Section 13: Requirements for ratepayers etc to provide information
Section 13 provides for: a new duty on ratepayers in England and Wales to provide a taxpayer reference number to HMRC (as part of the digitalisation of business rates); and new duties on ratepayers in England to provide information to the VOA to support a shorter revaluation cycle and improve the accuracy of the list. The duties are each accompanied by a set of penalties to ensure compliance and a system for reviews and appeals. The section amends Schedule 9 (administration) to the 1988 Act.
	Section 13(2) creates, in new paragraphs 4B to 4H of Schedule 9, a new duty on ratepayers in England and Wales to provide an up-to-date taxpayer reference number to HMRC:
Paragraph 4B provides that the duty applies to persons who are ratepayers in respect of hereditaments in England and Wales. The term ‘ratepayer’ is defined in section 67 (interpretation: other provisions) and includes those who may be in receipt of relief of 100% and therefore have a chargeable amount of nil.
Paragraph 4C sets out the scope of the duty on those persons. Where they have a taxpayer reference number (as defined in new paragraph 4F(1)), they must make a notification to HMRC if: they have not already done so; or they have already done so, but the number they provided was, or has since become, incorrect (for example, if they have since been issued with a new number).
Paragraph 4D provides for persons to make the notification within 60 days either of becoming a ratepayer in respect of the hereditament, or of when they knew, or ought to have known, that the number they provided was, or became, incorrect.
Paragraph 4E provides for the notification to be made using an online facility provided by HMRC, or in another agreed manner.
Subparagraph 4F(1) defines taxpayer reference number to cover: unique taxpayer references (such as self-assessment, partnership, corporation tax), VAT registration numbers, and national insurance numbers. It also defines taxpayer reference notification as a notification made to HMRC by the ratepayer in respect of a hereditament, specifying their taxpayer reference number.
Subparagraph 4F(2) gives the Commissioners for HMRC a power to amend, by regulations, the definition of taxpayer reference number given in subparagraph (1), for example to add another type of number to the definition. So far as these regulations apply to Wales, the Commissioners for HMRC must consult the Welsh Ministers before making them.
Paragraph 4G gives the Commissioners for HMRC a power to provide, by regulations, that the duty to provide a taxpayer reference number, as set out in the preceding paragraphs, does not apply to a person or a group of persons. So far as these regulations apply to Wales, the Commissioners for HMRC must consult the Welsh Ministers before making them.
	Section 13(3) creates, in new paragraphs 4I to 4M of Schedule 9, a set of duties on ratepayers to provide notifiable information to the VOA:
Paragraph 4I provides that the duties apply, in respect of a hereditament in England, to persons who are or would be a ratepayer. The term ‘ratepayer’ will be defined in section 67 (interpretation: other provisions) and includes those who may be in receipt of relief of 100% and therefore have a chargeable amount of nil.
Paragraph 4J provides for a duty for that person to provide notifiable information within a notifiable period. Information is notifiable if it relates to the identity of the ratepayer or the existence, extent or rateable value of the hereditament, and the ratepayer could reasonably be expected to know that it would assist the VOA in carrying out its functions. The notifiable period is within 60 days of the change in notifiable information or such longer period as may be specified by the VOA.
Paragraph 4K provides for the person to make an annual confirmation in which they confirm within 60 days of the start of the financial year that they have either provided notifiable information or confirm that they were not required to provide such information. The government has said the duty for annual confirmation will not come into force until the government is satisfied it will be straightforward to use.
Paragraph 4L provides for the information to be submitted using an online facility provided by the VOA or in another agreed manner.
Paragraph 4M replicates the existing powers in paragraph 5 of Schedule 9 to the 1988 Act which allow the VOA to also request information which they believe will assist them in carrying out their functions. The VOA may still need to request information using this power; in particular for specialist properties and in respect of very specific types of information.
	Section 13(4) creates, in new paragraphs 5ZA to 5ZF of Schedule 9 to the 1988 Act, a system of penalties for failures by ratepayers to comply with the new duties:
Paragraphs 5ZA and 5ZB (covering the duty to provide a taxpayer reference number) provide for:
A new civil penalty (5ZA(1)) where a person fails to comply with the requirement to make a taxpayer reference notification to HMRC. The maximum penalty for a failure to make a notification is set at £100.
A new civil penalty (5ZA(2)) where a person carelessly or deliberately provides false information in purported compliance with the requirement to make a taxpayer reference notification to HMRC. 5ZA(3) defines carelessness as a failure to take reasonable care. The maximum penalty for the provision of false information deliberately or carelessly is set at £3,000. The maximum is set at this level so as to give flexibility to HMRC to charge higher amounts where the circumstances warrant it (for example, where the false information has been provided deliberately and in an attempt to conceal fraudulent activity) and a lower amount where, for example, the false information has been provided simply as a result of carelessness on the part of the ratepayer. HMRC intends to issue guidance on how it will operate the penalties regime.
A person’s liability to further penalties of up to £60 per day where that person has been served with a penalty under either 5ZA(1) or 5ZA(2) and has still failed to provide an acceptable taxpayer reference number within a further 30 days (5ZA(6)). A person’s liability to daily penalties is ongoing until their failure is rectified, but the maximum liability a person may accrue in daily penalties is capped at £1,800 (5ZA(7)).
The contents of penalty notices (5ZA(4)), which are to be served by HMRC on persons who are being issued with a penalty under subparagraphs (1) or (2).
The possibility that a person might be liable to penalties under both subparagraph (1) and subparagraph (2) simultaneously (5ZA(5)), for example where a ratepayer has more than one hereditament and has failed to make a notification in respect of one hereditament and has provided false information in respect of another.
A power for HMRC to mitigate or remit any maximum penalty to which a person falls liable or which is imposed on them (5ZB). This will allow HMRC to operate a penalties regime which is fair, proportionate and which gives due regard to individual circumstances. HMRC intends to issue further guidance on how it will operate the penalties regime, including what level of penalties (up to the maximums provided for) it intends to issue and in what circumstances. The government has made a commitment only to issue penalties for a failure to make a taxpayer reference notification as a last resort and where all other methods of encouraging compliance have failed. The government has further committed not to issue a penalty for a failure to make a taxpayer reference notification where a person has already been issued with a penalty for a failure to make a relevant notification to the VOA, where those requirements to notify arose simultaneously.
Paragraphs 5ZC to 5ZF cover the duty to provide notifiable information to the VOA. Paragraph 5ZC provides for:
A new civil penalty (at paragraph 5ZC(1)) where a person fails to comply with the duties introduced in section 13(3) by paragraphs 4H to 4L. The penalty is determined under paragraph 5ZD.
A new criminal offence (at paragraph 5ZC(2)) where a person makes a false statement while purporting to comply with the duty. A person is liable on summary conviction to imprisonment for a term not exceeding 3 months or a fine not exceeding level 3 on the standard scale. For a criminal offence, as is normal, this must meet the test of beyond reasonable doubt. Alternatively, the person may be liable for a civil penalty for making a false statement of the same nature if this is beyond reasonable doubt (the civil penalty is determined under paragraph 5ZD). In practice the VOA expect to pursue the civil penalty in the first instance in this situation.
The arrangements for serving and the contents of penalty notices where the person is liable for a civil penalty.
Paragraph 5ZD provides for the level of civil penalty:
Where the person has failed to comply with a notification requirement as a result of knowingly or recklessly making a false statement, the maximum penalty is the sum of 3% of their rateable value and £500.
Where the person has failed to comply with a notification requirement for any other reason, the maximum penalty is the greater of 2% of their rateable value and £900, and a further penalty of £60 per day if the person fails to comply within 30 days of being serviced with an associated penalty notice. A person’s liability to daily penalties is ongoing until their failure is rectified, but the maximum liability a person may accrue in daily penalties is capped at £1,800 (5ZD(4)).
Paragraph 5ZE provides for the determination of rateable values for the purposes of calculating penalties where a matter affecting the rateable value has changed between the day when the notifiable information should have been provided and the day of the penalty notice. These provisions ensure that the penalty calculated under paragraph 5ZD is not increased or reduced merely due to changes to the hereditament after the liability to the penalty first arose.
Paragraph 5ZF provides for the valuation officer to mitigate or remit any of the above penalties. This will allow the VOA to operate the duties and penalties fairly and with due regard to individual circumstances. The VOA intends to produce a policy statement setting out how it will determine the level of penalty it will impose in particular cases. In exercising their discretion under paragraph 5ZF, the government has said that the VOA will draw upon the existing HMRC practice for mitigation of sanctions and HMRC’s approach to Reasonable Excuse5.
	Section 13(6) creates, in new paragraphs 5BA to 5BF of Schedule 9 to the 1988 Act, a process for reviewing and appealing penalties:
Paragraphs 5BA to 5BC cover reviews and appeals of penalties imposed by HMRC in relation to the duty to provide a taxpayer reference number:
Paragraph 5BA gives a person 30 days to request a review of a penalty notice (5BA(2)). The review is conducted by a reviewing officer in HMRC different to the officer who applied the penalty (5BA(10)). The nature and extent of the review are such as appear appropriate to the reviewing officer (5BA(6)) – HMRC will follow its standard principles for conducting reviews, including consideration of ‘reasonable excuse’. The review must be completed within 45 days (5BA(8)), otherwise the review is treated as having confirmed the penalty (5BA(9)).
Paragraph 5BB provides for a right of appeal against the conclusions of the review conducted under 5BA to the valuation tribunal within 30 days of the review conclusions (5BB(2)). For ratepayers in England, appeals are to be made to the Valuation Tribunal for England; for ratepayers in Wales, they are to be made to the Valuation Tribunal for Wales (5BB(4)).
Paragraph 5BC provides that the incidence of a review or appeal does not prevent a further penalty being applied where the person continues to fail to comply with their duty.
Paragraphs 5BD to 5BF cover reviews and appeals of penalties imposed by the VOA in relation to its information duty:
Paragraph 5BD gives a person 30 days to request a review of a penalty notice. The review is done by a reviewing officer of the VOA different to the officer who applied the penalty. The nature and extent of the review are such as appear appropriate to the reviewing officer but the government has said the mitigating criteria will be based on HMRC’s approach to Reasonable Excuse. The review must be completed within 45 days (or otherwise the review is treated as having confirmed the penalty).
Paragraph 5BE provides for a right of appeal against the conclusions of the review in 5BA to the valuation tribunal within 30 days of the notification of the review conclusions.
Paragraph 5BF provides that the incidence of a review or appeal does not prevent a further penalty being applied where the person continues to fail to comply with the notification requirement.