respondents that a reduction in empty property rates from 100% to 50% was fair and would reduce the incentive to engage in avoidance. It is disappointing that this hasn’t been addressed.”

Mr Drakeford said that the measures would come into force from April 2021, aligned with the implementation of the next rating list and revaluation exercise.

Cooke & Arkwright have looked after our property assets in South Wales for many years. Their knowledge of the South Wales market coupled with enthusiasm and willingness to go the extra mile has ensured we keep ahead of the market.

James Rodge, Rockspring