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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 03/02/2004
APPENDIX C - NATIONAL NON-DOMESTIC RATES (NNDR) DISCRETIONARY RATE RELIEF



Summary & Purpose
Provision for the granting of discretionary rate relief is contained in Section 47 of the Local Government Finance Act 1988, as amended by the Local Government and Rating Act 1997. The purpose of this report is for the Executive to determine the level of relief that it considers to be appropriate for Waverley during the next four financial years 2004/05 to 2007/08.

Quality of Life Implications
Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe Communities
Local Economy
Natural
Resource Use
Pollution
Prevention and Control
Biodiversity
and Nature
Local
Environment
Social
Inclusion
Safe, Healthy
and Active
Communities
Local
Economy
N/A
N/A
N/A
N/A
Positive
Positive
Positive


APPENDIX C
WAVERLEY BOROUGH COUNCIL

EXECUTIVE – 3RD FEBRUARY 2004
_________________________________________________________________________
Title:
NATIONAL NON-DOMESTIC RATES (NNDR)
DISCRETIONARY RATE RELIEF
[Wards Affected: N/A]
_________________________________________________________________________
Summary and purpose:

Provision for the granting of discretionary rate relief is contained in Section 47 of the Local Government Finance Act 1988, as amended by the Local Government and Rating Act 1997. The purpose of this report is for the Executive to determine the level of relief that it considers to be appropriate for Waverley during the next four financial years 2004/05 to 2007/08.
_________________________________________________________________________
Quality of life implications – social, environmental & economic (sustainable development):

Natural Resource Use
Pollution Prevention and Control
Biodiversity and Nature
Local Environment
Social Inclusion
Safe, Healthy and Active Communities
Local Economy
N/A
N/A
N/A
N/A
Positive
Positive
Positive

E-Government implications:

There are no e-government implications directly associated with this report.

Resource and legal implications:

Notice has been given to those organisations currently receiving relief to terminate their relief at the end of this current financial year. There are financial implications, which are described in this report.
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Introduction and Background

1. Section 47 of the Local Government Finance Act 1988 allows local authorities to grant discretionary rate relief on the rates payable by the following organisations: charities; non-profit making organisations whose objects are charitable, philanthropic or religious or concerned with education, social welfare, science; club, society or other organisation using premises for the purpose of recreation; and village stores, post offices and other businesses in rural settlements.

2. At the meeting of the former Operations Committee on 22nd September 1997, it was decided to review the guidelines used by the Council for the granting of discretionary relief on a four-yearly cycle, following the election of a new Council. In accordance with this decision, the required notice, under the 1988 Act, was given in March 2003 to all organisations currently receiving discretionary rate relief to terminate the existing relief with effect from 31st March 2004.

Granting of rate relief

3. There are two elements of rate relief under the legislation. The first is mandatory relief, and attracts relief at the rate of either 50% or 80%, whilst the second, discretionary, permits the billing authority the discretion to grant relief of up to 100%. This report does not cover the discretionary relief provisions under Section 49 of the Act covering ‘hardship’, which is a different issue, but is concerned only with the granting of the discretionary relief under Section 47 of the 1988 Act. For Members’ information, the mandatory relief relates either to charities or trustees of a charity where the relief is granted at 80%, or to those properties which are covered by the regulations more commonly known as the ‘rural rate relief’, where the relief is granted at 50%. Where mandatory relief applies, the full amount of the relief given is borne by the NNDR Pool, and no cost of the mandatory relief falls upon the billing authority’s General Fund.

4. The Office of the Deputy Prime Minister has issued a guidance note ‘Non-domestic rates: Guidance on rate relief for charities and other non-profit making organisations’. A copy of the latest edition of this Guidance Note can be found at www.local.odpm.gov.gov.uk/finance/busrates1.htm

5. The Guidance Note states that it is very important for local authorities to have readily understood guidelines for deciding whether or not to grant relief and for determining the actual level of relief given. Waverley’s existing policy for the granting of discretionary rate relief was last reviewed in January 2000. A summary of the current guidelines adopted by the Council is attached at Annexe 1. These guidelines indicate both the level of relief to be given, and the type of organisation, and have proved to be very useful to follow over the years, when considering applications for relief, so that consistent decisions are made.

Waverley’s existing practice

6. Paragraph 1 above, identifies the various types of organisation which, under the legislation, the local authority can grant discretionary rate relief on the rates payable. The authority has the discretion, if it so wishes, to grant up to 100% relief. This discretion is exercised by Waverley, using the current guidelines, in the following way:

7. The total amount of discretionary rate relief granted for the non-domestic rates due for the current financial year is 86,665.28. A list of all organisations receiving discretionary rate relief, and the amount of the relief they receive in the current year, is attached at Annexe 3. As a general rule, 75% of the discretionary relief granted is offset against the contributions made by Waverley to the National Non-Domestic Rates Pool with the balance of 25% being borne locally and met from the authority’s General Fund. However, for those charitable organisations that receive the 80% mandatory relief, any discretionary relief top-up granted is apportioned 25% to the Pool and 75% locally. As a result of this apportionment, the cost to Waverley of granting discretionary relief in respect of the non-domestic rates due for the current financial year is 39,558.35. Provision is already provided in the Council’s budget for the current level of discretionary rate relief granted.

8. There has been pressure on local authorities from various sources over the years, notably from national and local sports umbrella organisations for local authorities to grant 100% rate relief to sports clubs and similar organisations. Waverley, in granting 80% relief (reduced to 50% where bar facilities are available) compares favourably with other Surrey authorities.
9. From 1st April 2004, the Local Government Act 2003 amends the 1988 Act by granting 80% mandatory relief to those sports clubs that have registered with the Inland Revenue as Community Amateur Sports Clubs (CASCs). To be successful in applying for registration, the clubs need to be able to give positive answers to the following five questions:



Is membership of the club open to the whole community; Are all the club’s facilities available to members without discrimination;

Does the club’s constitution prevent profits of the club being distributed amongst its members (i.e. any profits must go back to the club);

Does the club provide facilities for and encourage participation in eligible sports; and

Does the club’s constitution provide that on dissolution of the club, any assets are to be applied for approved sporting or charitable purposes.
10. If those sports clubs in Waverley that are receiving 80% discretionary relief or less, were to register as CASCs the cost of the 80% mandatory relief they would receive would be met by the NNDR Pool and not the General Fund. Of the 39,558.35 cost to the General Fund for the discretionary rate relief granted in respect of the current financial year by Waverley, 9,460.52 is in respect of sports clubs - 1,589.35 for granting 80% relief and 7,7871.17 for granting less than 80%. Your officers are currently looking at the registration process to see what assistance or advice can be given to clubs to satisfy the registration criteria as it would benefit Waverley if these clubs were to register, and those clubs operating bar facilities currently receiving 50% relief, would benefit by a further 30% relief.
11. A sports funding seminar has been arranged in January to brief clubs on the funding available and how to register as a Community Amateur Sports Club. In addition, follow up support will be provided through the Partnership Funding Officer to help clubs with the registration process.
Conclusions

13. There are four options available to the authority:

a) to withdraw all discretionary rate relief and encourage those organisations that do not receive any mandatory relief to apply to the appropriate authority to become a registered charity - this would save Waverley, on the current year’s costs, 39,560; b) direct the sports clubs and organisations to register with the Inland Revenue as a CASC with officer support to assist in the process and to withdraw discretionary relief for recreational clubs, sports clubs and organisations - this would save Waverley 9,530. If this approach were followed no sports organisation would lose financially with 30 gaining additional relief. The scheme having the benefit that it is not subject to local authority financial pressures; c) to withdraw the discretionary rate relief to those organisations receiving a 20% top-up to the 80% mandatory relief they receive – this would save Waverley 26,840;

Corporate Overview and Scrutiny Committee

14. This report was considered by the Corporate Overview and Scrutiny Committee on 13th January 2004. The Committee wished to recommend to the Executive that the three questions set out in the recommendation relating to the granting of discretionary rate relief in 2004/05 be supported.

Recommendation

The Executive is asked to consider the four options in paragraph 13 above for the granting of discretionary rate relief for 2004/05 and to give consideration to the following:
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Background Papers (DoF)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.
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CONTACT OFFICER:

Name: Trevor Carter Telephone: 01483 523099
comms/exec/2003-04/441