Tribunals (Scotland) Act 2014 - draft regulations: consultation

Part 1: Policy background

1. The Tribunals (Scotland) Act 2014 (“the 2014 Act”) created a new, simplified statutory framework for tribunals in Scotland, bringing existing tribunal jurisdictions together and providing a structure for new jurisdictions. The 2014 Act created two tribunals, the First-tier Tribunal for Scotland (“First-tier Tribunal”) and the Upper Tribunal for Scotland (“Upper Tribunal”), known collectively as the Scottish Tribunals.

2. The 2014 Act also provides for the functions of existing tribunals and their membership to be transferred to the First-tier Tribunal and/or the Upper Tribunal. Alternatively, functions may be directly conferred on the First-tier Tribunal and/or the Upper Tribunal for newly created jurisdictions or extensions of jurisdiction.

3. The 2014 Act also provides for the First-tier Tribunal to be organised into a number of chambers, with regard to subject-matter and other relevant factors, to which the functions transferred to or conferred upon the First-Tier Tribunal can be allocated.

4. The 2014 Act also provides for the Upper Tribunal to be organised into a number of divisions, with regard to subject-matter and other relevant factors, to which the functions transferred to or conferred upon the Upper Tribunal can be allocated.

5. The rationale for the 2014 Act was to create a new structure for devolved tribunals in Scotland. Over the years, these tribunals were established in an ad hoc fashion, with no common system of leadership, appointments, practice and procedure or reviews and appeals. This can lead to a narrowness of outlook and allows for a variation of standards and performances across the tribunals landscape.

6. The 2014 Act seeks to address these issues by creating a structure that reduces overlap, eliminates duplication, ensures better deployment and allows for the wider sharing of available resources. The new structure also provides users with the reassurance that tribunal hearings are being heard by people with no links to the body whose decision they are challenging, by providing for greater independence for the new tribunals. By establishing a more coherent framework for tribunals, opportunities are created for improvement in the quality of services that cannot be achieved by tribunals operating separately.

7. The 2014 Act establishes a coherent structure within which to bring the functions and members of the devolved tribunals. It contains a list of devolved tribunals in Schedule 1 from which the functions and members may be transferred into the new structure.

8. The 2014 Act allows the list of tribunals set out in Schedule 1 to be added to or modified. Over time, the intention is that the new structure will acquire the functions of new or other jurisdictions which are not currently listed. The functions and members of a listed tribunal are transferred into the new structure by regulations. Regulations may also modify the underlying legislation in relation to the tribunals listed in Schedule 1 of the 2014 Act.

9. The Scottish Tribunals are composed of members who are either transferred in or appointed. If appropriate, existing eligible members of the listed tribunals transfer in at the same time as the functions of their tribunal are transferred, along with their current caseloads. New procedural rules are required in order to allow the Scottish Tribunals to operate effectively in the exercise of the transferred functions, though these will take into account the previously existing rules of procedure, modified as necessary to reflect the new structure.

Background to Valuation Appeals Committees

10. Valuation Appeals Committees (“VACs”) have their historic origins in the Lands Valuation (Scotland) Act 1854. Their jurisdiction and functions are set out in section 29(1)(a) of the Local Government etc. Scotland Act 1994:

“valuation appeal panels and valuation appeal committees shall be constituted for each valuation area, in accordance with the provisions of this section and with regulations made by the Secretary of State, for the purpose of hearing and determining appeals and complaints—

(i) under the Valuation Acts; and

(ii) under sections 81(1) and 87(6) of the Local Government Finance Act 1992 (Council Tax appeals)”.

11. The Local Government (Scotland) Act 1994 and regulations made thereunder establish 13 valuation appeal panels from which VACs members are drawn, aligned to local authorities or groups of local authorities. The rules of the functioning of VACs are set out in The Valuation Appeal Panels and Committees (Scotland) Regulations 1996 (constitution and membership); The Valuation Appeal Committee (Procedure in Appeals under the Valuation Acts) (Scotland) Regulations 1995 (procedures for appeals in respect of the Valuation Acts) and in the Council Tax (Alteration of Lists and Appeals) Regulations 1993 (procedure for Council Tax). Further rules in relation to the appeal of a VAC decision to the Lands Valuation Appeal Court are set out in the Act of Sederunt (Valuation Appeal Rules Amendment) 1982.

12. VACs consider appeals relating to Non-Domestic Rates (NDR) and Council Tax matters. In relation to NDR, Scottish assessors are responsible for maintaining the non-domestic valuation roll under section 1 of the Local Government (Scotland) Act 1975, and provide rateable values to the relevant local authority under section 3 of that Act. For council tax, assessors are responsible for maintaining the council tax valuation list, which contains information relating to each domestic property in a local authority area, and for the issue of council tax completion notices for new domestic dwellings. Local authorities administer and collect NDR and council tax for their area.

13. VACs deal with appeals regarding entries made by assessors to the valuation roll (non-domestic properties), the valuation list (domestic properties), and some other council tax appeals (such as on calculation of council tax liability).

Non-Domestic Rates

14. NDR liability on a property is the rateable value (what is expected to be paid by way of rent for the property, year on year), multiplied by the ‘poundage’ (the number of pence per pound payable as tax), minus any reliefs for which the property is eligible. Appeals against the entry in respect of a property in the valuation roll can be made to the assessor by the owner, proprietor or tenant within prescribed timescales.

15. VACs hear, and assessors are called to provide evidence on, appeals against an entry in the valuation roll. Certain cases, such as factually complex cases, may be referred to the Lands Tribunal for Scotland (LTS) on application by the assessor or the appellant in accordance with the Valuation Appeal Committee (Procedure in Appeals under the Valuation Acts) (Scotland) Regulations 1995, as amended.

16. A party to an appeal heard either by a VAC or the LTS may further appeal their decision to the Lands Valuation Appeal Court. The Lands Valuation Appeal Court will only consider questions as to value, and on such matters its decision is final.

17. By virtue of section 34 of the Non-Domestic Rates (Scotland) Act 2020, VACs will also hear appeals against the amount of a civil penalty imposed for failure to comply with assessor information notices, failure to comply with local authority information notices and failure to notify changes in circumstances to the local authority.

Council Tax

18. The relevant rules for council tax matters considered by VACs are set out in the Council Tax (Alteration of Lists and Appeals) (Scotland) Regulations 1993. VACs hear:

• List appeals (e.g. whether the band is right, whether a property should be on the list, whether it needs to be deleted, etc.).
• Non-list appeals i.e. appeals on whether a domestic dwelling should be exempt from council tax liability, whether a domestic dwelling should be subject to a council tax discount (e.g. the Single Person Discount) and appeals against council tax exemption notices.
• Civil penalties appeals in relation to council tax e.g. non-provision of information in relation to council tax.
• Appeal of an assessor decision to refuse to hear a list appeal on the grounds of time or title or lack of information.

19. Under section 82(4) of the Local Government Finance Act 1992, any party to an appeal may appeal against a decision of the VAC on a point of law to the Court of Session.

Membership

20. Members are appointed to the valuation appeal panel (see para 11 above) by the relevant Sheriff Principal. The chairman of each panel appoints members of the panel to one or more VACs to hear appeals.

21. The VACs are unpaid and consist of between three and six members in addition to the chair. Paid secretaries assist VACs but do not take part in the decision-making.

22. There are currently 13 VAC secretaries covering the valuation areas, along with their assistant secretaries, also appointed by the relevant Sheriff Principal. Secretaries are almost always solicitors and are paid by the relevant authority. Secretaries and assistant secretaries are not currently considered to form part of the panels or VACs.

Background to Council Tax Reduction Review Panel

23. The United Kingdom Welfare Reform Act 2012 abolished the GB-wide Council Tax Benefit from April 2013. In Scotland, the Scottish Government responded by putting in place the Council Tax Reduction scheme. This is not a benefit, but a reduction in council tax liability, calculated by assessing the income, capital, composition and characteristics of a household. Local authorities have administered the means tested Council Tax Reduction scheme since April 2013.

24. The Council Tax Reduction (Scotland) Amendment (No.2) Regulations 2013 amended the Council Tax Reduction (Scotland) Regulations 2012 (“2012 Regulations”) to make provision for a panel, now known as the Council Tax Reduction Review Panel (“CTRRP”), to review determinations made by a local authority in respect of applications for Council Tax Reduction. The CTRRP provides an additional review, beyond that provided by the administering local authority, to safeguard an individual's rights in relation to the Council Tax Reduction scheme. The 2012 Regulations are due to be replaced by updated regulations from April 2022.

25. A decision of the CTRRP is final subject to appeal to the Court of Session on a point of law.

Membership

26. The panel members must be legally qualified, in accordance with the 2012 Regulations, and the CTRRP’s work is currently supported by the Scottish Courts and Tribunals Service.

Background to the Lands Tribunal for Scotland

27. The LTS was established by the Lands Tribunal Act 1949 (“the 1949 Act”). The functions of the LTS are wide and varied, but for the purposes of transfer to the Scottish Tribunals the relevant functions are appeals against rating assessments for non-domestic premises as set out in section 1(3A-3BA) of the 1949 Act. The LTS exercises these functions in accordance with procedures laid down in the appropriate rating and valuation regulations.

28. As noted in para 15 above in relation to VACs, NDR cases can be referred to the LTS under the Valuation Appeal Committee (Procedure in Appeals under the Valuation Acts) (Scotland) Regulations 1995, as amended. The assessor or the appellant may make application to the VAC seeking referral of the appeal to the LTS and where an application has been made, and it appears to the VAC that—

(a) the facts of the case are complex or highly technical;

(b) the evidence to be given by expert opinion is complex or highly technical;

(c) the law applicable to the case is uncertain or difficult to apply;

(d) the case raises a fundamental or general issue likely to be used as a precedent in other cases; or

(e) the lands and heritages to which the appeal relates are part of larger subjects situated in more than one valuation area and the valuation of those subjects is appealed in more than one such area, the VAC shall refer the appeal to the LTS for determination.

29. Under section 1(3A), the LTS may determine any appeal or complaint under the Valuation Acts referred to it by a VAC. Under section 1(3BA), the LTS may also determine any appeal against the decision of a VAC not to refer an appeal on. Where the LTS upholds such an appeal, it shall regard the matter as having been referred to the LTS for determination under subsection (3A).

Fees

30. The LTS currently charges fees for appeals under the Valuation Acts against rateable value of non-domestic premises. The relevant fees are those set out in the schedule of the Lands Tribunal for Scotland (Amendment) (Fees) Rules 1996:

Application etc.

3. On an appeal under section 1(3A) of the Lands Tribunal Act 1949 (valuation for rating)–

(i) where the net annual value does not exceed £10,000: £100

(ii) where the net annual value exceeds £10,000 but not £50,000: £150

(iii) where the net annual value exceeds £50,000 but not £100,000: £300

(iv) where the net annual value exceeds £100,000: £500

4. On an appeal under section 1(3BA) of the Lands Tribunal Act 1949 (non-referral of valuation appeal or complaint): £ 78

Miscellaneous fees

10. On certifying a copy of an order or determination of the Tribunal: £ 7.50

11. For each sheet of a copy of all or part of any document: £ 1.20

12. On a case for the decision of the Court of Session or the Lands Valuation Appeal Court (in respect of references under Part VC of these Rules^[1])–an application for appeal by way of stated case (to include drafting of case and any necessary copies): £ 55

14. On an application for the cancellation of a hearing: £ 75

15. On an application during the course of proceedings which is not specifically referred to in the above table of fees (eg an application for (i) an extension to the period in which answers or adjustments are required to be lodged, or (ii) the continuation or sisting of an application): £ 35

Please note, however, that the undue hardship provisions of the existing rules will be retained so that the Upper Tribunal may waive the whole or part of the fees payable by a party where it considers that the financial circumstances of the party are such that undue hardship would be caused by payment of the said fees.

Membership

31. The LTS has a President who has overall responsibility for the organisation of its work, and three Members who have recognised expertise in the fields of law and surveying. The current President of the LTS is also Chairman of the Scottish Land Court. The current LTS members are a QC and two Fellows of the Royal Institution of Chartered Surveyors (“RICS”).

32. As noted at para 16 above, parties may appeal decisions of the LTS to the Lands Valuation Appeal Court on matters of value.

Proposed new regulations

33. The draft regulations are attached at Annexes A, B, C, D, E, F and G. Please note that some minor consequential amendment details are still to be finalised in the various transfer of functions regulations. In addition, as the 2012 Regulations are to be replaced by equivalent 2021 regulations references in the draft regulations are to these new regulations.

34. We have already consulted with key stakeholders on draft regulations intended to amend the First-tier Tribunal for Scotland (Chambers) Regulations to provide for a Local Taxation Chamber. These are time-critical as the Judicial Appointments Board for Scotland (JABS) have been asked to recruit a new Chamber President in advance of the transfer, who cannot take up post until the new Chamber is created. We anticipate that these regulations will be laid for consideration by the Scottish Parliament in September 2021.

35. In addition, we have also previously consulted with key stakeholders on the draft regulations which set out eligibility criteria for ordinary members of the First-tier Tribunal and Upper Tribunal. These are time-critical as well as the JABS have also been asked to recruit both legal and ordinary members for the tribunal and so the eligibility requirements for ordinary members need to be set in law. The eligibility requirements for a Chamber President and legal members are already set out in the 2014 Act. We anticipate these regulations will also be laid in September 2021.

36. Please note, there will also shortly be a public consultation on reforms to the non-domestic rates system, including procedures in proposals. The draft regulations on reforming the non-domestic rates appeals system are the subject of a separate consultation which can be accessed at: https://consult.gov.scot/local-government-and-communities/non-domestic-rates-processes

37. The draft regulations in Annex A provide for the addition of the Council Tax Reduction Review Panel to Part 1 of Schedule 1 of the Tribunals (Scotland) Act 2014, which lists the tribunals that may transfer into the Scottish Tribunals.

38. The draft regulations in Annex B transfer in to the new Local Taxation Chamber of the First-tier Tribunal the functions of the Valuation Appeals Committees.

39. The draft regulations in Annex C transfer in to the new Local Taxation Chamber of the First-tier Tribunal the functions of the Council Tax Reduction Review Panel.

40. The draft regulations in Annex D transfer in the relevant functions and members of the Lands Tribunal for Scotland to the Upper Tribunal.

41. The draft regulations in Annex E provide for the composition of the First-Tier Tribunal and Upper Tribunal.

42. The draft regulations in Annex F set out procedural rules for the Local Taxation Chamber of the First-Tier Tribunal post-transfer.

43. The draft regulations in Annex G provide procedural rules for the Upper Tribunal post-transfer.