COMHAIRLE CONTAE ÁTHA CLIATH THEAS
SOUTH DUBLIN COUNTY COUNCIL
MEETING OF SOUTH DUBLIN COUNTY COUNCIL
Monday, September 22, 2014
MOTION NO.10
MOTION: Councillor P. Foley
That this Council requests the Chief Executive to present a report, for discussion, outlining best practice in attempting to maximise the collection of commercial rates. In the Chief Executive's opinion are the policies of 100% rates credits for vacancies and also the policy of commercial rates debt following the tenant (as opposed to the debt following the property) worth reviewing?
REPORT:
Commercial Rates & Debt Management best practice
The range and number of businesses based in South Dublin make an important contribution to the economic and social fabric of the county and also provide a significant financial resource in the form of commercial rates for the council. The economic downturn in 2008/9 significantly affected many local business and this had a knock on impact on the collection of commercial charges including rates. In response to the crisis a small team of staff was dedicated to work with debtors in order to enhance debt collection, particularly of commercial rates. This team works with debtors to initiate payment arrangements, maximise the debt collection and agree acceptable cashflow solutions for ratepayers. This team have engaged with a cross section of business and domestic customers to collect commercial rates, entry year property levy, non domestic water charges, Non Principal Private Residence Charge and household charge. The collection of commercial rates is prioritised as it is an important source of income for the council. Ratepayers are offered a range of payment options and are contacted regularly and frequently throughout the year by mailshot, phone, and email to facilitate the collection process and in some cases to agree a payment plan with the debtor.
Electronic customer contact and debt management systems are employed to record each contact, document arrangements, record feedback from accountholders and to categorise debt by ratepayer and year. This information is used to prioritise future actions, to strategically plan the collection process, measure performance and benchmark with other similar undertakings. It is also used as an tool to set targets for weekly and monthly collection and as the basis for financial projections and comparisons to budget.
Non-performing accounts are assigned to one of the two Rate Collectors who identify any particular issues associated with a case and initiate appropriate action, e.g. legal proceedings, name change (if the occupier has changed), apportionments of liability (if occupancy changes mid-year), strike-offs (in the case of liquidations or where the previous occupant cannot be traced or legally pursued) etc.
The collection procedure is constantly monitored and reviewed and changes or improvements are made as required.
Procedures are also discussed with other local authorities, so that best practice can be developed based on shared experience.
Commercial Rates: Vacancy Credits
The issues and options affecting rates credits for vacancies will be discussed and brought to the attention of the members during the budget process for 2015. The Annual Budget (2015) meeting is scheduled for Thursday 6th November 2014 but the Budget Strategy must be disclosed to the Department of the Environment, Community and Local Government (in the format as outlined in Appendix 2 of Circular Fin 05/2014) by 30th September to facilitate the EU and National Budget process. The Chief Executive has scheduled a consultation process with the Corporate Policy Group and members in order to facilitate this process and submit the preliminary estimate of income and expenditure (including Commercial Rates and related provisions for 2015 Rates Vacancy credits) to the DECLG by 30th September.
The following statutory provisions are relevant: Section 31 of the Local Government Reform Act 2014 provides that: “(1A) A local authority may—
(a) specify a local electoral area or local electoral areas within its administrative area where owners of vacant premises shall be entitled to claim and receive a refund of differing proportion of the municipal rate to that referred to in subsection (1), and (b) determine the proportion of the refund to apply in respect of each specified local electoral area or local electoral areas in accordance with paragraph (a).
(1B) The specifying of a local electoral area or local electoral areas and the determination of the proportion of the refund shall be a reserved function.”,
In addition Part 5 of the Local Government (Financial and Audit Procedures) Regulations 2014, S.I. 226 of 2014 provides for Rates on vacant premises as follows:
"29. (1) The decision of the local authority to specify a local electoral area or local electoral areas and to determine the proportion of the refund that shall apply in each case as provided by section 71 (as amended by section 31 of Local Government Reform Act 2014) of the Local Government (Dublin) Act 1930, section 20 (as amended by section 31 of Local Government Reform Act 2014) of Cork City Management Act 1941 and section 14 (as amended by section 31 of Local Government Reform Act 2014) of Local Government Act 1946 shall—
(a) be taken by the local authority at the budget meeting concerning the local financial year to which the rate of refund shall apply, and
(b) apply for the whole of that local financial year."
Commercial Rates: Repeal of subsequent occupier liability
Section 71 of the Poor Relief (Ireland) Act 1838 provided that a person in occupation of a premises on the date the rate was struck was primarily liable for rates and in the case of their default, the subsequent occupier was liable. Section 19 of the Poor Relief (Ireland) Act 1849 provided that in the event that rates cannot be recovered from the person with whom the primary liability lies, any person not primarily liable to pay the rate, i.e. a subsequent occupier, could be held liable for up to two years arrears of rates.
Part 6 of Schedule 2 of the Local Government Reform Act 2014 partly deletes section 71 of the Poor Relief (Ireland) Act 1838 and fully deletes section 19 of the Poor Relief (Ireland) Act 1849. The effect of these amendments is to remove the liability of subsequent occupiers for up to two years of the arrears of previous occupiers. The amendment was introduced by government to support enterprise and job creation and took effect from 24th March 2014 so no new liability has accrued under this provision since this date.
The repealed subsequent occupier powers and provisions were to some extent replaced by Section 32 of the Local Government Reform Act 2014 which places a new obligation on property owners to notify the local authority of a change in interest in a property within two weeks of transfer, where this transfer results in a change in the person liable for commercial rates. Subsection 2(b) provides a new duty to discharge any commercial rates outstanding on property prior to sale or transfer of tenancy or interest. In the event that the owner does not discharge any outstanding rate liabilities (these would arise from either occupation or unpaid vacancy rates charged on the property), the unpaid amount becomes a charge on the property (as set out in subsection 3). Subsection 4 provides for a penalty payable by the owner of an amount which is equivalent to the level of outstanding liabilities (up to a maximum of 2 years liability), that may have accrued to any previous occupier of the property if the owner does not comply with the terms of section 32.
Section 32 of the 2014 Act was commenced by S.I. 146 of 2014 on 1st July 2014. The Council has implemented the provisions of Section 32 and is reviewing the impact which these changes have on the collection of commercial rates. The council is obliged to implement the legislation as amended and any change or review of this aspect of the rates process should be carried out in the context of a review of the statutory framework governing rates nationally.