Mark Drakeford MS, Cabinet Secretary for Finance and Welsh Language
The scale of non-domestic rates avoidance in Wales, through various methods, has previously been assessed as at least £10 million to £20 million of lost revenue per year. This is equivalent to more than 1 to 2% of the revenue received from the tax, which is vital funding for our public services.
The Welsh Government is committed to reducing the opportunities for avoidance within the non-domestic rates system. The overwhelming majority of businesses in Wales act with honesty and integrity in arranging their local tax affairs. It cannot be right that the efforts of the considerable majority, to abide by the rules and pay their liabilities, are undermined by a small minority intent on exploiting or abusing the system.
In 2018, following consultation, I announced a package of measures to tackle avoidance. Since then, through a mix of primary and secondary legislation, we have:
- extended the minimum period a property must be occupied before it can be eligible for a 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 empty properties;
- created a general anti-avoidance framework to address artificial arrangements for the avoidance of non-domestic rates; and
- enabled the creation of a duty to provide information to billing authorities which is relevant to determining non-domestic rates liability.
Several of these changes will already have reduced opportunities for avoidance of non-domestic rates. Others enable us to take further steps to tackle known avoidance behaviours, which continue to evolve.
Today, I am launching a consultation about the detailed policy proposals for the final two measures listed above, where regulations are required to give full effect to the changes we have made.
Firstly, we are proposing to define a range of artificial avoidance arrangements, giving effect to the general anti-avoidance framework we have created. This will enable billing authorities to apply that framework and counteract the avoidance of liability achieved where the defined arrangements are made.
Secondly, we are proposing to establish a duty for ratepayers to report certain changes of circumstances to billing authorities. This will help to ensure crucial information is not intentionally withheld from billing authorities and ratepayers are charged the correct amount.
Subject to the outcome of this consultation, these proposals are intended to take effect on 1 April 2026.
The consultation sets out the Welsh Government’s proposals in detail and asks for views. It will run for 12 weeks from 7 April to 30 June 2025.
The consultation is available at: https://www.gov.wales/measures-address-avoidance-non-domestic-rates
This statement is being issued during recess to keep Members informed. Should Members wish me to make a further statement or to answer questions on this when the Senedd returns I would be happy to do so.