Deferred Payment Scheme

The Deferral Scheme

Background

On the 31st March 2009 the Chancellor announced that the Government would allow businesses to defer payment of a proportion of the increase in their 2009-10 business rates bills. The deferred payments were to be repaid in 2010-11 and 2011-12.

In the budget the Government stated that ratepayers could defer 60% of the increase in their 2009-10 rates bill caused by the retail price index (RPI) adjustment to the non-domestic multiplier; and the end of the transitional relief scheme for the 2005 revaluation period.

For ratepayers who were not receiving transitional relief in 2008-09, they can choose to defer £13.80 for every £1,000 of the rateable value. To repay the amount, £6.90 would be added to both the charge for 2010-11 and the charge for 2011-12.

For ratepayers who were in receipt of transitional relief in 2008-09, they can defer both the increase in RPI and 60% of the amount of transitional relief they received as at 31st March 2009.

An application pack was sent to all businesses in Doncaster based on the information held on the business rates database.

Eligibility

The authority was required to grant a deferral to all businesses that paid rates in 2009-10 and who applied for the scheme, except:

• Where the ratepayer has already paid the 2009-10 rates liability in full. This was because the regulations could not be applied retrospectively so refunds could not be provided.
• Where the ratepayer was due to pay the 2009-10 rates liability in full within 21 days of receiving the application. 
• Where the ratepayer had lost the right to pay by instalments due to non-payment. 

If a ratepayer applied for a deferral and was found to be ineligible letters were sent to confirm this and the reasons why.

Where a ratepayer occupied a property part way through 2009-10 they were still eligible for deferral. The amount that could be deferred was applied pro-rata to the period of occupation during 2009-10.

Applying for the scheme

The form of application was specified by Government. 

For ratepayers who wished to apply for numerous properties only one application form needed to be completed, however, details of all properties being applied for must have been submitted with the form.

The application form needed to be signed by the ratepayer or a person authorised to sign by the ratepayer. A person authorised to sign on behalf of the ratepayer means, where the ratepayer is:

• a limited company, or a director of that company
• a partnership, a partner
• a trust, a trustee

Adjusted Instalments

Once eligibility to the scheme had been confirmed and the deferred amount calculated an amended bill was issued with a revised instalment plan.

Where instalments had already fallen due but had not been paid then these amounts were not changed.  Instead the deferred amount was deducted from instalments which had not fallen due.

All revised bills detailed any overdue instalment amount, the amount of future instalments, the total amount deferred into 2010-11 and the total amount deferred into 2011-12.

Changes in Circumstances

Where there is a change to your liability for business rates during the year, for example where the rateable value of the property changes or your eligibility for small business rates relief changes, your deferral amount will need to be adjusted. Below is a list of changes which may occur and how this will affect you.

Your liability for business rates ends on the property to which deferral applies - The full balance including the deferred amount becomes due.

There is a change to the rateable value - The amount of increase deferred will be automatically adjusted and new bills issued reflecting the change.

Your property is split/merged - The agreed deferred amount on your previous liability ends (see above). You can apply for a deferral on your new liability.

Repaying the Deferred Amount

The deferred amount will be repayable over the financial years 2010-11 and 2011-12, 50% in each year. Your bills for these years will show an additional amount for the deferred amount due that year and will be included in your instalment plan for that year.

Enforcement

Where a deferral has been agreed and you default on your instalment arrangement, meaning that you lose the right to pay by instalments, the full balance, including any deferred amount will become due.

Questions

If you require any further information on deferred liability please contact the business rates team at the above address.