Cheshire East

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Never too late?

Cutbacks iStock 000013353612XSmall 146x219In the first of his three-part series on debt recovery, Marc Samuels revisits the circumstances in which local authorities can issue late demands for non-domestic business rates.

National non-domestic rating (NNDR) recovery is a chore for local government practitioners for a variety of reasons – pursuit of the often unknown occupant, evidential gaps on the file, the amalgam of civil applications within criminal courts, etc. It nevertheless represents big money in a time of budgetary austerity. According to the Department for Communities and Local Government’s latest statistical release (“National non-domestic rates to be collected by local authorities in England 2016-17”), local authorities estimate the non-domestic rating income in 2015-16 to be £23.5bn, this figure representing what authorities expect to collect after all relief, accounting adjustments and sums retained outside the rates retention scheme are taken into account. As we know, however, a significant proportion of collectable rates go uncollected year on year.

So what restrictions are there on local authorities’ ability to issue late demands for rates?

Statutory scheme

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Liability for non-domestic rates arises under the Local Government Finance Act 1988 and relevant procedure is prescribed by the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989 (SI 1989/1058). Regulation 5 provides that statutory notices demanding the payment of business rates should be “served on or as soon as practicable after” 1st April in the relevant year (i.e. the chargeable financial year to which the notice relates). Regulation 12 empowers the authority to apply for a liability order should the demand go unpaid.

Tactics following Honda

In North Somerset District Council v Honda Motor Europe Ltd. [2010] EWHC 1505 (QB), the High Court considered certain demands issued by the council a number of years late in relation to hitherto unidentified occupants at docks in Bristol.

Finding that the council could not recover the business rates, the court held that:

  • Failing to serve notice in the timeframe specified in Regulation 5 does not, in itself, invalidate the notice. The court will consider the impact on the ratepayer and extent of delay, and balance this with the public interest in collecting outstanding rates – “The greater the prejudice to the ratepayer, the more likely the notice will be deemed invalid” (para. 60)
  • The court will assess whether there has been substantial compliance with Regulation 5. The longer the delay in serving notices, the more likely that the ratepayer can show prejudice.
  • The question is whether it would have been practicable for the local authority to identify the occupant(s) sooner, not whether the local authority had served the notice as soon as practicable after identifying the occupants.

In short, if the demand is late, the court will evaluate the delay and assess whether prejudice has been caused to the ratepayer, and to what extent.

So what practical steps can the local authority take?

  • While prejudice may arise in numerous ways, prejudice is different from inconvenience, and the local authority should emphasise this in applicable cases – “the prejudice relied upon must be substantial and certainly not technical or contrived” (Para. 61).
  • Delay is not always damaging. There is no provision for interest on NNDR demands, so ratepayers may actually benefit from receiving demands late. A late demand may, for example, improve a ratepayer’s cash flow by enabling him to generate interest on sums set aside for payment of rates.
  • If possible, the local authority should demonstrate that the demand was served as soon as “practicable”. This is the explanation of the late service, and it could, for example, take the form of chronologised records of the council’s attempts to identify the relevant owner/occupier.

Marc Samuels is a barrister practising at 4-5 Gray’s Inn Square. He can be contacted This email address is being protected from spambots. You need JavaScript enabled to view it..

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