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Discretionary Business Rate Relief Policy

Powers to apply discretionary business rate relief

Section 69 of the Localism Act 2011 amends Section 47 of the Local Government Finance Act 1988 to allow billing authorities such as South Hams District Council, to grant discretionary rate relief in any circumstances, provided it is in the interests of the local Council tax payers to do so.

The purpose of this new power is to give billing authorities the ability and scope to encourage, sustain and improve economic performance. The power to lower the business rate burden while businesses grow can create significant additional employment within the District.

Local Business Rate Relief Discount (LBRRD) Requirements The following principles apply when considering LBRRD applications:

  1. The Council will consider the cost of funding the LBRRD and the burden this places on its finances
  2. The LBRRD will support opportunities for new business growth, expansion, employment and the safeguarding of jobs within the Borough and the effect this will have on competing local businesses
  3. If it is reasonable to offer a LBRRD having taken into account the interests of the Council tax payers as a whole
  4. Any LBRRD award will be at the absolute discretion of the billing authority. The LBRRD may be awarded to any property or business of the Council's choosing, at any level between 0% and 100%. For example, 20% or 100% or for companies who are relocating within the Borough, the discount awarded may equal the difference between the old premises business rates payable and the new premises business rates payable
  5. Claims for LBRRD cannot be backdated
  6. The Council reserves the right to withdraw the LBRRD scheme at any time vii. Whether the award of a LBRRD may constitute State Aid. The 'de minimis' threshold for State Aid granted to any undertaking of any size must not exceed €200,000 over any rolling period of three fiscal years from any source. The onus is on the applicant to provide sufficient evidence to the billing authority to confirm that the 'de minimis' threshold is not and will not be breached. Applications which may constitute state aid will not be considered.

Criteria for valid LBRRD applications

Each application will be considered on its individual merits against the criteria set out below:

  1. Does the LBRRD incentivise the creation of new permanent contract (not zero hour contract) jobs for local people (paying the living wage as a minimum)?
  2. Will the LBRRD provide a return on investment from higher future rates income?
  3. Are there social or economic implications for the area if the LBRRD is not applied? e.g. the loss of a substantial number of jobs or skills from the area
  4. Is the request for temporary relief (LBRRD will not be repeated year after year)?
  5. To be considered for an award under this policy the applicant must be either :
    1. A new business starting up in the area
    2. A business relocating to the area
    3. An existing business expanding within the area and creating additional or safeguarding existing jobs
  6. Applications will not normally be considered where the Applicant's business premises are held on a lease with less than seven years remaining at the time of application
  7. No LBRRD will be awarded for greater than 2 years
  8. No LBRRD will be awarded if the applicant has received financial assistance worth a cumulative total of greater than €200,000 over three years, from any source that could be considered as State Aid
  9. LBRRD will not normally be considered until the Applicant has all required permissions, licences, leases and other provisions in place in order to begin lawfully trading from the premises at which the rate relief will be applied
  10. In considering an application for a LBRRD, applicants may be asked to provide certain information. This may include, but is not limited to, the last two years of financial accounts; a business plan, and; evidence of its ownership of a freehold or a minimum remaining lease term of seven years for commercial premises
  11. All LBRRD decisions are to be made by the panel within four weeks of receipt of a fully completed application form and all requested supporting evidence
  12. Any LBRRD awarded will be made by crediting the business rate account to which it applies
  13. There is no statutory right to appeal against a decision made by the discretionary business rate relief panel other than a Judicial Review. An applicant may make a request for the decision panel to review a decision within four weeks of notification of a decision. However, this only applies if additional relevant information becomes available that was not available at the time the decision was made. Cases will be reviewed by the same discretionary rate relief panel. A request for review must set out the reasons for the request to review and include the relevant new information.
  14. The applicant must sign a statement of intent to operate the business in the Borough for a minimum of five years.
  15. If in the Council's opinion any of the clawback events or termination events listed in Appendix A occurs, the Council may at its absolute discretion:
    1. Suspend the LBRRD awarded under this Policy for such period as the Council shall determine;
    2. Vary the LBRRD awarded under this Policy, in which case the discount shall thereafter be made in accordance with a written variation notified to the Applicant;
    3. Terminate any agreement to award the LBRRD under this Policy whereupon the Council shall cease to be under any obligation to provide any further LBRRD to the Applicant. In addition, the Council may require the Applicant to repay the whole or any part of the LBRRD previously enjoyed by the Applicant. The Applicant agrees that upon receipt of written notice requiring repayment the Applicant shall repay the sums required within 30 days of receipt of such notice.

If an applicant relocates the business for which the LBRRD is awarded outside the Borough, the Council shall be entitled to recover some or all of the relief on the following basis. This must be done within a period of five years from the date of the decision to award the LBRRD. This is not affected by the provisions of Clauses (1) and (2) above,

If the relocation occurs before 5 calendar years have expired beginning with the date of the decision, 100% of the LBRRD awarded shall be recoverable, at the Council's discretion.

Appendix A - Clawback and Termination Events

The following Clawback and Termination Events apply to this Policy:

  1. There is any change in the Applicant's legal status and such a change is likely to adversely affect the LBRRD; or
  2. Any claim and/or report submitted by the Applicant does not properly comply with the requirements detailed in this Policy; or
  3. Any information supplied by the Applicant under or in connection with the LBRRD proves to be materially incorrect or misleading; or
  4. The Applicant does not comply with or observe any condition of this Policy; or
  5. The assistance exceeds European Community State Aid limits to the extent that any LBRRD paid should not have been paid.
  6. A decision of the European Commission or of the European Court of Justice requires payment to be withheld or recovered; or
  7. There is an unsatisfactory report from the auditors. This will be the case if the auditors
    1. refer to a fundamental uncertainty, a disagreement or a limitation to their opinion, or
    2. if the auditors are unable to form an opinion; or
    3. if they report that the statement of grant does not give a true and fair view; or
    4. There is any evidence of irregularity, impropriety or negligence in connection with a LBRRD application; or
  8. If:
    1. the Applicant, being an individual, an incorporated or an unincorporated body:
      1.  becomes bankrupt, has a receiving order or administration order made against it,
      2. makes any composition or arrangement for the benefit of creditors,
      3. makes any conveyance or assignment for the benefit of creditors or purports to do so, or
      4. is the subject of an application under the Insolvency Act 1986 (or superseding legislation) for the sequestration of the Applicants estate or of a trust on behalf of the Applicant's creditors; or
    2. the Applicant, being an unincorporated body is dissolved; or
    3. the Applicant, being an incorporated body
      1. passes a resolution that the Applicant should be wound up,
      2. is ordered by the High Court to be wound up,
      3. has an administrator appointed by order of the Court,
      4. has an administrative receiver appointed, or
      5. being a company is struck from the register at Companies House.

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