Consultation on the measures to address avoidance of non-domestic rates

Non-domestic rates, sometimes referred to as ‘business rates’, is a local tax which helps to pay for local services. Rates are charged on most non-domestic properties, including those owned or occupied by the public sector and not‑for-profit organisations, not just properties used for commercial purposes. Non-domestic rates contributes over £1.1 billion annually towards the funding of essential public services provided by local government in Wales.

The scale of non-domestic rates avoidance in Wales, through various methods, has previously been estimated as at least £10 million to £20 million of lost revenue per year (as set out in our consultation on tackling avoidance in 2018). This is equivalent to more than 1 to 2% of the income received from non-domestic rates. While avoidance is not illegal, it is behaviour that creates artificial arrangements to gain tax advantages. The Welsh Government is committed to reducing the opportunities for avoidance within the non-domestic rates system. 

A package of measures to tackle avoidance was announced in 2018, following the previous consultation. Since then, through a mix of primary and secondary legislation, we have:

• extended the minimum period for which a previously unoccupied property must be occupied, before it can be eligible for a further period of empty property relief
• enabled billing authorities to enter and survey a property
• enabled billing authorities to request information from a third party carrying on a business in relation to a property
• strengthened the eligibility criteria for charitable relief for unoccupied properties
• created a general anti-avoidance framework for the counteraction of advantages gained from artificial arrangements for the avoidance of non-domestic rates liability (regulations are required to give effect to the framework)
• enabled the creation of a duty for persons to provide information to billing authorities which is relevant to determining non-domestic rates liability (regulations are required to provide for the duty)

This consultation seeks views on the 2 proposals where regulations are required to give full effect to the changes we have made. We are consulting on proposals for regulations to:

• define a range of artificial avoidance arrangements, giving effect to the general anti-avoidance framework we have established
• create a duty for ratepayers to report certain changes of circumstances to billing authorities

The Welsh Government intends for both proposals to take effect from 1 April 2026, subject to any changes which arise from this consultation.

Sections 63F to 63M of the Local Government Finance Act 1988 (“the 1988 Act”) establish a framework to counteract an advantage gained from artificial arrangements for the avoidance of non-domestic rates. An advantage is the avoidance or reduction of non-domestic rates liability and may occur during or following an arrangement. Regulations are required to give effect to this anti-avoidance framework, by defining the specific arrangements that are to be treated as artificial and counteracted.

Many of the most widely known arrangements for the avoidance of non-domestic rates rely on exploiting the definition of beneficial occupation which has been established through case law. The aim of such arrangements is often to re-set eligibility for empty property relief, whereby the advantage of reduced liability is obtained following a period of occupation. Other advantages are also possible (e.g. if the occupier is eligible for other reliefs or makes an arrangement to prevent payment from being collected). The arrangements have historically proved difficult to address. 

Defining beneficial occupation in legislation would be difficult to do in a way which would not remain open to exploitation and without risking the creation of other unintended consequences or ‘loopholes’. The anti-avoidance framework enables the opposite approach of, in effect, defining avoidance arrangements which are considered to constitute artificial occupation, so that the advantages gained can be counteracted.

The Welsh Government proposes to define a range of artificial avoidance arrangements falling within the following 4 types: 

• type 1: the occupation is not on a commercial basis
• type 2: the ratepayer has been wound up voluntarily
• type 3: the owner or occupier exhibits particular characteristics or behaviours
• type 4: the occupation has certain characteristics

These arrangements are considered relevant to hereditaments (units of property with rating assessments) included in local non-domestic rating lists. They have been identified through joint working with billing authorities and research, including detailed consideration of the features of relevant case law, over several years. Further arrangements may be identified and defined in future.

When a defined arrangement has been made, the anti-avoidance framework requires the billing authority to counteract the advantage gained. The advantage will typically be the reduction in non-domestic rates liability which has been obtained since the coming into force of regulations which define the arrangement as artificial or the date on which the arrangement was first made (whichever is later). 

The occupier of a property is normally liable for non-domestic rates. The owner (person entitled to possession) of a property is liable if it is unoccupied. The proposed definitions are intended to ensure that, in each case, the arrangement is ignored and the person who would have been the owner of the property in the absence of the artificial occupation is treated as liable for the amount which would have been payable.

This section of the consultation sets out proposals to give effect to the anti-avoidance framework. The proposals relate to the definitions of artificial avoidance arrangements and the collection of liability. Questions 1 to 8 seek views on these proposals. 

The draft Regulations

The Welsh Government has prepared a draft of the Non-Domestic Rating (Artificial Avoidance Arrangements) (Local Lists) (Wales) Regulations (“the draft Regulations”), which would be required to give effect to the proposals set out in this section of the consultation. A copy of the draft Regulations is included at annex a. The purpose is to provide respondents with sufficient and clear information to enable informed and considered views on the policy proposals. This does not represent any guarantee in respect of the content of the final Regulations. Following conscientious consideration of the consultation responses, some changes to the draft Regulations may be necessary to ensure they are effective in achieving the policy objectives.

Type 1: the occupation is not on a commercial basis

Arrangements often involve tenancy or lease agreements which are designed to enable the avoidance of non-domestic rates liability. Such arrangements have a range of common features which distinguish them from legitimate agreements entered into for genuine commercial reasons. An agreement for occupation which is not on a commercial basis could constitute an avoidance arrangement in its own right, or be a feature of another type of avoidance arrangement.

The Welsh Government proposes to define 4 specific arrangements of this type. In each case, the arrangement is artificial where it makes a person (“P”) the occupier of the property which is not occupied on a commercial basis because the specified circumstances apply.

In the first arrangement, P is not required to make payment for their occupation of the property. Leases containing rent clauses in which payment is not intended to be demanded or required have been features of identified cases of avoidance. Any commercial agreement for genuine occupation would be expected to require the payment of rent. This is reflected in the established use of market rents for comparable properties as the basis for assessing rateable values for non-domestic rates purposes.

In the second arrangement, the payment which P must make for their occupation of the property is significantly below the level which could reasonably have been obtained on the open market at the time the arrangement was entered into, or is offset or cancelled (in whole or in part) by other transactions. Where payment is required, a minimal or ‘peppercorn’ rent has been noted as a feature of prominent case law which has formed the foundation for widespread avoidance practices. In addition, separate payments to the ‘tenant’ from the landlord for services to enable avoidance often offset or exceed the rent paid.

In the third arrangement, one or more parties to it (including a third-party provider of services relating to non-domestic rates) has identified the mitigation of non-domestic rates liability as a purpose or motivation. Rates mitigation is considered to be a term which, in practice, refers to artificial avoidance arrangements which seek to exploit shortcomings in legislation and the outcome of case law. The aim of an arrangement achieving occupation for the purpose of rates mitigation is often identified in lease agreements, or on the websites of third-party providers which openly advertise the rates mitigation services they offer.

In the fourth arrangement, P does not have the assets which would enable them to use the property in the manner which is claimed. This means they cannot genuinely occupy and use the property for the stated purpose. An occupier having no business attributes (e.g. no Companies House entry which includes the staff and assets which would be required) is a feature of some avoidance arrangements which have previously been identified.

Each of the arrangements of this type is considered to be artificial on the basis that it is not a reasonable course of action because it lacks economic or commercial substance (other than obtaining the advantage of avoiding or reducing non-domestic rates liability). The features of these arrangements demonstrate that the occupation is not intended to make genuine commercial use of the property. They are, therefore, considered to be strong indicators of avoidance.

Type 2: the ratepayer has been wound up voluntarily

Some relatively sophisticated avoidance arrangements involve the leasing of properties to ‘special purpose vehicles’ and ‘phoenix companies’. A special purpose vehicle is a separate legal entity established by a parent organisation, often to isolate financial risks or liabilities. Phoenix companies are used for the practice of carrying on the same business or trade through successive companies, each of which becomes insolvent and cannot pay its debts.

A company is installed as the ratepayer of the property so that the registered owner or landlord is not liable for non-domestic rates. This company will usually be wound-up voluntarily, often (but not always) following a period of occupation during which non-domestic rates liability is owed but not paid. Once the company is being wound up voluntarily, the property it has been made the ratepayer of ceases to attract non-domestic rates liability. This benefit can persist for a long time where the winding up process is intentionally protracted.

The ratepayer typically has a ‘qualifying connection’ with the registered owner or landlord (e.g. a connected company structure or the same director) or, as part of a pattern of repeat avoidance, a previous company installed as the ratepayer. Alternatively, arrangements are sometimes established at an arm’s length from the landlord, by a third-party provider of rates mitigation services with which the qualifying connection exists.

A qualifying connection means, where both persons are companies, one is a subsidiary of the other, both are subsidiaries of the same company, or the same person is either a director or individual with significant control in respect of both companies. It also means, where only one person is a company, the other person has such an interest that would make it the holding company (if it were itself a company). The definition is intended to capture connections which have previously been identified in relevant arrangements.

The Welsh Government proposes to define 3 specific artificial arrangements of this type. In each case, the arrangement is entered into between the person (“L”) who granted the agreement for occupation and the person (“P”) who is made the ratepayer for the property. 

In the first arrangement, prior to entering an arrangement with P, L entered into an arrangement which made another person (“X”) the ratepayer for a property (either the same property which is the subject of the current arrangement, or a different property). X was subsequently wound-up voluntarily, whilst still a party to the arrangement. On the day the current arrangement (with P) is entered into, P has a qualifying connection with X. 

In the second arrangement, on the day it is entered into, P has a qualifying connection with L or a person providing services relating to non-domestic rating (e.g. a rating agent or tax adviser) to L. Prior to entering an arrangement with P, L entered into an arrangement which made another person (“Y”) the ratepayer for a property (either the same property which is the subject of the current arrangement, or a different property). On the day that previous arrangement was entered into, Y had a qualifying connection with L (or a person providing services relating to non-domestic rating). Y was subsequently wound-up voluntarily, whilst still a party to the arrangement. 

The proposed definitions of the first and second arrangements reflect patterns of behaviour noticed by billing authorities, which involve the repeated installation of special purpose vehicles or phoenix companies as ratepayers under arrangements with the same landlord, before they are dissolved (often with unpaid liabilities). During a period of occupation by a new ratepayer, the billing authority is aware of a relevant qualifying connection with a previous ratepayer which was eventually wound up voluntarily. In such cases, it is intended that the billing authority is able to counteract the arrangement before the current ratepayer progresses to voluntary wind up. It will not be possible to capture a first occurrence prior to a company being wound up, due to the reliance on evidence of past behaviour.

In the third arrangement, on the day it is entered into, P has a qualifying connection with L or a person providing services relating to non-domestic rating to L. Within 3 years of L and P entering into the arrangement, P begins the process of being wound up voluntarily. This is intended to ensure that, where a billing authority has not been able to identify and counteract the arrangement before the winding up process is commenced, it will be able to do so once that step is taken. It is considered necessary to specify a time period within which the voluntary wind up of a company may result in the arrangement being defined as artificial. The period of 3 years is intended to be long enough to ensure that it does not provide a means of escaping the definition (i.e. by waiting a little longer than would otherwise be intended before winding up).

The arrangements of this type represent different stages in what may be a complex and repeating cycle of actions to transfer non-domestic rates liability to a company established for the purpose of avoidance.

Type 3: the owner or occupier exhibits particular characteristics or behaviours

The fundamental basis of the non-domestic rates system is that a legitimate occupier of a property is the ratepayer and that liability is correctly attributed and paid. Certain characteristics and behaviours of the owner or occupier would undermine the intended operation of the system in ways that, when combined with an advantage, are strong indicators of avoidance. 

The Welsh Government proposes to define 4 specific arrangements of this type. In each case, the arrangement is artificial because the specified characteristics or behaviours apply. 

In the first arrangement, the owner, occupier or person who granted the agreement for occupation failed to provide the name of the ratepayer in response to a statutory request for information from a billing authority. Withholding identify of the ratepayer undermines the non-domestic rates system, by preventing liability being correctly attributed and collected. This arrangement may, for example, be used to avoid paying liability during an initial period of occupation, before a ratepayer is wound up voluntarily as part of a ‘Type 2’ arrangement described above.

In the second arrangement, a person (“P”) is made the ratepayer, but P has no connection to the operation or economic activity taking place on the property. A ratepayer with no assets or business connected to the claimed use of the property will not be able to occupy and use it for the stated purpose.

In the third arrangement, entered into between a person (“L”) who granted the agreement for occupation and another person (“P”), P is made the ratepayer for the property and, on the day the arrangement was entered into, P was an employee, contractor, partner or close relative of L. Where such a connection exists, it is often the person who granted the agreement who intends to retain control over the property in practice. Billing authorities have reported the use of this arrangement to avoid the two-property limit per ratepayer in each local authority for Small Business Rates Relief.

In the fourth arrangement, a person (“P”), or the company, firm or trust for which P is a director, partner, charity trustee or an individual with significant control, is made the ratepayer. On the day the arrangement was entered into, 1 or more of the following circumstances applies: 

• Within the previous 2 years, P had carried out the business or exercised the borrowing powers of a public company without a trading certificate. Doing so is an offence.
• Within the previous 2 years, P was subject to a declaration issued by a court for fraudulent or wrongful trading before or during the wind up of an insolvent company. The courts may impose liability on a person who has been dishonest or is to blame in respect of debts incurred by an insolvent company.
• P was disqualified from being a company director. A person can be disqualified from being a company director if they do not meet their legal responsibilities. Disqualification can apply for up to 15 years, during which time a person cannot be a director of a company registered in the UK, or be involved in the formation, promotion or management of a company.
• P was disqualified from being a trustee of a charity. A person can be disqualified from being a trustee for a variety of reasons related to offences, mismanagement or misconduct in the administration of a charity. Some disqualifications can apply for up to 15 years, during which time a person cannot hold office or employment in senior management functions for a charity.
• Within the previous 2 years, P was convicted for breaching restrictions on the re-use of company names. This would reveal that P is carrying on the same business as the insolvent company, which is a common feature of arrangements involving phoenix companies and special purpose vehicles.
• P was subject to bankruptcy restrictions. The courts may impose restrictions on a bankrupt person who has been dishonest or is to blame for their debts. Restrictions may be imposed for a period between 2 and 15 years, during which a person may not (among many other things) be a director of a company, or form, manage or promote a company.

The proposed definition of the fourth arrangement captures a range of circumstances where the ratepayer has recently conducted their business in an unlawful manner, been convicted of a related offence, been disqualified from senior company roles or been subject to bankruptcy restrictions. These are strong indicators that they are not a genuine ratepayer who is able to conduct a legitimate business unhindered.

Each of the arrangements of this type are considered to be artificial on the basis that they frustrate the intended operation of the non-domestic rates system. They either prevent the identification of the correct ratepayer or install a ratepayer who, because of their recent business conduct, is not able to legitimately conduct a business. 

Type 4: the occupation has certain characteristics

The thresholds for determining ‘actual’ and ‘beneficial’ occupation have been established in case law, generally in response to billing authorities seeking to challenge avoidance arrangements. The Welsh Government considers these thresholds to be too low, allowing for advantages to be gained from arrangements which are inconsistent with the broader principles and policy objectives on which the non-domestic rates system is based.

The Welsh Government proposes to define 2 specific arrangements of this type. In each case, the arrangement is artificial because the occupation has the specified characteristics which are strong indicators of avoidance. 

In the first arrangement, the occupation is beneficial primarily because it contributes to the carrying on of a non-domestic rates mitigation business. Case law has established that leasing a property for the purpose of rates mitigation alone can be ‘beneficial’, even if there is no other benefit to the ratepayer under the arrangement. It has also established that occupation is ‘actual’ where items of no material value or consequence are placed on the property. The Welsh Government does not agree with this position as it allows for properties which are, in effect, unoccupied to be treated as occupied for the purposes of non-domestic rates.

In the second arrangement, the benefit of the occupation arises from a WiFi or Bluetooth transmitter used for electronic marketing or advertising (often referred to as ‘proximity marketing’). Case law has established that occupation can be ‘actual’ where only a very small proportion of a property’s floor space is used. Proximity marketing is a known arrangement which exploits the ease with which this test is satisfied. This intends to capture a specific example of inappropriate or minimal use of a property which does have a benefit. While proximity marketing is a legitimate enterprise, it is not the reasonably expected sole use of non-domestic properties. As very little physical space is required, it could easily be accommodated alongside and without interfering with the main use of a property. 

Both arrangements of this type have proven effective in achieving occupation through minimal or no real use of a property. The aim is often to re-set the eligibility of the owner for a period of empty property relief, once the arrangement has ceased, although other advantages may arise.

Other avoidance arrangements

Stakeholders may be aware of other avoidance arrangements which are not directly addressed by the proposed definitions set out above. Some known arrangements have been addressed by case law, which was considered by the Welsh Government during the development of these proposals. Where case law has ruled against an avoidance arrangement for a relevant reason, this means it has already been addressed under the existing legislative framework for non-domestic rates. As such, including such arrangements in these proposals would not have any constructive effect.

‘Property guardianship’ is an arrangement the Welsh Government is aware of which aims to achieve occupation of non-domestic property by using it as living accommodation. Within the local tax system, a property (or part of a property) used as living accommodation should be classified as domestic and liable for council tax (subject to exceptions for short-stay and self-catering accommodation meeting specified criteria). The existing legislative framework already provides for this outcome, which is the appropriate way of preventing avoidance of local tax liability through the arrangement. The Valuation Office Agency (“VOA”) is responsible for compiling non-domestic rating and council tax lists. Cases which may require a change of classification should be brought to the attention of the VOA.

The Welsh Government is also aware of arrangements which aim to exploit exemptions from non-domestic rates, including for agricultural premises and places of religious worship. Some examples of these arrangements (including where they have been made in England) have been successfully challenged, whereby courts have ruled that the ‘occupation’ intended to engage the exemption did not achieve the established test. The VOA is responsible for determining whether properties should be exempt from inclusion in a non-domestic rating list. Any remaining issues with the exploitation of exemptions may be more appropriately addressed by strengthening the relevant definitions.

Case law on these matters is complex and continues to evolve. The Welsh Government will keep under review the treatment of any relevant arrangements and reconsider as appropriate if circumstances change.

Identification of artificial arrangements

Where billing authorities have reason to believe an artificial avoidance arrangement has been made, they may need to gather further evidence. The relevant evidence would depend on the specific arrangement and may include publicly available information from a range of sources. These sources include, but may not be limited to the following:

• Companies House publishes information about companies, including the nature of their business and assets, the identity of directors, partners, and individuals with significant control, and insolvency information
• the Insolvency Service publishes the Individual Insolvency Register, which combines information about bankruptcies and insolvencies
• details of disqualified directors are published by the Insolvency Service (in relation to the most recent 3 months) and on the Companies House database of disqualified directors (for the duration of the disqualification)
• the Charity Commission published the Charity Register, which includes the identity of trustees, and the Register of Removed Trustees, which provides details of persons disqualified as a charity trustee
• information may also be available from the courts about relevant convictions and offences

Some relevant evidence which is not available in the public domain may be accessed by other means. Existing powers for billing authorities to request information and to enter and survey a property (under paragraphs 5 and 7A, respectively, of Schedule 9 to the 1988 Act) may be used to obtain such evidence. Examples of ways in which these powers may be used include, but are not limited to the following:

• a copy of a lease agreement may be requested, to provide details of the arrangement for occupation of a property (e.g. the parties to the agreement, its purpose and the associated rent)
• a survey of a property may be undertaken, to determine the extent and characteristics of any occupation
• a copy of an agreement with a third-party provider of services relating to non-domestic rates may be requested, to provide details of the provider, the service being provided and its purpose

There may be other circumstances and sources of information known to billing authorities which are relevant to identifying whether any of the proposed arrangements has been made. Once a defined arrangement has been identified, it will be addressed by the billing authority, in accordance with the anti-avoidance framework.

In relation to all of the defined arrangements, the Welsh Government proposes to enable a billing authority to determine that a particular arrangement is not artificial, having regard to all the circumstances of an individual case. A billing authority may, for example, have local knowledge about the occupier or the property, which results in such a determination. No determination would be necessary to treat a defined arrangement as artificial, which is the default outcome. 

Counteracting the advantage

Under the anti-avoidance framework, once an artificial avoidance arrangement has been identified, the billing authority must treat the person who would have been the ratepayer as liable for the amount of non-domestic rates which would have been payable, as if the arrangement had not been made. The billing authority must give notice to a person who is to be treated as liable, setting out the reasons for doing so and information about the review and appeals processes. 

A person may request a review of the notice that they will be treated as liable, within 30 days of receiving it. The billing authority must notify the person of the outcome within 30 days of receiving the request for review. Where a notice has been confirmed following a review, the person may make an appeal to the Valuation Tribunal for Wales (“VTW”) within 30 days. The Welsh Government proposes to enable a further appeal to the Upper Tribunal in respect of decision made by the VTW. 

A person treated as liable will then be subject to the existing framework for collection and enforcement of non-domestic rates liability (set out in the Non-Domestic Rating (Collection and Enforcement) (Local Lists) Regulations 1989). The Welsh Government proposes that, once the time for a review and appeal has expired, the billing authority will issue a demand notice in respect of each chargeable financial year affected by the arrangement. Aside from the potential for an additional penalty for failure to pay an amount due (see below), the established arrangements for enforcement of non-domestic rates liability which is not paid following a demand notice will apply.

Penalties 

The anti-avoidance framework allows a financial penalty to be imposed for failure to pay an amount due in consequence of having made an artificial avoidance arrangement. In the context of the proposed approach to collection and enforcement set out above, this could only occur if an amount due in a demand notice (following the opportunity for a review and appeal) was not paid. It is important that the framework is supported by a proportionate sanction to help ensure artificial avoidance arrangements can be effectively addressed.

The Welsh Government proposes to apply a penalty of £500 plus 3% of the rateable value of the property (on the date of the notice that the person will be treated as liable) in relation to all types of arrangement. The billing authority would serve a penalty notice on a person who has failed to pay an amount due, requiring payment of the penalty within 21 days. If the penalty is not paid, the billing authority would be able to recover it as a civil debt, but no such claim could be made before the conclusion of any appeal (if one is made) against the relevant notice. This aligns with the approach to similar penalties within the non-domestic rates system.

Ratepayers are not currently obliged to notify billing authorities of changes of circumstances which would affect their non-domestic rates liability. A minority of ratepayers knowingly withhold information, if they believe this will help them avoid or reduce their liability. 

Billing authorities are not always notified about changes of ratepayer or occupation status for a property, preventing them for correctly calculating and attributing liability. A common example occurs when an occupier eligible for Small Business Rates Relief vacates a property, but the owner of the empty property (who may or may not be the same person) fails to notify the billing authority that it is no longer occupied. Alternatively, the owner of an empty property may not notify the billing authority if they have resumed occupation during the period when time-limited relief is applicable. In both cases, the ratepayer continues to benefit from relief they are not eligible for.

Paragraph 6AA of Schedule 9 to the 1988 Act enables regulations to require persons to provide information to billing authorities which is relevant to determining who is liable for non-domestic rates in respect of a property in Wales and the amount they are liable to pay. The Welsh Government proposes to make regulations which create a duty to provide information to billing authorities about specified changes of circumstances. The aim is to ensure relevant changes are brought to the knowledge of billing authorities in a timely manner. This will improve the accuracy of non-domestic rates bills and reduce the potential for avoidance.

The proposal is intended to compliment the duty to provide information to the VOA. It is important that the parallel duties complement each other and reflect the division of responsibilities between the VOA and billing authorities within the non-domestic rates system. Whilst the information to be provided to the VOA relates to the existence and extent of the property, enabling the VOA to carry out its valuation function, these proposals are focused on the identity of the ratepayer and whether the property is occupied, enabling billing authorities to carry out their billing and collection function. 

Questions 9 to 11 seek views on proposals for the creation of a duty for ratepayers to provide information about certain changes of circumstances to billing authorities. 

The proposed duty

The Welsh Government proposes that a person (“P”) who is the ratepayer for a property in Wales will be required to notify the relevant billing authority of the following changes:

• The identity of P. This means that P will be required to notify the billing authority that they are the new ratepayer for the property.
• P has become the occupier and the property was unoccupied immediately prior to the change. This means that P will be required to notify the billing authority if they occupy the previously empty property (whether or not they were already the ratepayer, as the owner).
• A person (who may be P or a previous ratepayer) has ceased to be the occupier and the property is unoccupied immediately following the change. This means that P, as the owner of the empty property, will be required to notify the billing authority that it is no longer occupied (whether or not they were already the ratepayer, as the previous occupier).   

The ratepayer will be required to provide this information within the period of 60 days of a relevant change taking place. This timeframe is consistent with similar requirements, including in respect of the parallel duty to provide information to the VOA.

Penalties, review and appeals

The Welsh Government proposes to enable the imposition of penalties to incentivise compliance with the proposed duty to provide information to billing authorities. A penalty of £500 may apply for failure to comply with a requirement in the regulations to provide information. A separate penalty on summary conviction not exceeding level 3 on the standard scale (£1,000) may apply for knowingly or recklessly providing false information. 

A person who receives a penalty notice from the billing authority for failure to comply with the duty would be able to require a review within 30 days. Within a further 30 days of the date of any such request, the billing authority would be required to notify the person that the penalty notice is either confirmed or withdrawn. If the penalty notice is confirmed, the person would be able to appeal to the VTW within 30 days of the date on which they are notified of the outcome of the review.

The billing authority would serve a penalty notice, requiring payment to be made within 21 days. If the penalty is not paid, the billing authority would be able to recover it as a civil debt, but no such claim could be made before the conclusion of an appeal (if one is made) against the penalty notice. This aligns with the approach to similar penalties within the non-domestic rates system.

Demand notices

It is recognised that the proposed duty to provide information to billing authorities will have limited effectiveness if ratepayers are not aware and regularly reminded of their obligations. It would, therefore, be optimal for the duty to be brought directly to the attention of individual ratepayers on a regular basis, within relevant statutory communications from billing authorities. 

Annual demand notices are issued by billing authorities to all ratepayers. The Welsh Government proposes to amend the statutory requirements for demand notices to include a description of the obligations placed on the ratepayer by the duty. This is intended to ensure ratepayers understand and are routinely reminded of the information they would be required to provide to billing authorities. 

Subject to conscientious consideration of the views submitted in response to this consultation, the Welsh Government intends to bring forward the regulations required to give effect to both proposals and bring them into force on 1 April 2026.

In relation to the draft Regulations appended to this consultation, changes may be made to those Regulations in consequence to the responses received and as necessary to ensure the provisions are effective in achieving the policy objectives.

Question 1 

Do you agree with the proposals to define artificial avoidance arrangements in which the occupation is not on a commercial basis?

Question 2

Do you agree with the proposals to define artificial avoidance arrangements in which the ratepayer is wound up voluntarily?

Question 3

Do you agree with the proposals to define artificial avoidance arrangements in which the owner or occupier exhibits particular characteristics or behaviours?

Question 4

Do you agree with the proposals to define artificial avoidance arrangements in which the occupation has certain characteristics?

Question 5

Please provide details of any artificial avoidance arrangements you are aware of which may not be covered by the proposals.

Question 6

Please provide details of any other sources of evidence it may be useful for billing authorities to consider where they identify that an artificial avoidance arrangement may have been made.

Question 7

Do you agree with the proposal to enable billing authorities to determine that a particular arrangement is not artificial in individual cases? 

Question 8

Do you agree with the proposal to impose a financial penalty for failure to pay an amount due, to counteract the advantage gained from an artificial avoidance arrangement? 

Question 9

Do you agree with the proposed duty for ratepayers to report specified changes of circumstances to billing authorities? 

Question 10

Do you agree with the proposals to impose financial penalties for failure to comply with the duty and providing false information? 

Question 11

Do you agree with the proposal to remind ratepayers about the requirements of the duty in annual demand notices?

Question 12

What, in your opinion, would be the likely effects of the proposals on the Welsh language? We are particularly interested in any likely effects on opportunities to use the Welsh language and on not treating the Welsh language less favourably than English.

1. Do you think that there are opportunities to promote any positive effects?
2. Do you think that there are opportunities to mitigate any adverse effects? 

Question 13

In your opinion, could the proposals be formulated or changed so as to: 

1. have positive effects or more positive effects on using the Welsh language and on not treating the Welsh language less favourably than English; or
2. mitigate any negative effects on using the Welsh language and on not treating the Welsh language less favourably than English?

Question 14

We have asked a number of specific questions. If you have any related points which we have not specifically addressed, please use this space to record them.

Submit your comments by 30 June 2025, in any of the following ways.

• Complete our online form
• Download, complete our response form and email CTandNDR.Consultations@gov.wales
• Download, complete our response form and post it to:

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Cardiff
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Website: ico.org.uk

UK General Data Protection Regulation (GDPR)

The Welsh Government will be data controller for any personal data you provide as part of your response to the consultation. The Welsh Ministers have statutory powers they will rely on to process this personal data which will enable them to make informed decisions about how they exercise their public functions. Any response you send us will be seen in full by Welsh Government staff dealing with the issues which this consultation is about or planning future consultations. Where the Welsh Government undertakes further analysis of consultation responses, this work may be commissioned to be carried out by an accredited third party (eg a research organisation or a consultancy company). Any such work will only be undertaken under contract. The Welsh Government’s standard terms and conditions for such contracts set out strict requirements for the processing and safekeeping of personal data.

In order to show that the consultation was carried out properly, the Welsh Government intends to publish a summary of the responses to this document. We may also publish responses in full. Normally, the name and address (or part of the address) of the person or organisation who sent the response are published with the response. If you do not want your name or address published, please tell us this in writing when you send your response. We will then redact them before publishing.

You should also be aware of our responsibilities under Freedom of Information legislation. If your details are published as part of the consultation response, these published reports will be retained indefinitely. Any of your data held otherwise by the Welsh Government will be kept for no more than three years.

WG Number: WG52064

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