Decision - Application for Discretionary Rate Relief on the Grounds of Hardship

Decision details

Application for Discretionary Rate Relief on the Grounds of Hardship

Decision Maker: Cabinet Member - Regulatory, Compliance and Corporate Services

Decision status: Recommendations Approved

Is Key decision?: No

Is subject to call in?: Yes

Purpose:

This report seeks approval to reject the award of discretionary rate relief to Charleston Grey Ltd on the grounds of hardship under the provisions of section 49 of the Local Government Finance Act 1988.

Decision:

Decision:

 

That the application from Charleston Grey Limited for discretionary rate relief on the grounds of hardship amounting to £20,153.01 for the financial year 2016-2017 be rejected.

 

The discretionary rate relief applied for is in respect of the premises at 28 Chapel Street, Southport, Merseyside, PR8 1BH.

 

Reason for the Decision:

 

Section 49 of the Local Government Finance Act 1988 gives billing authorities the discretion to reduce or remit the payment of rates where it is satisfied that the ratepayer would sustain hardship if it did not do so and it is reasonable to do so having regard to the interests of its Council Tax payers.

 

Charleston Grey Limited has held the lease on 28 Chapel Street, Southport, Merseyside, PR8 1BH since 1st April 2016 and started to trade from the property on 6th June 2016.  They have made an application for relief of £24,601.50 which is equal to their gross liability for the period 1st April 2016 until 31st March 2017. However their rate liability for 2016–2017 has been reduced to £20,153.01 due to an exemption of £4448.49 being applied to the account as the property was unoccupied for the period 1st April 2016 until 5th June 2016. The amount of relief applied for has been reduced in accordance with their gross rate liability.

 

They have applied for discretionary rate relief of 20,153.01, if awarded in full this would reduce their rate liability for 2016-2017 to zero.

 

 

The application for discretionary top up rate relief shows that Charleston Grey Limited:-

 

  • Operate a retail business selling mid-range women’s clothing.
  • Use the property at 28 Chapel Street for 49 hours per week.
  • Pay a rent of £15,600 per annum inclusive of building insurance and service charge.
  • Have renovated and improved the appearance of the shop at 28 Chapel Street.
  • Stock Robell stretch clothing, easy to wear for elderly and disabled.  

·         Employs 1 full time and 4 part members of staff all of whom reside in Sefton.

·         Were incorporated on 31st March 2016.

·         Objects to the outdoor Chapel Street market held each Tuesday and Wednesday as of the opinion it takes away trade from their shop which sells similar goods.

·         Are unable to compete with the prices goods are sold on the market stalls due to the additional overheads of occupying a shop.

·         Have introduced a customer loyalty card, giving customers 10% discount deals.

·         Host open evening when new stock arrives, customers with loyalty cards are invited to prosecco evenings to increase sales.

·         Have ordered new stock from Germany to attract new customers.

·         Have approached Barclays Bank for an overdraft facility but it has been refused.

·         Have negotiated extended credit from some of their suppliers. .

 

A report has been provided by a member of the Business Support team at Invest Sefton which confirms the following:

 

·         The business has provided bank statements which show a balance of £20,345.05 as at 7th February 2017.

·         It has not been possible to undertake a financial analysis of the trading figures and cash flow projections for the following reasons:

 

·         Three sets of cash flow projections were supplied for 2016, and 2017, which were used in business planning: (1) 2016 Jan-Dec; (2) 2017 Jan-Dec; and (3) April 2016-March 2017.  However, they contain inaccuracies, missing data and underestimated figures relating to business rates liability.  Electronic copies were requested from the business in March, April, July and August to facilitate analysis, which have not been provided

·         Financial information requested by the business rates section remains outstanding as follows:

·         Outline of the financial impact of the market stall being located outside the shop including a summary of the drop in takings - Figures relating only to August 2017 provided.

·         Cash flow plan showing the drop in income since the market came into operation.

·         Estimate of annual income and expenditure and cash flow forecast for a minimum of the next twelve months.

·         It is therefore not possible to provide a view of the business’ ability to pay outstanding rates, or its viability as an enterprise over the coming year.

 

In recommending the rejection of the application for discretionary rate relief on the grounds of hardship the following has been taken into account:-

 

·         Under rate retention 99% of discretionary rate relief on the grounds of hardship has to be borne by the local Council Tax payers and 1% by the Fire Authority

 

·         In order to decide whether a business ratepayer should have their Business Rates reduced on the grounds of hardship, the Council must be satisfied that the ratepayer would sustain hardship if it did not do so and it is reasonable to do so having regard to the interest of its Council Tax payers.

 

·         Documentary evidence of the financial impact on the business of the market being located outside the 28 Chapel Street has not been provided.

 

·         The business does not provide a unique service to Southport and there are several other businesses in the area selling similar items.

 

·         The property 28 Chapel Street is currently being marketed to let, Charleston Grey Ltd state they are unable to extend their lease unless rate relief is granted.

 

·         Whilst the financial difficulties experienced are recognised, hardship relief is not designed to support this situation.

 

Other Options Considered and Rejected:

 

The ratepayer has applied for 100% discretionary rate relief on the grounds of hardship to reduce their rate liability at 28 Chapel Street, Southport, Merseyside, PR8 1BH for the financial year 2016 – 2017

 

The discretionary rate relief on the grounds of hardship can be refused or a different percentage of relief granted, as shown in the table below:-

 

 

2016-2017 

25% Relief

50% Relief

75% Relief

100% Relief

Gross Increase in Revenue Expenditure

£5,038.25

£10,076.50

£15,114.76

£20,153.01

 

 

 

 

 

Funded by Sefton funded Resources 99%

£4,987.87

£9,975.74

£14,963.61

£19,951.48

 

 

 

 

 

Funded by Fire Authority 1%

£50.38

£100.76

£151.14

£201.53

 

Publication date: 19/09/2017

Date of decision: 19/09/2017

Effective from: 27/09/2017

Accompanying Documents: