Westway Development
Trust: a developer's claims were "taken at
face value" - 3/3
This
auditor's report will make little sense if you
haven't read Brian Deer's Notting
Hell from The Sunday Times of June 17
2001. In July 2002 the trust renamed itself
Westway Development Trust. A Westway Development Trust
index of
materials is also available
<<<
Continued from district auditor's report part two
Rate
Relief Applications
Findings
23. The
Council granted the Trust mandatory and
discretionary rate relief on the property since
its use was established as a community centre up
until the decision to withdraw those reliefs in
1999.
24. In order
to qualify for mandatory relief (80%), the
ratepayer of an occupied property must be a
charity or trustee for a charity and the property
must be wholly or mainly used for charitable
purposes. The full cost of mandatory relief is
borne by the national pool.
25. The
criteria for granting additional discretionary
relief are less tightly defined and considerable
discretion is available but authorities should
nevertheless consider each case on its merits
against set criteria. The Council has adopted
such criteria, which broadly follow the
conditions for considering mandatory relief but
giving weighting to the degree that the
organisation benefits the local community. The
local authority must meet 75% of the cost of any
additional discretionary relief, with the
remaining 25% being offset against the
authority's contribution to the national pool.
26. There is
no record of NKAT submitting an application for
mandatory or discretionary relief prior to 1996.
Annual rate accounts were sent which detailed the
reliefs but there was no requirement for annual
or periodic applications by organisations in
receipt of relief. So it appears that the
situation of them receiving both reliefs was
carried forward from the old General Rates
system, which became defunct on 31st March 1990.
This was a common practice for Councils on the
transition from the old to the new system.
27. Under
revised arrangements effective from 1996,
discretionary rate relief was subject to
triennial review and a report to the Council's
Corporate Management Committee. This review could
also be used to consider eligibility for
mandatory relief but was not intended
specifically to do so. Under contract
arrangements for Non Domestic Rates, we
understand from officers that Capital plc, which
provides the service, were meant to undertake a
review of mandatory cases every three years.
However there are no records to document that the
mandatory relief in respect of 12 Acklam Road
(Subterania) had been reviewed during the period
1990-1996.
28. NKAT
were required to complete an information return
as part of the review of discretionary relief.
The procedure for considering rate relief for
NKAT was the same as that applied to other
discretionary rate relief reviews at that time.
The form required minimal information and the
only additional information it elicited was the
percentage of those benefiting from the use of
the property that came from the Royal Borough of
Kensington and Chelsea. The degree of detail
required should be considered in the context of
the amounts involved and, in this case, the full
rates due in respect of Subterania amounted to
£7,865 for 1996/97 with the 20% discretionary
element amounting to £1,573. The procedure was
not designed to test the more fundamental
question of whether the conditions for mandatory
relief applied. Consequently, there was no
detailed scrutiny of the activities at Subterania
that may have alerted officers to the need to
review the relief granted in greater detail.
29. The
results of the reviews were considered at the
Corporate Management Committee in September 1996.
Some concerns were raised by one of the Members
of the Committee and assurances were sought from
the Trust that the conditions for charitable
purposes and discretionary relief still applied.
This was not minuted, but was dealt with by
correspondence and subsequent discussion with the
Chairman of the Committee. The assurances
provided by NKAT were accepted at face value.
30. We note
that one of the Members of the Committee
(Councillor Tomlin) was also serving as a Member
of NKAT's Management Committee at the time. The
minutes show no record of Councillor Tomlin
declaring a non-pecuniary interest in the
particular item. Although we understand that it
is not a specific requirement to declare a
non-pecuniary interest, we not that Members will
generally do so and that another Member
(Councillor Levitt) declared a non-pecuniary
interest as a director of the City Challenge
company under the same item and took no part in
the proceedings in respect of the application
from that organisation.
31. The next
triennial review fell due in 1999 and, due to the
decision taken on the public entertainment
licence, the rate reliefs (for both discretionary
and mandatory relief) were subject to more
detailed review and were withdrawn. We note that
there is no systematic process for cross-checking
differing types of reliefs granted to the same or
similar organisations.
32. The
views of the Director of Legal Services and the
Director of Finance and Information Systems have
been sought as to whether there is a case for
seeking to raise bills retrospectively in respect
of rate relief granted in previous years on the
basis that the eligibility criteria for mandatory
and/or discretionary relief were not met. The
views of both officers are that the Council is
not entitled to withdraw discretionary relief
retrospectively and, in respect of mandatory
relief, it could be argued that the Council could
have checked what use was being made of the
premises earlier and that therefore it is not
reasonable to withdraw the mandatory relief
retrospectively. This is a matter of rating law
and it is not an area where we have expert
knowledge.
Conclusions
33. The
decision to withdraw mandatory and discretionary
relief in 1999 was correct, based on the evidence
and the criteria for granting relief. In our
view, a similar decision would have been reached
in 1996, had the process on that occasion been
designed to test, in more detail, the eligibility
criteria for mandatory relief. There appeared to
be some element of confusion about the
responsibility and process for reviewing
mandatory relief on a periodic basis.
34. The
issues of potential concern were identified in
1996 following the concern expressed at the
Corporate Management Committee. However the
assurances sought from NKAT were not sufficiently
detailed and were accepted at face value. We
consider that the decision not to pursue the
issue more rigorously was based on the close and
long established relationships with NKAT, both at
Member and officer level and the relatively small
amounts involved in comparison to the overall
level of financial support for NKAT by the
Council.
35. We
consider that the current arrangements for
reviewing discretionary relief are sufficiently
robust and we have no specific recommendations in
that respect. We understand that the remaining
rate reliefs granted to NKAT are currently being
reviewed again by officers as a precautionary
measure and that the results of this review will
be available shortly. We also understand that a
specific requirement will be included in the
specification for the next NNDR contract for
triennial reviews of mandatory relief cases.
36. We have
made the following recommendations, which are of
a precautionary nature and are intended to
address potential areas of confusion or
inconsistency.
Recommendations
The Council
should consider the need for any further guidance
to Council Members who also act as Members of the
Trust's Management Committee.
The Council
should consider the introduction of a more
systematic process of sharing information between
different parts of the Council that award
discretionary rate relief.
The Director
of Legal Services and the Director of Finance and
Information Systems Council should complete their
review of the Council's rights and duties in
respect of the mandatory rate relief granted to
NKAT in respect of Subterania for the period from
1996-1999 and document the conclusions and
decisions.
PricewaterhouseCoopers
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