Local Government Finance (Wales) Act 2024

Anti-avoidance

13 Artificial non-domestic rating avoidance arrangements

After section 63E of the 1988 Act insert—

“Anti-avoidance: Wales

63F Artificial non-domestic rating avoidance arrangements: introduction

(1) This section and sections 63G to 63M make provision in relation to Wales about counteracting advantages, in respect of liability to non-domestic rating, from artificial non-domestic rating avoidance arrangements.

(2) For the purposes of this section and sections 63G to 63M, an arrangement is an “artificial non-domestic rating avoidance arrangement” if—

(a) in consequence of the arrangement, a person obtains or will obtain an advantage in relation to non-domestic rating (see section 63G), and

(b) the arrangement is artificial (see section 63H).

(3) For the purposes of this section and sections 63G to 63M, “an arrangement” includes (among other things) any action, event, agreement, operation, promise, scheme, transaction, understanding or undertaking (whether legally enforceable or not), and references to an arrangement are to be read as including—

(a) a series of arrangements, and

(b) any part or stage of an arrangement comprised of more than one part or stage.

63G Meaning of “advantage”

For the purposes of sections 63F to 63M, “an advantage” means the avoidance or reduction of liability to non-domestic rating, by means of (among other things)—

(a) avoidance of an assessment;

(b) remission;

(c) relief (or increased relief);

(d) repayment (or increased repayment);

(e) deferral of a payment.

63H Meaning of “artificial”

(1) For the purposes of sections 63F to 63M, an arrangement is artificial if—

(a) it is of a type specified by the Welsh Ministers by regulations, and

(b) where subsection (3) applies, no determination has been made in relation to the (particular) arrangement.

(2) The regulations may only specify a type of arrangement if making an arrangement of that type would not be a reasonable course of action in relation to the provisions of enactments relating to non-domestic rating, having regard in particular to—

(a) whether the substantive results of arrangements of that type are inconsistent with—

(i) any principles on which those provisions are based (whether express or implied), and

(ii) the policy objectives of those provisions;

(b) whether arrangements of that type are intended to exploit any shortcomings in those provisions;

(c) whether arrangements of that type lack economic or commercial substance (other than obtaining an advantage in relation to non-domestic rating).

(3) The regulations may provide that a particular arrangement of a type specified under subsection (1)(a) is not artificial if a determination to that effect is made, in accordance with the regulations and having regard to all the circumstances, by—

(a) a billing authority in Wales, in connection with the authority’s local non-domestic rating list;

(b) the Welsh Ministers, in connection with a central non-domestic rating list for Wales.

(4) In this section “enactments relating to non-domestic rating” means—

(a) this Act,

(b) the Business Rate Supplements Act 2009 (c. 7), and

(c) any subordinate legislation (within the meaning of the Interpretation Act 1978 (c. 30)) made under those Acts.

63I Liability to non-domestic rating: local lists

(1) Subsections (2) to (5) apply if, in connection with a billing authority in Wales’ local non-domestic rating list, an artificial non-domestic rating avoidance arrangement has been made.

(2) The billing authority must, from the relevant date—

(a) treat the ratepayer as liable under section 43 or 45 to pay the chargeable amount for a chargeable day that would have been, or would be, payable in respect of that day in the absence of the arrangement, or

(b) treat as liable the person who would have been, or would be, the ratepayer in the absence of the arrangement (and treat them as liable under section 43 or 45 to pay the chargeable amount for a chargeable day that would have been, or would be, payable in respect of that day in the absence of the arrangement).

(3) The provisions of this Act apply in relation to the persons mentioned in subsection (2)(a) and (b) as if they were liable under section 43 or 45.

(4) In subsection (2), “the relevant date” means the later of—

(a) the day the arrangement mentioned in subsection (1) is made;

(b) the day the applicable regulations come into force;

(c) a day provided for in those regulations.

(5) In subsection (4)(b), “the applicable regulations” means the regulations under section 63H(1)(a) that specify the type of arrangement within which the arrangement mentioned in subsection (1) falls.

63J Liability to non-domestic rating: central lists

(1) Subsections (2) to (5) apply if, in connection with a central non-domestic rating list for Wales, an artificial non-domestic rating avoidance arrangement has been made.

(2) The Welsh Ministers must, from the relevant date—

(a) treat the ratepayer as liable under section 54 to pay the chargeable amount for a chargeable day that would have been, or would be, payable in respect of that day in the absence of the arrangement, or

(b) treat as liable the person who would have been, or would be, the ratepayer in the absence of the arrangement (and treat them as liable under section 54 to pay the chargeable amount for a chargeable day that would have been, or would be, payable in respect of that day in the absence of the arrangement).

(3) The provisions of this Act apply in relation to the persons mentioned in subsection (2)(a) and (b) as if they were liable under section 54.

(4) In subsection (2), “the relevant date” means the later of—

(a) the day the arrangement mentioned in subsection (1) is made;

(b) the day the applicable regulations come into force;

(c) a day provided for in those regulations.

(5) In subsection (4)(b), “the applicable regulations” means the regulations under section 63H(1)(a) that specify the type of arrangement within which the arrangement mentioned in subsection (1) falls.

63K Liability to non-domestic rating: notification

(1) The billing authority must give notice to a person who is to be treated as liable in accordance with section 63I.

(2) The Welsh Ministers must give notice to a person who is to be treated as liable in accordance with section 63J.

(3) A notice under subsection (1) or (2) must set out—

(a) the reasons for treating the person as liable,

(b) information about requiring a review under subsection (4), and

(c) information about the right of appeal under section 63L.

(4) A person who receives a notice under subsection (1) or (2) may require a review of it by making a request in writing to the billing authority or the Welsh Ministers (as the case may be) within 30 days beginning with the date of the notice under subsection (1) or (2).

(5) The review must conclude that the notice under subsection (1) or (2) is to be either—

(a) confirmed, or

(b) withdrawn (in which case the arrangement subject to the notice is to be taken as not having been an artificial non-domestic rating avoidance arrangement).

(6) The billing authority or the Welsh Ministers must notify the person of the conclusion of the review and their reasoning within 30 days beginning with the day on which the request was made under subsection (4).

(7) Notices under this section must be in writing.

63L Appeals to valuation tribunal

(1) This section applies where a person is given a notice under section 63K(1) or (2) that is confirmed in accordance with section 63K(5).

(2) The person may appeal to a valuation tribunal established under paragraph 1 of Schedule 11 within 30 days beginning with the day on which the billing authority or the Welsh Ministers notify the person of their conclusions in accordance with section 63K(6).

(3) The valuation tribunal may confirm the notice or require it to be withdrawn (in which case the arrangement subject to the notice is to be taken as not having been an artificial non-domestic rating avoidance arrangement).

63M Penalties

(1) The Welsh Ministers may by regulations make provision for the imposition of a financial penalty where—

(a) a person has been given a notice under section 63K(1) or (2) and it has not been withdrawn,

(b) the time limit for requesting a review under section 63K(4) has expired and, if a review has been requested, the time limit for appealing under section 63L has expired, and

(c) the person has failed to pay an amount due to a billing authority or the Welsh Ministers in consequence of having made an artificial non-domestic rating avoidance arrangement.

(2) The maximum penalty that may be specified in the regulations is £500 plus 3% of the rateable value of the hereditament on the date of the notice under section 63K(1) or (2).

(3) The artificial non-domestic rating avoidance arrangement is to be ignored when determining the rateable value of the hereditament for the purposes of subsection (2).

(4) Any sum received by way of penalty under this section is to be paid into the Welsh Consolidated Fund.

(5) The regulations may make further provision in relation to the collection and enforcement of penalties under this section.

(6) The Welsh Ministers may by regulations amend subsection (2) by substituting a different amount for the penalty for the time being specified in that subsection.”