Taxation - be careful what you post

[Temp]

While looking for something else I stumbled on this MS Word document...

 

https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=0ahUKEwjo_LnZkd3RAhXBBsAKHW3_AT8QFggdMAA&url=https%3A%2F%2Fwww.taxation.co.uk%2Fsystem%2Ffiles%2Farticle_files%2FTIPsconstruction5711.doc&usg=AFQjCNGhrS3m27K8AsZKohWFMAZuBL-pHQ&sig2=87TByx5YjVpRhiMxLvXsWA

 

It appears to be internal HMRC guidance on taxation within the construction industry. Of note is the number of sections redacted with the words...

 

This area of guidance had been withheld because disclosure would prejudice the assessment or collection of taxes/duties or assist tax/duty avoidance or evasion.

 

I noticed there are TWO of those in the section on self build and one is in the section headed "Useful websites". So best be careful what you post on forums eh?. 

 

 

[Jeremy Harris]

This tallies with our recent ordeal in getting our VAT reclaim sorted (finally resolved by a letter received yesterday, nearly 4 months after I started the process).

 

There seems to be a central government drive to get all departments to focus on collecting as much tax owed as possible, which is a laudable aim, but the way some departments are going about it is a bit OTT.

 

I've already related the tale on Ebuild about out Council Tax snoopers, breaking in to the site at night, climbing fences, ignoring PPE warnings and (not wearing any PPE!) to look in through windows and see if the house was habitable enough for them to start charging Council Tax on.  I got annoyed enough to formally complain, send a copy of the CCTV and legally deny access by the council or anyone they employed without my express written permission, saying that their breach of site safety rules jeopardised my site insurance premium and therefore constituted aggravated trespass.

 

The stupid thing is that it meant that I had helpful advice from many forum members, including some case law on when a house became a "rateable hereditament", and so liable for Council Tax.  I could then easily delay paying it by making sure that I didn't officially have a potable water supply in the house until just before completion.  That meant they probably lost a years worth of Council Tax, simple because they'd annoyed me by breaking in.

Edited January 25, 2017 by JSHarris

[Trw144]

6 hours ago, JSHarris said:

 

 

The stupid thing is that it meant that I had helpful advice from many forum members, including some case law on when a house became a "rateable hereditament", and so liable for Council Tax.  I could then easily delay paying it by making sure that I didn't officially have a potable water supply in the house until just before completion.  That meant they probably lost a years worth of Council Tax, simple because they'd annoyed me by breaking in.

 

Any tips on this one Jeremy - we ve been on a month but the council still have nt sorted out its council tax band. They say it's due from the day we moved in but wondered if there is any grey area?

[Jeremy Harris]

Sure, I can pretty much give chapter and verse on the law on this now!

 

It's a bit complicated, because the Council Tax was rushed in to replace the Poll Tax, so the government didn't have time to create all new legislation.  Instead, they had to come up with a way to value properties, in order to put them into Council Tax bands, and they did that by using an old law that was still in force, the 1969 Rating Act.  This was the law that backed rateable values for the rates, and contained all the detailed definitions as to when a property was liable to rates and when it wasn't, along with a lot of other stuff.  So, The Valuation Office Agency used the 1969 Rating Act as the basis for valuing properties and obtaining what used to be the rateable value for rates, but they divvied it up into Bands, under the new Council Tax legislation.

 

Like most law, there is a statuary instrument, in this case the 1969 Rating Act, plus subsequent modifying case law, that together define, in legal terms, certain things.  HerbJ came up with the relevant case law, in post on this incident on Ebuild.  Here is a copy of that post that I've kept for reference:

 

Quote

The key to this is that the dwelling must be on the valuation list before council tax becomes due for payment.

The key section seems to be 3.12 - Completion Notices which states in the first pargraph

"There are two ways a dwelling can be shown in a list. Firstly, by coming into existence as a dwelling, and secondly, where the building is not quite completed, by the BA serving a completion notice. If a LO is in doubt as to whether the building is sufficiently complete to constitute a dwelling, the BA should be asked to issue a completion notice before the list is altered. The law in this regard was examined in the case of RGM Properties v Speight LO 2011."


I have quickly read this case and it provides the very helpful opinion at Paragraphs 17 and 18, essentially defining "completion"

• In the more recent case, before the Upper Tribunal Lands Chamber, of Porter v The Trustees of Gladman Sipps [2011] UKUT 204 (LC) the judgment examined the authorities and considered Ravenseft v Nottingham City Council. At paragraph 66 the judgment says:

• "The authorities, in our judgment, establish the following. A building is only a hereditament if it is ready for occupation, and whether it is ready for occupation is to be assessed in the light of the purpose for which it is designed to be occupied. If the building lacks features which will have to be provided before it can be occupied for that purpose and when provided will form part of the occupied hereditament and form the basis of its valuation it does not constitute a hereditament and so does not fall to be shown in the rating list. There is in consequence no scope for including in the list a building which is nearly, even very nearly, ready for occupation unless the completion notice procedure has been followed

• ."It should be noted that the wording there replaces "capable of occupation" with the words "ready for" occupation. If anything turns upon that distinction, I prefer the expression "capable of" which has the support of the Court of Appeal. Otherwise, this seems an uncontroversial summary of that which the cases showed.

Certainly, our Council used the Valuation as a shield to kep us paying council tax and simply informed us that we had to apply to the VOA to remove it from the valuation list, before they would cease to impose council tax. The law would seem to work in reverse - the Council cannot impose council tax until the new house is re-entered onto the valuation list.

 

 

When I challenged the local authority, and quoted the law to them, and pointed out that in order to become a "rateable hereditament" the house must have a potable water supply, as defined in case law judgements that had refined the meaning of the 1969 Rating Act, they backed off, very quickly indeed.

 

In my case, because we had a borehole, I was in a very fortunate position.  Under the environmental health rules of our local authority, our private water supply was not deemed safe to drink unless it had been tested by a properly accredited test lab, or by the environmental health departments own testing facilities.  I had the water tested by a former colleague where I used to work and it was fine, so I used it without any problems whilst we finished off the build.  However, under the councils own rules, the water wasn't safe to drink, because it had not been tested by a properly accredited lab. 

 

Just before completion I got the environmental health people to come around and sample the water, and send it off to be tested officially, and it was only then that the house became eligible for council tax.  As it happens, I received the test certificate from environmental health on the day of the completion inspection.  I then wrote to the VOA, filled in a form and requested that they add our house to the list dated from the completion date of 30th September 2016.  The VOA said they had a high workload, and could take several weeks to process our valuation request, and suggested than the valuation date be amended to 18th October 2016.  I provided them with a stack of evidence to show that the gross external floor area (which is what they use for determining the value) would be impacted by our very thick walls, and included drawings with carefully annotated internal floor areas to illustrate this.  I also got a bit cheeky and suggested that, in my opinion, it should be in Band D.  Now, realistically, I knew we hadn't a hope of being in Band D, but were more likely to end up in Band F or even G, as the similar sized bungalows behind us are band G.

 

I was a bit surprised to find that we ended up in Band E, and I couldn't, in all honesty, argue about that.  Just after Christmas I received a Council Tax demand, backdated to 18th October 2016, as expected.  I rang and asked if I could pay by instalments and they agree to three monthly payments, one a week ago, one in late February and the last in late March.  However, I'm a bit peeved, as I put in a request for wheelie bins and recycling bins at the beginning of January and we still don't have them, which is nuisance when we've been paying for refuse collection (amongst other things) since last October.

 

Hope the above is clear.  If you read the linked judgements they also give other reasons as to why a property may not be a rateable hereditament that may be useful.

[joe90]

I think I read on this or another forum that you also have to have the sewerage treatment plant sighed off before habitation ( or council tax) can be implimentated, I hope, as that's what I hope to do to delay paying council tax until I want to officially move in.

[Jeremy Harris]

Your best bet is to read those judgements and see if that makes sense in the context of the rulings.  I have some doubts about it, TBH, but would be happy to be proved wrong if there is a clear statement in one of those judgements that could be used to support that argument.

 

It's worth noting that local authorities are very lax when it comes to the law,  I spoke to the supervisor of the person who was sent to climb over our security fence and across piles of rubble and steel reinforcement fabric to look in through a window, and she had no idea of the offences she was ordering her staff to commit.

 

I'd treat anything on the internet, even posts on this forum, with a degree of caution, as very often seemingly competent posts can turn out to be incorrect.  Unfortunately, the internet is a place where false information gets' spread around quickly, so there maybe many references that are the same, but all originate from one poor source.

 

It's the reason I get so hung up on honesty, and make a point of correcting things I know to be wrong, really as a way of trying to break the chain of misinformation, or at least help to put things into context and ensure there's a better balance of views, especially on the law and risk, two areas I've worked with a lot over the years,

Edited January 25, 2017 by JSHarris

[Bitpipe]

I just had an email from my LA stating that they will continue to charge me 50% of the Band A rate on the caravan while it remains on site.

 

We removed water, electricity and LPG from the van upon exiting but the LA do not believe this is relevant. Have put a call into the valuation office and they're calling me back tomorrow.

 

Hopefully we'll get it sold asap - the financial impact is not huge, £40 a month, but more the point of principal.

[Jeremy Harris]

The case law is clear, if there is no electricity or potable water supply it is not a rateable hereditament and therefore Council Tax cannot be charged.  

 

Well worth pursuing this with the council, quoting the relevant case law from earlier in this thread and providing evidence that the electricity supply and water supply have been removed.

 

 

 

 

 

[ProDave]

I will watch this one with interest.

 

My planning allows me to retain the 'van as a garden out building with the condition habitational use of the 'van will cease upon occupation of the house. So they bloody well better not try charging council tax for it once we move into the house because nobody will be allowed to live in it, and it will in effect just be a garden shed.

 

At the moment, it's not a "rateable hereditament" because there is no electricity to the treatment plant so no functioning drainage system.
 

[Jeremy Harris]

3 minutes ago, ProDave said:

I will watch this one with interest.

 

My planning allows me to retain the 'van as a garden out building with the condition habitable use of the 'van will cease upon occupation of the house. So they bloody well better not try charging council tax for it once we move into the house because nobody will be allowed to lice in it, and it will in effect just be a garden shed.

 

At the moment, it's not a "rateable hereditament" because there is no electricity to the treatment plant so no functioning drainage system.
 

 

The only thing I'd watch, in your case, Dave, is whether the case law that defines what is a rateable hereditament applies in Scotland.  A check on the original rating act, as amended by a series of acts later, would be needed to see if it only applied to England and Wales, or whether it also applied to Scotland.

Edited February 1, 2017 by JSHarris

[Bitpipe]

Thanks Jeremy, I'll be sure to raise that point with the valuation office when they call me back later this week.

 

[Jeremy Harris]

FWIW, my experience with the VoA was that the people you talk to on the phone don't seem to be 100% conversant with the law, but are quite reasonable in terms of accepting a logical and sound argument as to why a particular point should be relevant. 

 

My particular experience was with the way they calculate external area as a means of determining value, and in particular the way that they accepted my point that a passive house would often have much thicker than normal walls, and so the (rather odd) way though go about determining value from external gross floor area would be flawed in our case, because the usable room area inside the house (which is really what plays a part in determining area) would be less that that which their "standard formula" gives.  They accepted this without question - I just sent them copies of the detailed drawings, annotated with room floor areas, as evidence.  I'm reasonably sure that this, together with the absence of normal central heating (and no heating at all on the first floor) contributed to our house getting put into Band E, when I fully expected it to be in Band G!  The two  houses further up the hill, behind us, are smaller in net internal floor area, were both built around 15 years ago and are both in Band G.

 

I rather think I was pretty lucky.  The VoA put in their letter to me that I could appeal against the banding, and included a description as to how to do this, but to be honest I felt that to do so would be wholly unreasonable, in the circumstances.......................

 

One tip for others.  Apparently you are far more likely to get a reasonable Council Tax valuation if you make the application for a change to the register directly to the VoA, rather than hang on and wait for your local authority to do so.  You get the opportunity when you make your own request to suggest the band you think your house should be in and you can submit your own evidence to support this with the application.  If your LA does it, they will almost certainly try to push for a higher band, I think.

[Bitpipe]

Hmm, we've got lumped on the top band but as the house is fairly large (over 350m2 internal) however will pick this up as well when they call?