Rating (Coronavirus) And Directors Disqualification (Dissolved Companies) Act 2021

Commentary on provisions of Act

Section 1: Determinations in respect of certain non-domestic rating lists

42. Section 1 of the Act makes provision as to what matters attributable to coronavirus should be taken into account when deciding whether a hereditament ought to appear in the rating list and determining rateable values on the 2017 rating list.
43. Section 1(1) provides that the section applies to relevant determinations. Relevant determinations are defined in sections 1(2) and 1(3).
44. Section 1(2)(a) provides that a relevant determination is a determination which is concerned with whether a hereditament ought to appear in the rating list. Whether something is a hereditament and should appear in the rating list, and therefore be liable for business rates, is the first question to be addressed by the Valuation Officer and the Courts. There is established case law on the meaning of a hereditament including that something must be capable of beneficial occupation to be considered a hereditament 1 . Hereditament is defined in section 1(8) and ensures that references to a determination in section 1(2)(a) include a determination of that first question of whether something is a hereditament.
45. Section 1(2)(b) provides that a relevant determination is a determination of the rateable value of a hereditament on the 2017 rating list. Rateable values are determined in line with rules in Schedule 6 to the 1988 Act. Broadly speaking the rateable value is the annual rental value of the hereditament. Schedule 6 to the 1988 Act provides for the rateable value, during the lifetime of a rating list, to be assessed by reference to two dates:
    1. Paragraph 2(3)(b) of Schedule 6 to the 1988 Act gives the Secretary of State the power to specify a day – known as the valuation date – by reference to which the assessment of rateable value in a rating list is to be made. For the 2017 rating lists, that day was specified as 1 April 2015. 2 Therefore, rateable values in the 2017 rating lists are made by reference to valuations as at 1 April 2015.
    2. Paragraph 2(6A) of Schedule 6 to the 1988 Act gives the Secretary of State powers to specify rules for determining the day – known as the material day - by reference to which certain matters are to be reflected. Those matters are listed in paragraph 2(7) of Schedule 6 to the 1988 Act and include matters such as those affecting the physical state of the hereditament or mode or category of occupation of the hereditament.
46. Therefore, rateable values in the 2017 rating lists are made by reference to factors affecting valuations as at 1 April 2015 except for those matters listed in paragraph 2(7) of Schedule 6 which are reflected as at the material day. As a result, where one of the matters listed in paragraph 2(7) of Schedule 6 changes during the life of a rating list then the rateable value of existing hereditaments may need to be amended and that matter may need to be reflected in the rateable value of new hereditaments. A change in any matter not within the list in paragraph 2(7) of Schedule 6 should not lead to a change in an existing rateable value, or be reflected in the rateable value of new hereditaments, before the next rating lists are compiled.
47. Section 1(3) excludes from the provisions of the section determinations as to whether a hereditament is non-domestic or domestic (and therefore liable for Council Tax) or exempt or not exempt from business rates.
48. Section 1(4) provides that, subject to exceptions in section 1(5), no account is taken of any matter that is directly or indirectly attributable to coronavirus when making a relevant determination. This includes matters arising before the passing of the Act. This ensures, for example, that any checks, challenges or appeals the Valuation Officer has received seeking either for a hereditament to be deleted from the list or its rateable value to be reduced will be determined taking no account of matters attributable to coronavirus. This includes checks, challenges and (in respect of Tribunal and Courts) appeals lodged before the passing of the Act concerning matters arising before the passing of the Act. It will also include determinations the Valuation Officer makes in maintaining the current 2017 rating list in the absence of any check, challenge or appeal such as the inclusion of a new hereditament in the rating list (including such determinations with retrospective effect).
49. Section 1(5) provides exceptions to the effect of section 1(4) for the following matters:
    1. the physical state of the hereditament. This will ensure, for example, that changes to the physical structure of the hereditament or the extent of the hereditament (such as structural changes to the internal fabric of the hereditament, a new extension to the hereditament or a demolition of part of the hereditament) continue to the be reflected in the rating list when they arise even if they are attributable to coronavirus. It will also ensure that changes to the mode or category of occupation of the hereditament (for example from a restaurant to a shop) may still be reflected in the rating list where this has been affected by the change in the physical state of the hereditament, and
    2. the quantity of minerals or other substances in or extracted from the hereditament (typically this provision applies to mines and quarries) and the quantity of refuse or waste permanently deposited on the hereditament (applying to landfill sites). Mines, quarries and landfill sites are valued for business rates based, in part, on the amount of minerals extracted each year or, for landfill, the amount of waste deposited. 3 A special rule in paragraphs 2(7)(c) and (cc) of Schedule 6 to the 1988 Act allows for the rateable value of these hereditaments to vary year to year between revaluations based on changes in the rates of mineral extraction (or for landfill deposits). Section 1(5)(b) and (c) will preserve that special rule in respect of changes in the minerals extracted or landfill deposits attributable to coronavirus.
50. Section 1(6) provides a non-exhaustive list of matters included in section 1(4). The section will ensure, for example, that restrictions on the use of a property imposed by the Government’s Non-Pharmaceutical Interventions (such as rules on social distancing) will not be taken into account for a relevant determination. For example, in so far as a hereditament has been forced to close because of the Non-Pharmaceutical Interventions then no account will be taken of this in determining whether the hereditament ought to be shown in the rating list or determining its rateable value. It will also ensure, for example, that where occupiers have decided that in order to comply with health and safety legislation, they have had to implement social distancing in their buildings, then this will not be taken into account for relevant determinations.
51. Section 1(7) provides that determinations falling within section 1(4) include those which are based upon matters taken at a day which falls before the Act is passed (as well as a day on or after it is passed). This ensures that section 1(4) applies to determinations which have a material day before the Act is passed.
52. Section 1(8) provides for definitions.
53. Section 1(9) revokes The Valuation for Rating (Coronavirus) (England) Regulations 2021 (S.I. 2021/398) which require, with effect from 25 March 2021, that interventions to control coronavirus should be assumed to have not occurred for the purposes of determining rateable values. These regulations are superseded by section 1.

Section 2: Unfit directors of dissolved companies: Great Britain

54. Section 2 amends certain sections of CDDA86 to provide a power to the Secretary of State and the official receiver to investigate the conduct of former directors of dissolved companies, for the Secretary of State to seek their disqualification where appropriate, and to seek compensation where their actions have led to losses to creditors of dissolved companies.
55. Section 6 of CDDA86 is amended to increase its scope to include former directors of dissolved companies. In particular, section 6(1) is amended so that if the court is satisfied on application that the person was a director of an insolvent company, or was a former director of a company which was dissolved without becoming insolvent, and their conduct as a director of that company (either taken alone or considered along with their conduct in other companies) makes them unfit to be concerned in the management of a company, it has a duty to make a disqualification order. Section 6(3) is amended to provide the court with jurisdiction to make a disqualification order in a case that concerns a former director of a dissolved company is the court which would have had jurisdiction to wind it up on the date of dissolution.
56. Section 7(2) of CDDA86 is amended so that where an application for a disqualification order is made by the Secretary of State in respect of a former director of a dissolved company, it may not be made after the period which is 3 years beginning on the day that the company was dissolved. Section 7(4) is amended so that the Secretary of State or the official receiver may require any person to provide information or documentation which relates to the conduct of a person who was a former director of a dissolved company, as may be reasonably required.
57. Section 8ZB(2) of CDDA86 is amended so that where a disqualification application is made by the Secretary of State under section 8ZA (in the circumstances that the person in respect of whom the disqualification application is made influenced the actions of a disqualified former director of a dissolved company), the period within which such an application may be made is 3 years starting with the date on which the company in question was dissolved.
58. Section 15A of CDDA86 is amended so that compensation may be sought where a former director of a dissolved company’s conduct in that company may be considered when seeking compensation for losses to creditors.
59. Sections 22A to 22H of CDDA86 apply that Act to:
    • Building societies within the meaning of the Building Societies Act 1986
    • Incorporated friendly societies within the meaning of the Friendly Societies Act 1992
    • NHS foundation trusts
    • Registered societies within the meaning of the Co-operative and Community Benefit Societies Act 2014
    • Charitable incorporated organisations
    • Further education bodies
    • Protected cell companies incorporated under Part 4 of the Risk Transformation Regulations 2017.

60. Those sections of the CDDA86 are amended so that references to dissolved companies do not apply when the Act is being applied to those bodies.
61. Section 2 also provides that the conduct which may be investigated and considered as a result of the amendments to the CDDA86 made by that section, includes that which occurred in companies which were dissolved prior to commencement, and that which occurred prior to commencement in companies which were not dissolved at that time.

Section 3: Unfit directors of dissolved companies: Northern Ireland

62. Section 3 makes equivalent amendments to certain Articles of CDD(NI)O02 as did section 2 for the CDDA86. The amendments provide a power to the Department and the official receiver to investigate the conduct of former directors of dissolved companies, for the Department to seek their disqualification where appropriate, and to seek compensation where their actions have led to losses to creditors of dissolved companies.
63. Article 9 of CDD(NI)O02 is amended to increase its scope to include former directors of dissolved companies. In particular, Article 9(1) is amended so that if the court is satisfied on application that the person was a director of an insolvent company, or was a former director of a company which was dissolved without becoming insolvent, and their conduct as a director of that company (either taken alone or considered along with their conduct in other companies) makes them unfit to be concerned in the management of a company, it has a duty to make a disqualification order.
64. Article 10(2) of CDD(NI)O02 is amended so that where an application for a disqualification order is made by the Department in respect of a former director of a dissolved company, it may not be made after the period which is 3 years beginning on the day that the company was dissolved. Article 10(5A) is inserted, giving a power to the Department or the official receiver to require any person to provide information or documentation which relates to the conduct of a person who was a former director of a dissolved company, as may be reasonably required.
65. Article 11B(2) of CDD(NI)O02 is amended so that where a disqualification application is made by the Department under Article 11A (in the circumstances that the person in respect of whom the disqualification application is made influenced the actions of a disqualified former director of a dissolved company), the period within which such an application may be made is 3 years starting with the date on which the company in question was dissolved.
66. Article 19A of CDD(NI)O02 is amended so that compensation may be sought where a former director of a dissolved company’s conduct in that company may be considered when seeking compensation for losses to creditors.
67. Articles 24D to 25C of CDD(NI)O02 apply that Order to:
    • Building societies within the meaning of the Building Societies Act 1986
    • Incorporated friendly societies within the meaning of the Friendly Societies Act 1992
    • Registered societies within the meaning of the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969
    • Credit unions
    • Protected cell companies incorporated under Part 4 of the Risk Transformation Regulations 2017.

68. Those Articles of the CDD(NI)O02 are amended so that references to dissolved companies do not apply when the Order is being applied to those bodies.
69. Section 3 also provides that the conduct which may be investigated and considered as a result of the amendments to the CDD(NI)O02 made by that section, includes that which occurred in companies which were dissolved prior to commencement, and that which occurred prior to commencement in companies which were not dissolved at that time.