Technical Guidance Note TGN/NDR/20
Auditor Certification of 2019/20 Non-Domestic Rates Income Returns
Prepared for appointed auditors in the local government sector
20 May 2020
Who we are
The Auditor General, the Accounts Commission and Audit Scotland work together to deliver public audit in Scotland:
•	The Auditor General is an independent crown appointment, made on the recommendation of the Scottish Parliament, to audit the Scottish Government, NHS and other bodies and report to Parliament on their financial health and performance.
•	The Accounts Commission is an independent public body appointed by Scottish ministers to hold local government to account. The Controller of Audit is an independent post established by statute, with powers to report directly to the Commission on the audit of local government.
•	Audit Scotland is governed by a board, consisting of the Auditor General, the chair of the Accounts Commission, a non-executive board chair, and two non-executive members appointed by the Scottish Commission for Public Audit, a commission of the Scottish Parliament.

About us 
Our vision is to be a world-class audit organisation that improves the use of public money.
Through our work for the Auditor General and the Accounts Commission, we provide independent assurance to the people of Scotland that public money is spent properly and provides value. We aim to achieve this by:
•	carrying out relevant and timely audits of the way the public sector manages and spends money
•	reporting our findings and conclusions in public
•	identifying risks, making clear and relevant recommendations.

Claim overview

Description of return	
The return is used to calculate a local authority’s annual contribution to the national non-domestic rates pool.	
Return reference	Deadline to auditors	Auditor submission deadline	
NDRI notified return report 2019/20	11 June 2020	6 October 2020	
Risk areas	
1.	The amount payable before reliefs is not properly calculated. 
2.	The exemption for unoccupied or partly occupied properties has been awarded incorrectly or is not properly calculated.
3.	Reliefs have been awarded incorrectly or are not properly calculated.
4.	State aid implications have not been considered where limits have been breached.
5.	Adjustments for bad or doubtful debts are not properly calculated.
6.	Refunds of overpayments are not properly calculated. 
7.	Other deductions and additions are not properly calculated.	
Address for certified claim	
Nikola Fanton, Local Government and Analytical Services Division, Scottish Government, Area 3G North, Victoria Quay, Edinburgh EH6 6QQ	
Technical Guidance Note publication date and relevant year	Professional Support contact point and email address	
20 May 2020 for 2019/20 claims	Anne Cairns
TechnicalQueries@audit-scotland.gov.uk  	

Audit Scotland makes no representation that legal guidance is correct. Points of law can ultimately be decided only by the Courts. Audit Scotland accepts no responsibility for any loss or damage caused as a result of any person relying upon anything contained in this note.

Introduction

Purpose
1.	   The purpose of this Technical Guidance Note from Audit Scotland's Professional Support is to provide external auditors appointed by the Accounts Commission with guidance on the certification of 2019/20 non-domestic rate income (NDRI) returns.  The approach set out in this Technical Guidance Note has been agreed with the Scottish Government.  
2.	   Appointed auditors are required by the Code of Audit Practice to examine, as part of their audit appointment, approved grant claims and other financial returns submitted to grant-paying bodies by local government bodies and provide reasonable assurance as to whether they are fairly stated and in accordance with specified terms and conditions. One of the approved claims that auditors are required to certify is in respect of NDRI.
3.	This Technical Guidance Note: 
•	provides guidance for auditors on the examination of the NDRI return, including highlighting the main risk areas
•	sets out and explains the preliminary procedures (at section 1), testing procedures (at section 2), and completion procedures (at section 3) that auditors should carry out (all summarised in the checklist at Appendix 1)
•	provides an external auditor's certificate at Appendix 3
•	clarifies for the Scottish Government the nature of work undertaken by appointed auditors before giving their certificate.
4.	Auditors are required to express their conclusion in a certificate attached to each claim. The assurance process performed by auditors is therefore described in the Code of Audit Practice as the certification of each claim. 
5.	Although this note provides a concise summary of the scheme, it may still be necessary for auditors to refer to the source material listed at Appendix 2 on which this note is based. 
6.	Auditors should also refer to the general guidance on the certification of claims provided by Technical Guidance Note TGN/GEN/20.
Changes in 2019/20
7.	The most significant changes from 2018/19 are:
•	a new fibre broadband relief has been introduced
•	transitional relief has been extended (resulting in a real-terms increase to the cap)
8.	There are also presentational changes in the 2019/20 notified return in relation to:
•	separate reporting of Business Growth Accelerator relief for improved property (line 21a) and new property (lines 21b)
•	separate reporting of lighthouse relief (line 25)
•	separate reporting of discretionary relief for Community Amateur Sports clubs (CASCs) or sports clubs which are registered charities (line 28) from other sports clubs (line 29) 
•	changes to backdated relief lines to include backdated sports and charities (line 41), backdated Business Growth Accelerator relief (line 40) and other backdated relief (line 43).
Nature of return
9.	NDRI in Scotland is collected by local authorities on an agency basis and notionally placed in a national ‘pool’, which is then redistributed among authorities based on each authority's estimated collection levels.
10.	In April each year, authorities submit an estimate of their expected NDRI yield for the year ahead. This is known as the provisional contributable amount and is used to calculate the amount of NDRI for the purposes of funding payments. 
11.	 In October each year, authorities submit an updated estimate of NDRI in the mid-year estimate returns (MYE). These are used to calculate each local authority’s distributable amount. 
12.	 Following the year end, authorities are required to submit their actual NDRI yield, known as 'the notified amount' in a final return to the Scottish Government. 
Funding arrangements
13.	The total revenue funding allocation for an authority is fixed by an annual order and includes NDRI and general revenue grant (GRG). As authorities do not physically pass NDRI to the national pool, the weekly funding payments made to authorities are adjusted for NDRI collections.  
14.	After receipt of the final return, the actual NDRI yield is compared with the provisional contributable amount, and any differences are adjusted for by amending the weekly funding payments in the following year. These adjustments are generally conducted in two stages; firstly, after the receipt of the return in June and then (if there have been any further changes) once the return certified by auditors has been submitted. The weekly funding payments are therefore adjusted for the net result of the authority’s expected NDRI yield in the current year, and differences between estimate and actual collections in previous years.  
Submission of return to auditor
15.	 Authorities are required to submit the completed final return to their external auditors by 11 June 2020. 
16.	Due to the impact of the Covid-19 crisis, the Scottish Government has indicated that they recognise the difficulties councils may have in meeting the June deadline. Auditors should therefore discuss the expected date of receipt of the return with each council.
Contact point
17.	The contact point in Professional Support for this Technical Guidance Note is Anne Cairns, Manager (Professional Support).
18.	Enquiries should be sent to TechnicalQueries@audit-scotland.gov.uk.

Section 1
Preliminary procedures 
Purpose of section
19.	This section sets out the preliminary procedures that auditors should carry out when they receive the return.
Preliminary procedure 1 - Completion of form
Auditors should evaluate whether:
•	the authority’s arrangements for the completion of the return appear adequate 
•	all relevant parts of the return have been completed, including certification by the director of finance 
•	all arithmetic on the return is correct 
•	the entries on the return agree with the authority’s financial ledger or other underlying records.	
20.	The NDRI return is a statement of income yield. It records the gross amount payable to an authority by rate-payers, including contributions in lieu of rates and amounts payable in respect of preceding years not included in previous returns.
21.	The return has lines for the following reductions in rate yield which authorities are permitted in arriving at their contribution to the pool:
•	All of the mandatory reliefs, and at least a proportion of the discretionary reliefs (i.e. the proportion funded by the Scottish Government), granted by the authority to rate-payers.
•	Provisions for bad debts and amounts written-off.
•	Refunds of overpayments, normally as a result of appeals, as well as related interest payments.
•	Income from the Tax Incremental Financing (TIF) and Business Rates Incentivisation Scheme (BRIS).
22.	Authorities use the Scottish Government's online ProcXed system to submit the final return but should have generated a hard copy for certification by auditors. 
23.	The return passed to auditors should have been certified by the director of finance (or equivalent) as being made in accordance with the regulations.
24.	
Section 2
Testing procedures 
Purpose of section
25.	This section sets out the testing procedures that auditors should carry out on the return.
Test 1 - Amount before reliefs (lines 1 and 5)
Auditors should obtain evidence that the amount payable in lines 1 and 5:
•	has been properly calculated by using the rateable values shown on the valuation roll for the year multiplied by the rate per £ specified by Scottish Ministers
•	is gross of reductions in the yield arising from reliefs and other deductions in respect of 2019/20.	
26.	The amount payable in lines 1 and 5 is the theoretical maximum rate yield in respect of 2019/20 if the properties included in the valuation roll were occupied and not subject to any reliefs or exemptions. It is calculated using non-domestic properties’ rateable values (RV) multiplied by a rate per pound (£) specified by Scottish Ministers. The last revaluation introduced rateable values effective from 1 April 2017.
27.	The poundage rate for 2019/20, set by The Non Domestic Rate (Scotland) Order 2019, and the Large Business Supplement, set by The Non Domestic Rates (Levying) (Scotland) Regulations 2019 are included, along with rates for earlier years, in the following table:
Year	Poundage rates	
	RV £29,000 or less	RV more than £29,000	
2005/06	0.461	0.4655	
2006/07	0.449	0.453	
2007/08	0.441	0.444	
2008/09	0.458	0.462	
2009/10	0.481	0.485	
	RV £35,000 or less	RV more than £35,000	
2010/11	0.407	0.414	
2011/12	0.426	0.433	
2012/13	0.450	0.458	
2013/14	0.462	0.471	
2014/15	0.471	0.482	
2015/16	0.480	0.493	
2016/17	0.484	0.510	
	RV £51,000 or less	RV more than £51,000	
2017/18	0.466	0.492	
2018/19	0.480	0.506	
2019/20	0.490	0.516	
Test 2 - Large business supplement (lines 2a & 2b)
Auditors should obtain evidence that: 
•	the amount in line 2a is the amount payable in respect of the gross large business supplement; or
•	the amount in line 2b is the net amount in respect of large business supplement where the gross amount is not available.	
28.	The gross amount payable in respect of the large business supplement included in line 1 should also be separately reported at line 2a. The large business supplement is payable by businesses with a rateable value in excess of £51,000. The supplement for 2019/20 is 2.6p as set out in the table above. 
29.	Where the gross amount in respect of large business supplement is not available, the amount net of reliefs and deductions should be included at line 2b.
Test 3 - Church exemption (line 3)
Auditors should confirm that the amount included at line 3 for church and religious relief exemption equals the amount included at line 9 for deductions.	
30.	The gross amount included in line 1 in respect of churches and religious relief exemption should be included at line 3 for information in addition to being included at line 9 as a deduction (see test 8).
Test 4 - Adjustments for in-year changes to rateable values (line 4)
Auditors should confirm that any adjustments to the amount payable for in-year rateable value changes are included at line 4. 	
31.	Some authorities make adjustments to the amount payable in line 1 to reflect changes to rateable values through the year, e.g. growth in the tax base and appeals. Where this is the case, the net change should be included for information at line 4.
Test 5 - Unoccupied/partly unoccupied property (line 6)
Auditors should obtain evidence that the reduction in rate yield for unoccupied properties in line 6 has been properly stated and includes:
•	100% relief on industrial properties for the first six months they are empty and 10% relief thereafter
•	50% relief on non-industrial properties for the first three months they are empty and 10% thereafter
•	the yield loss from properties exempt from unoccupied property rate of 90%.	
32.	As a result of The Non-Domestic (Unoccupied Property) (Scotland) Regulations 2018:
•	industrial properties only receive full relief from rates for the first six months they are empty, and 10% thereafter
•	non-industrial properties only receive 50% relief for the first 3 months they are empty, and 10% thereafter. 
33.	Some properties are exempt from the unoccupied property charge of 90% as set out in The Non-Domestic Rating (Unoccupied Property) (Scotland) Regulations 1994 as amended in 2018 Circumstances under which properties are exempt from the 90% charge include:
•	property not comprising one or more buildings or a part of a building
•	listed buildings or scheduled monuments
•	subject of a building preservation order
•	the rateable value of the lands and heritages is less than £1,700 (£1,500 before 1 April 2000 and £1,000 before 1 April 1995)
•	where the owner is in administration or subject to a winding up order
•	where occupation is prohibited by law
•	land and heritages kept vacant by the Crown or any other public authority
•	possession by a trustee, executor or liquidator.
34.	The amount in line 6 should include:
•	the total reduction in rate yield as a result of the 100%, 50% and 10% empty property relief and
•	the yield loss from properties exempt from the 90% unoccupied property rate. 
35.	The reduction in yield is calculated after taking account of any small business relief under the Small Business Bonus scheme. 
36.	Where part of a property is unoccupied for a short time, an authority may ask the assessor to apportion the rateable value between the:
•	occupied part - the chargeable amount is then calculated on this part
•	unoccupied part - an exemption or empty property charge is applicable, as appropriate.
37.	The entry in the return is the reduction in rate yield as a result of the apportionment.
Test 6 - New Start (line 7)
Auditors should obtain evidence that the amount included at line 7 in respect of New Start relief is properly stated and: 
•	applies to empty new build properties entered on the valuation roll since 1 April 2013
•	is limited to a 15 month period.	
38.	New Start relief for empty new build properties was introduced by The Non-Domestic Rating (Unoccupied Property) (Scotland) Amendment Regulations 2013, amended in 2018. Up to 15 months relief is available while a property is empty. This need not be a continuous period if a property moves in and out of occupancy. After receiving New Start relief, a property is eligible for empty property relief in the normal way. 
39.	New Start relief is only applicable to new properties entered onto the valuation roll between 1 April 2013 and 31 March 2018 and is not applicable to splits and mergers or other changes to existing entries on the valuation roll.  
40.	Applications can be granted no later than 15 months after the property was entered on the roll or, where there has been occupation during that period, 15 months plus the periods of occupation.
41.	New Start relief is only applicable until the end of 2019/20 as it was partly superseded by Business Growth Accelerator relief on 1 April 2018.
Test 7 - Fresh Start (line 8)
Auditors should obtain evidence that the amount included at line 8 in respect of Fresh Start relief is properly stated and:
•	100% relief has been granted for all properties that were unoccupied for at least 6 months before becoming occupied on or after 1 April 2018
•	relief has been awarded only where an application has been made
•	does not apply where payday lending takes place at interest rates of 100% or above.	
42.	Fresh Start relief was introduced by The Non-Domestic Rating (Unoccupied Property) (Scotland) Amendment Regulations 2013 and amended by The Non-Domestic Rating (Unoccupied Property) (Scotland) Regulations 2018. This is a 100% relief for a period of 12 months available to eligible properties: 
•	with rateable values of up to £65,000
•	that have been in receipt of empty property relief for a continuous period of at least 6 months prior to becoming occupied.
43.	The relief available from 1 April 2018 is available to all types of property. It is available for the 12 month period immediately following occupation. Property-owners are required to make an application for relief.
44.	In some instances, the Small Business Bonus Scheme may offer greater relief for a single individual property, in which case that relief should be awarded if the property is eligible. 
45.	Fresh Start relief is not available where 'payday lending' is carried out at the property if interest rates used are 100% or above.
Test 8 - Religious relief (line 9)
Auditors should obtain evidence that the reduction in rate yield for churches, etc in line 9 has been properly stated and includes:
•	buildings occupied by a religious body used for worship
•	church halls used for purposes connected with that body
•	premises used for administrative activities.	
46.	Under schedule 13 of the Local Government Finance Act 1992, the following religious properties are exempt from rates:
•	Buildings occupied by a religious body used exclusively for the purposes of public worship.
•	Church halls and similar buildings used wholly or mainly for purposes connected with the church and no profit is derived from their use.
•	Premises occupied by a religious body and used by it for carrying out administrative activities.  
Test 9 - Charities mandatory relief (lines 10 and 10a)
Auditors should obtain evidence that the mandatory reduction in rate yield for charities at line 10 has been properly stated and:
•	reflects the granting of 80% rate relief 
•	relates only to properties occupied by a registered charity 
•	the amount of relief granted to ALEOs is separately reported at line 10a.	
47.	This relief relates only to properties occupied by a charity registered with the Office of the Scottish Charity Regulator (OSCR), or its trusts, and wholly or mainly used for charitable purposes (whether of that charity or other charities).
48.	Auditors should confirm that any property granted this relief in 2019/20 is on the Scottish charity register.
49.	OSCR-registered charities are required to pay only 20% of the rates otherwise due (and may pay less where top up discretionary relief for this category has been granted).
50.	Reliefs granted to ALEOs should be included in the figure reported at line 10 and also reported separately at line 10a.  
Test 10 - Sports clubs mandatory relief (line 11 and 11a)
Auditors should obtain evidence that the mandatory reduction in rate yield for registered sports clubs at line 11 has been properly stated and:
•	reflects the granting of 80% rate relief
•	relates only to properties used by registered sports clubs
•	the amount of relief in relation to ALEOs is separately reported at line 11a.	
51.	Community Amateur Sports Clubs (CASCs) or sports clubs which are registered with HM Revenue and Customs qualify for 80% mandatory relief under Section 98 of The Charities and Trustee Investment (Scotland) Act 2005.
52.	Auditors should confirm that properties granted this relief in 2019/20 are registered with HM Revenue and Customs. 
53.	Mandatory relief granted should be included in line 11. Local authorities can also top up relief to 100% with the use of discretionary relief (for example if the premises are unlicensed). 
54.	Reliefs granted to ALEOs should be included in the figures reported at line 11 and also reported separately at line 11a.
Test 11 - Rate rebates for disabled persons (line 12)
Auditors should obtain evidence that the reduction in rate yield for disabled persons at line 12 has been properly stated and:
•	includes any institutional building where half or more of the floor area is used for specified qualifying purposes
•	reflects the amount of rates attributable to that part of the building used exclusively for qualifying purposes.	
55.	Residential and nursing homes which cater for the needs of disabled persons are eligible for relief under the Rating (Disabled Persons) Act 1978.  Rebate is granted if more than half of the floor area is used exclusively for specified purposes, which include the provision of:
•	residential accommodation for the care (not including medical, surgical or dental treatment) of persons suffering from illness, their aftercare, or disabled persons
•	facilities for the training of such persons
•	welfare service, workshops, etc. for disabled persons.
56.	The percentage of rebate granted is equivalent to the proportion that the part of the property used exclusively for these qualifying specified purposes bears to the whole building (i.e. it will be between 50% - 100%).
Test 12 - Rural rate mandatory relief (line 13)
Auditors should obtain evidence that the mandatory reduction in rate yield for rural settlements at line 13 has been properly stated and:
•	relates only to qualifying businesses in settlements on the authority’s rural settlement list
•	relates only to settlements which have been designated by Scottish Ministers as rural areas
•	relates to properties where rateable values are below thresholds
•	reflects 100% rate relief granted.	
57.	Local authorities are required to compile and maintain a rural settlement list which contains settlements with a population of 3,000 or less on the 31 December before the relevant financial year, i.e. 31 December 2018 for 2019/20. Certain types of business within a rural settlement, provided the settlement has been designated by Scottish Ministers as a rural area, are entitled to a mandatory rates relief where their rateable values are less than prescribed thresholds. The Don-Domestic Rates (Rural Areas) (Scotland) Regulations 2017 increased this relief from 50% to 100% from 1 April 2017. 
58.	Designated areas can be found in The Non Domestic Rating (Rural Areas and Rateable Value Limits) (Scotland) Amendment Order 2010 whilst qualifying businesses and relevant thresholds for mandatory relief (as set out in the 2005 order) are:
•	the only general store or post office and where the rateable value is £8,500 or less
•	a food shop (excluding confectionery and excluding the supply of food in the course of catering) with a rateable value of £8,500 or less 
•	the only public house/small hotel (with appropriate license), with a rateable value of £12,750 or less
•	a petrol filling station with a rateable value of £12,750 or less where the ratepayer is not also the ratepayer for another petrol filling station in Scotland.
Test 13 - Small Business Bonus Scheme (line 14)
Auditors should obtain evidence that the reduction in rate yield for small business mandatory relief at line 14 has been properly stated and:
•	relates only to businesses with a cumulative rateable value of £35,000 or less not involved in pay day lending
•	been awarded over and above other reliefs 
•	reflects total reliefs granted of between 25% and 100%.	
59.	Line 14 should record the reduction in rate yield in 2019/20 resulting from mandatory rate relief under the Small Business Bonus scheme. The Non-Domestic Rates (Levying) (Scotland) Regulations 2019 set the cumulative rateable value ranges for relief in 2019/20:
RV bandings £	Relief	
From	to 		
0 	15,000	100%	
15,001	18,000	25%	
18,001	35,000	25% on each individual property with a rateable value not exceeding £18,000 	
60.	Businesses with properties that have a cumulative rateable value between £18,000 and £35,000 can receive 25% rates relief on individual properties with a rateable value of up to £18,000. No rate relief may be granted in respect of properties used for payday lending.
61.	Where any of the other mandatory reliefs or discretionary relief for sports clubs or stud farms apply, they take precedence over relief under the bonus scheme, i.e. ratepayers receive the higher relief available.  This should be reflected in the return as follows:
•	Where the other relief is higher than under the bonus scheme, there is no entry in line 14 for that item.
•	Where the relief under the bonus scheme is higher than the other relief, the total relief should be spread with only the remainder included in line 14.  
Test 14 - Renewable Energy Relief scheme (line 15)
Auditors should obtain evidence that the reduction in rate yield for renewable energy relief at line 15 has been properly stated and:
•	relates only to qualifying properties used solely for production of renewable energy
•	has been awarded only where applications have been made.	
62.	Line 15 should record the reduction in rate yield in 2019/20 resulting from mandatory rate relief under the Renewable Energy Relief scheme which was established by The Non-Domestic Rates (Renewable Energy Generation Relief) (Scotland) Regulations 2010 and amended in 2016, 2017 and 2018. This scheme provides a reduction on the rates due for properties which are used solely for the production of renewable energy where there is either a community benefit or, from 2018/19, properties used for hydro schemes. It is necessary for rate-payers to have made an application for relief, and this relief must be applied before the calculation of other reliefs.
63.	Eligibility for community benefit renewable relief requires arrangements that give at least 15% of the annual profit (or profit attributable to 0.5 megawatt of capacity if lower (previously 1 megawatt in 2016/17) to a community organisation, in return for investment by that organisation. Qualifying properties with a rateable value up to £145,000 are entitled to 100% relief, while relief is tapered for properties with higher values. The percentage reliefs for each banding is shown in the following table:
Cumulative RV	Relief	
up to £145,000	100%	
over £145,000 and up to £430,000	50%	
over £430,000 and up to £860,000	25%	
over £860,000 and up to £4,000,000	10%	
over £4,000,000	  2.5%	
64.	The Non-Domestic Rates (Renewable Energy Generation Relief) (Scotland) Amendment Regulations 2018 introduced a 60% relief from 2018/19 for properties used solely for hydro schemes (where renewable heat or power is produced from waves and tides but not from pumped storage of water) with a rateable value of no more than £5 million. 
Test 15 - District heating relief (line 16)
Auditors should obtain evidence that the reduction in rate yield for district heating relief at line 16 has been properly stated and:
•	relates to properties used wholly or mainly for the purposes of a district heating network
•	has been awarded only where applications have been made.	
65.	The Non-Domestic Rates (District Heating Relief) (Scotland) Regulations 2017 introduced a 50% application-based relief in respect of property used for the purposes of a district heating network. Applications must be made in writing and be signed by the rate payer or person authorised to sign on their behalf.
66.	District heating relief is not applicable if other reliefs already amount to 50%.
Test 16 - Enterprise areas (line 17)
Auditors should obtain evidence that the reduction in rate yield for enterprise area relief at line 17 has been properly stated and:
•	relates to new properties or properties vacant for 3 months
•	relates to properties in enterprise areas
•	is in respect of specified activities
•	has been awarded only where applications have been made.	
67.	The Non-Domestic Rates (Enterprise Areas) (Scotland) Regulations 2012 (as amended in 2013, and 2016) provide for a reduction on the rates due for specified properties in defined geographic locations known as enterprise areas. The four enterprise areas are set out in the following table:

Life Sciences	Low Carbon/ Renewables North	Low Carbon / Renewables East	General Manufacturing and Growth Sectors	
Irvine (N. Ayrshire) - part of site
Forres (Moray)
Inverness Campus (Highland)
BioQuarter (Edinburgh)
BioCampus (Midlothian)
BioCity (North Lanarkshire)	Hatston (Orkney)
Arnish (Western Isles)
Scrabster (Highland)
Lyness (Orkney)	Leith (Edinburgh)	Creative Clyde (Glasgow City)
Prestwick International - aerospace (S. Ayrshire)
West Lothian (Broxburn) - Food and drink manufacturing
West Lothian (Livingston) - Food and drink manufacturing	
68.	Each area comprises a number of defined geographic locations. Boundaries for each location are set out in a series of maps.
69.	Relief is available only to:
•	new entries on the roll after 1 April 2012 which have been vacant for at least a three month period  
•	businesses undertaking certain activities set out in Schedule 1 of the 2016 regulations.
70.	Rate-payers are required to make an application for the relief, and an authority is required to consider whether a property is in receipt of any other relief. The total percentage of relief available to properties after the award of enterprise area relief is set out in the following table:
Rateable value	Relief	
up to £120,000 	100%	
over £120,000 and up to £240,000	50%	
over £240,000 and up to £480,000	25%	
over £480,000 and up to £1,200,000	10%	
over £1,200,000 and up to £2,400,000	5%	
over £2,400,000	2.5%	
Test 17 Transitional relief (lines 18-19)
Auditors should obtain evidence that the reduction in rate yield for transitional relief has been properly stated and awarded only where applications have been received in respect of:
•	specified properties used for hospitality (line 18)
•	offices in Aberdeen and Aberdeenshire (line 19).	
71.	The Non-Domestic Rates (Transitional Relief) (Scotland) Regulations 2017 and amended in 2018  and 2019 introduced a transitional relief scheme for some business sectors following the revaluation exercise applicable from 1 April 2017. Ratepayers are required to submit an application for the relief.
72.	Properties eligible for transitional relief are those used for the purposes specified in the schedule to the regulations, i.e.
•	Hospitality with a rateable value of no more than £1.5 million - bed and breakfast accommodation; camping sites; caravans and caravan sites; chalets and holiday huts; guest houses, hotels, and hostels; public houses; restaurants; self-catering holiday accommodation; and time share accommodation.
•	Offices in Aberdeen and Aberdeenshire.
73.	 For eligible properties used for a specified purpose on 31 March 2017 (or on their last day of occupation) and continue to be so used the increases in gross bills for 2017/18, 2018/19 and 2019/20  are limited to 12.5% in real terms of the 2017/18 amount plus inflation. The inclusion of inflation gives a total limit of 52.7% for 2019/20 of the charge as at 31 March 2017.
74.	Finance circular 3/2017 provides illustrative information to local authorities on the operation of the scheme.
Test 18 - Day nursery relief (line 20)
Auditors should obtain evidence that the reduction in rate yield for day nursery relief at line 20 has been properly stated and:
•	relates only to properties that are used wholly or mainly as a day nursery
•	has been awarded only where applications have been made
•	reflects 100% rate relief granted.	
75.	The Non-Domestic Rates (Day Nursery Relief) (Scotland) Regulations 2018 introduced a relief for any land and heritages that are used as a day nursery.
76.	Ratepayers are required to submit an application for the relief. 
Test 19 – Business Growth Accelerator relief (line 21-22)
Auditors should obtain evidence that the reduction in rate yield for Business Growth Accelerator relief has been properly stated and:
•	awarded only where applications have been received in respect of:
•	improved (line 21a) or new (line 21b) properties added to the valuation role after first occupation
•	newly added properties added to the valuation role having never been occupied (line 22)
•	reflects 100% rate relief granted.	
77.	The Non-Domestic Rates (New and Improved Properties) (Scotland) Regulations 2018 introduced a 100% Business Growth Accelerator relief from 1 April 2018 for properties newly added to the valuation roll (also referred to as new and improved properties relief). Ratepayers are required to submit an application for the relief.
78.	Relief for properties that have yet to be occupied should be reported at line 22. The relief continues for 12 months after occupation, and that element should be reported at line 21. The 2019/20 return has been amended to report improved  property (line 21a) separately from new property (line 21b). 
79.	The Non-Domestic Rates (Relief for New and Improved Properties) (Scotland) Regulations 2019 provide that if a building in receipt of new build relief is further expanded or improved and where the rateable value increases as a result, it will not pay rates on the value attributable to the improvements until 31 March 2020.
80.	Where an occupied property on the valuation roll in receipt of new-build relief is split, relief continues to be available on each part until the end of the twelve-month occupation period.
81.	The relief which is not available where a new entry in the valuation roll is for a property that was previously a dwelling.
82.	Properties comprising buildings or parts of buildings which have been expanded or improved and the rateable value increases as a result will not pay rates on the value attributable to the improvements for 12 months. In these cases, the liability will be calculated based on the rateable value prior to any such improvements having been made. Relief is not available where the increase in the property’s rateable value is caused by a split, merger or reorganisation. 
Test 20 – Mobile mast relief (line 23)
Auditors should obtain evidence that the reduction in rate yield in respect of mobile masts at line 23 has been properly stated and:
•	awarded only where applications have been received in respect of entries added to the valuation role from 1 April 2016 for lands and heritages occupied by a tower or mast used for electronic communication services in pilot areas
•	reflects 100% of the rate relief granted. 	
83.	The Non-Domestic Rates (Telecommunication Installations) (Scotland) Regulations 2016, amended in 2018 and  2019  provide for 100% relief from business rates in respect of new entries to the valuation roll from 1 April 2016 for lands and heritages occupied by a tower or mast used for electronic communication services in mobile masts pilot areas. Current mast areas are delineated in orange on maps of eligible areas in Arran and the Cairngorms.
84.	The relief is available until 31 March 2029. The 2019 amendments update the list of grid references for where this relief is available.
Test 21 – Telecommunications New Fibre Infrastructure relief (line 24)
Auditors should obtain evidence that the reduction in rate yield in respect of fibre infrastructure relief at line 24 has been properly stated and:
•	awarded only where applications have been received in respect of new fibre infrastructure for telecommunications
•	reflects 100% of the rate relief granted.	
85.	The Non-Domestic Rates (Telecommunications New Fibre Infrastructure Relief) (Scotland) Regulations 2019 introduce from 1 April 2019 a 100% relief from business rates to any provider of new fibre infrastructure for telecommunication. Line 24 has been added to the 2019/20 return for this new relief.
86.	The Non-Domestic Rating (Telecommunications New Fibre Infrastructure) (Scotland) Order 2019 provides that where new telecommunications fibre infrastructure is installed on land, separate entries must be made on the valuation roll and separate valuations obtained for the new fibre infrastructure and for the existing land and buildings on the site.
87.	Ratepayers are required to submit an application for the relief. 
Test 22 – Lighthouse relief (line 25)
Auditors should obtain evidence that the reduction in rate yield in respect of lighthouses at line 25 has been properly stated.	
88.	Section 221 of the Merchant Shipping Act 1995 provides 100% relief  for lighthouses, buoys and beacons, and premises or property belonging to or occupied by any of the general lighthouse authorities.
89.	Line 25 has been added to the 2019/20 return to allow this relief to be reported separately.  

Test 23 - Hardship relief (line 26)
Auditors should obtain evidence that the reduction in rate yield in respect of hardship at line 26 has been properly stated and:
•	the authority is satisfied that the rate-payer would sustain hardship if relief was not granted, and it is reasonable to do so having regard to the interest of council tax payers
•	the relief has been awarded in line with the authority's policy
•	reflects 75% (or 95% in some cases) of the rate relief granted. 	
90.	Section 25A of the Local Government etc. (Scotland) Act 1966 permits local authorities to remit rates in whole or in part if they are satisfied that the rate-payer would sustain hardship if relief was not granted, and it is reasonable to do so having regard to the interests of council tax-payers.  
91.	Line 26 should normally represent 75% of any relief granted and is offset against the authority’s contribution to the pool. However, if a claim relates to businesses negatively affected as a result of the Glasgow School of Art fire, the proportion increases to 95%. 
Test 24 - Charities (excluding sports clubs) and other organisations - discretionary (lines 27 and 27a)
Auditors should obtain evidence that the reduction in rate yield in respect of charities and other organisations at line 27 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy
•	reflects 75% of discretionary rate relief granted for up to 20% of charities’ bill 
•	reflects 75% of discretionary rate relief granted for other non-profit making organisations.
•	separately reports 75% of the discretionary rate relief included in line 27 in relation to ALEOs at line 27a.	
92.	Authorities are permitted to grant discretionary relief to OSCR-registered charities on the remaining 20% of their rates (having given mandatory relief on 80%), bringing the total relief up to 100%. An amount equal to 75% of the discretionary relief granted may be offset against the authority’s contribution to the pool and should be recorded at line 27. 
93.	Authorities may also grant up to 100% relief to certain other non-profit-making bodies. To qualify, an organisation must be:
•	charitable (i.e. relief of poverty; advancement of religion; advancement of education; or other purposes beneficial to the community); or
•	religious; or
•	 concerned with education, social welfare, science, literature or the fine arts.
94.	An amount equal to 75% of the discretionary relief granted may be offset against the authority’s contribution to the pool (excluding sports clubs reported at line 27).
95.	Reliefs granted to ALEOs should be included in line 27 and also separately reported at line27a.  

Test 25 - Sports clubs - OSCR-registered and/or CASCS - discretionary (lines 28 and 28a)
Auditors should obtain evidence that the reduction in rate yield in respect of sports clubs at line 28 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy
•	reflects 75% of discretionary rate relief granted for up to 20% of the bill for CASCs or sports clubs which are registered charities
•	separately reports at line 28a 75% of the amount of discretionary rate relief in relation to ALEOs included at line 28.	
96.	In addition to the mandatory relief included at line 11, authorities may grant discretionary top up relief to sports clubs. The 2019/20 return has been amended to report CASCs and sports clubs that are registered charities:
•	CASCs or sports clubs which are registered charities may be granted discretionary relief under section 4(5)(a) of the Local Government (Financial Provisions) (Scotland) Act 1962. Line 28 should reflect 75% of the relief granted.
•	Reliefs granted to ALEOs should be included in line 28 and also separately reported at line 28a. Line 28a should (as for line 28) reflect 75% of the relief granted to ALEOs.
Test 26- Sports clubs - not for profit recreational organisations- discretionary (lines 29 and 29a)
Auditors should obtain evidence that the reduction in rate yield in respect of sports clubs at line 29 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy
•	reflects 100% of the discretionary rate relief granted for not for profit clubs, societies or organisations used for recreation
•	separately reports the amount of discretionary relief included in line 29 in relation to ALEOs at line 29a.	
97.	Where discretionary top up relief is granted to not for profit clubs, societies or organisations set up for recreational purposes under section 4(5)(c) of  the Local Government (Financial Provisions) (Scotland) Act 1962 e.g. where recognised by Sports Scotland, 100% of the discretionary reliefs granted can be offset. These should be included at line 29.
98.	Reliefs granted to ALEOs should be included in line 29 and also separately reported at line 29a.
Test 27 - Rural rate relief - discretionary (line 30)
Auditors should obtain evidence that the reduction in rate yield in respect of rural settlements at line 30 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy
•	reflects 75% of discretionary rate relief granted to properties with a rateable value of less than £17,000 which are of benefit to the local community.	
99.	Authorities may extend relief to properties with a rateable value of less than £17,000 which are of benefit to the local community in line with the authority's policy.
100.	This discretionary relief can be off-set against the pool at a rate of 75% and should be reported at line 30.  
Test 28 - Stud farms (line 31)
Auditors should obtain evidence that that the reduction in rate yield in respect of stud farms at line 31 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy
•	reflects 75% of discretionary relief granted on stud farms:
•	established on or after 1 April 2003
•	with a maximum rateable value of £7,000.	
101.	Stud farms established on or after 1 April 2003 may be granted discretionary relief provided the rateable value is less than £7,000 under The Valuation (Stud Farms) (Scotland) Order 2005.  
102.	75% of this relief can be off-set against the pool and should be recorded at line 31.
Test 29 - State aid
Auditors should obtain evidence that the authority has considered the state aid implications of awarding discretionary benefits where de minimis levels have been breached.	
103.	State aid is a European Commission term which refers to forms of public assistance given to undertakings on a discretionary basis, with the potential to distort competition and affect trade between Member States.
104.	State aid rules are applicable to rates relief. Authorities granting discretionary rate relief should consider state aid implications if de minimis levels are breached (currently 200,000 Euros over a rolling 3 year period). 
Test 30a - Bad or doubtful debts (lines33, 36 and 45) - gross basis
Where the authority does not take the option to report only the net change, auditors should obtain evidence that the reduction in rate yield in respect of bad or doubtful debts at lines 33 and 36 and the increase at line 45 have been properly stated and:
•	the write off of bad debts has been properly approved
•	provisions have been calculated on a reasonable basis 
•	line 33 reflects reductions to the yield for rates relating only to 2019/20
•	line 36 reflects reductions to the yield for rates relating to 1993/94 to 2018/19 
•	line 45 reflects increases in the rate yield for bad debts written off in previous years which have been collected or are now considered collectable.	
105.	Bad or doubtful debts (i.e. impairment losses) in respect of rates for 2019/20 or preceding years dating back to 1993/94 (provided they have not been taken into account in a previous return) can be offset against the authority’s contribution to the pool.  
106.	Authorities have the option of either reporting changes in bad debts in respect of preceding years on a gross basis or they may report only the net change to the yield in respect of bad debt adjustments since the last return.
107.	Where the authority adopts a gross basis, the entries in the return should be as follows:
•	The entry in line 33 relates to bad debts written off and provisions for bad debt in respect of rates due for 2019/20.
•	The entry in line 36 should include increases in bad debt provision and amounts written off in respect of rates due in the period 1993/94 to 2018/19.  
•	The entry in line 45 relates to bad debts in respect of preceding years which have been previously written off but which have been collected or are now considered collectable. 
Test 30b - Bad or doubtful debts (lines 33, 36, and 45) - net basis
Where the authority takes the option to report only the net change in bad or doubtful debts, auditors should obtain evidence that the adjustments in rate yield in respect of lines 33, 36 and 45 have been properly stated and:
•	the write off of bad debts has been properly approved
•	provisions have been calculated on a reasonable basis 
•	line 33 reflects reductions to the yield for rates relating only to 2019/20
•	line 36 reflects any net reduction to the yield for rates relating to 1993/94 to 2018/19 
•	line 45 reflects any net increase in the rate yield for bad debts written off in previous years which have been collected or are now considered collectable.	
108.	Where the authority chooses to report only the net change to the yield in respect of bad debt adjustments since the last return:
•	amounts previously included that are now collected or considered collectable are netted off at line 36 rather than shown separately at line 45 where there is a net reduction in the yield (i.e. a net increase in bad debt adjustments); or
•	increases in bad debt provision and amounts written off are netted off at line 45 rather than shown separately at lines 36 and 45 where there is a net increase in the yield (i.e. a net decrease in bad debt adjustments).
Test 31 - Appeals etc (line 37)
Auditors should obtain evidence that the reductions in rate yield in respect of appeals at lines 37 have been properly stated and:
•	repayments are included only where an overpayment has been caused by error or an incorrect entry in the valuation roll
•	transitional relief has been taken into account where relevant.	
109.	Authorities are required to repay rates if there has been an overpayment caused either by error or as a result of an incorrect entry in the valuation roll (mainly identified as a result of appeals). These amounts, included in previous returns as being due but which are now repayable by the authority, are reductions in the rate yield and should be reported at line 37.  
110.	Any amounts paid to the authority as the result of appeals which have not been previously taken into account should not be reported at line 37 but should be included at line 46.
111.	The previous transitional relief scheme was available in respect of the revaluation that took place on 1 April 2005 and limited subsequent increases in rates for the three years to 2007/08. This relief may be relevant to the calculation of backdated appeals. Amounts payable in 2005/06 (before taking account of reliefs) were limited to a proportion of the liability for 2004/05 as set out in The Non-Domestic Rates (Levying) (Scotland) Regulations 2005. Applicable limits are shown below:
Upper transitional limit 	Lower transitional limit	
1.16	0.928	
112.	The difference between what would be payable on a property’s new rateable value in 2005/06 without any transitional adjustment and the amount payable after limitation is referred to as the ‘base transitional adjustment’. For years 2006/07 and 2007/08, transitional adjustments reduced as a proportion of this base adjustment in line with the factors set out in the relevant levying regulations and shown below:
Year	Factor to be applied to the base adjustment	
2006/07	0.649	
2007/08	0.491	
Test 32 - Interest (line 34)
Auditors should obtain evidence that the reduction in rate yield at line 34 in respect of interest payable on overpayments has been properly stated and reflects amounts paid in the year. 	
113.	Where a repayment has been necessary following an appeal, the authority is also required to pay interest to the rate-payer involved.  Amounts paid in the year (in respect of all years from 1990/91) as interest on overpayments are also reductions in the rate yield and should be entered at line 34.
114.	The rate of interest is set by Regulation 4(2) of The Non Domestic Rating (Payment of Interest) (Scotland) Regulations 1992, as amended in 2009, at 1% below the bank base rate on the preceding 15 March. Rates for 2019/20 and other years are set out below:
Year               %	Year                %	Year               %	
1990/91        14%	2000/01        5.00%	2010/11        0%	
1991/92        12%	2001/02        4.75%	2011/12        0%	
1992/93        9.5%	2002/03        3.0%	2012/13        0%	
1993/94        5%	2003/04        2.75%	2013/14        0%	
1994/95        4.25%	2004/05        3.0%	2014/15        0%	
1995/96        5.75%	2005/06        3.75%	2015/16        0%	
1996/97        5%	2006/07        3.5%	2016/17        0%	
1997/98        5%	2007/08        4.25%	2017/18        0%	
1998/99        6.25%	2008/09        4.25%	2018/19        0%	
1999/2000    4.5%	2009/10        0%	2019/20         0%	
115.	Regulation 3(2) of the 1992 Regulations provides that interest will not be paid if the account concerned has fallen into arrears and legal proceedings have been taken by the authority for recovery.
Test 33 - Late changes to valuation roll (lines 38 and 46)
Auditors should obtain evidence that adjustments to the rate yield at lines 38 and 46 due to late changes to the valuation roll have been properly stated and:
•	relate to a preceding year and have not been taken into account in previous notified returns
•	line 38 reflects late deductions from the roll
•	line 46 reflects late additions now due.	
116.	Late changes to the valuation roll affect the rate yield in respect of a preceding year as set out in the following table:
Change	Nature	Effect on yield	Reporting line	
Deductions from the roll	Amounts repayable to rate-payers, including contributions in lieu) not taken into account in previous returns	Remove from rate yield	Line 38	
Additions to the roll	Amounts now payable to the authority) not taken into account in previous returns	Add to the rate yield	Line 46	
Test 34 - Backdated relief (lines 39, 40 , 41 and 42 )
Auditors should obtain evidence that any amounts at lines 39,40, 41 and 42 in respect of backdated relief have been properly stated.	
117.	The 2019/20 return has been amended in respect of the reporting of backdated relief. Any backdated relief granted in 2019/20 should be included at:
•	line 39 for Small Business Bonus Scheme relief
•	line 40 for Business Growth Accelerator relief
•	line 41 for sports club and charities relief
•	line 42 for any other backdated relief.
Test 35 – Tax Incremental Financing income (line 49)
Auditors should obtain evidence that any TIF income at line 49 has been properly stated.	
118.	Where the authority has an approved TIF scheme, the notified amount of any additional TIF income should be included at line 49. The notified amount is the difference between the collected amount and the collectable amount as set out in The Non-Domestic Rating Contributions (Scotland) Amendment Regulations 2010. Where an authority has repaid all TIF debt the notified TIF amount is limited to 50% of the difference between the collected and collectable amounts set out in the regulations.
119.	Auditors should contact Professional Support for further guidance where amounts are included at line 49.
Test 36 – Business Rates Incentivisation Scheme income (line 50)
Auditors should obtain evidence that any BRIS income at line 50 has been properly stated.	
120.	Under the BRIS, authorities who exceed agreed income targets can retain 50% of any additional income generated. Guidance relating to BRIS is provided at Annex N of Finance Circular No. 9/2014.
121.	Local authorities should include at line 50 any retained income associated with BRIS relating to the two years since the last revaluation in 2017 i.e.2017/18 and 2018/19. Amounts relating to the scheme prior to the 2017 revaluation should no longer be reported. Income can be retained until the next NDR revaluation date provided the additional rates income also continues during that period. For example, income in relation to 2017/18 may be retained for a second year if the additional rates income continued in 2018/19.
122.	The Scottish Government has advised that there has been some misunderstanding regarding the retention of income. As both the 2017/18 and 2018/19 payment amounts were made available by the Scottish Government after the completion of the 2018/19 certified returns, income retained for both 2017/18 and 2018/19 should be accounted for in 2019/20 return. The details set out in the following table below be included in the 2019/20 final returns as the sums to be retained. For those councils whose income in 2018/19 was greater in real terms that their income in 2017/18, the 2017/18 amounts will be included twice in the total BRIS figure on the return. For those councils that were awarded 2017/18 BRIS payments, only Dundee City and Midlothian Councils did not see an increase in their rates income in real terms in 2018/19.  
Local authority	BRIS income 2017/18	BRIS income 2018/19	Total BRIS included in 2019/20 return	
Aberdeenshire	£241,742		£483,484	
Argyll & Bute		£101,983	£101,983	
City of Edinburgh	£387,292		£774,584	
Dumfries & Galloway	£1,481,766	£1,592,095	£4,555,627	
Dundee City	£233	£517,668	£517,901	
East Ayrshire		£307,944	£307,944	
East Lothian		£723,912	£723,912	
Eilean Siar		£17,707	£17,707	
Highland	£1,095,060	£227,963	£2,418,083	
Midlothian	£176,277		£176,277	
Moray		£1,858,975	£1,858,975	
South Ayrshire	£163,086		£326,172	
South Lanarkshire	£8,568		£17,136	
Stirling		£291,594	£291,594	
West Dunbartonshire	£55,313		£110,626	
West Lothian	£144,494		£288,988	
Test 37 - Other additions/deductions (line 43)
Auditors should obtain evidence that any other additions or reductions in rate yield identified at line 43 has been properly stated and the reason notified to the Scottish Government 	
123.	Any additions or deductions that are not included elsewhere in the return should be identified at line 43. The authority should advise the Scottish Government of the nature of any entry in these lines by providing an explanation in the comments box. 
124.	This should include any reliefs granted under The Non-Domestic Rates (Steel Sites) (Scotland) Regulations 2016 (relief only applies to two addresses in Motherwell and Glasgow).
Test 38 - Notified amount (line 51)
Auditors should confirm that the notified amount at line 51 is the sum of the gross amount adjusted for reliefs, additions and deductions.	
125.	The notified amount at line 51 should equal:
•	the amount at line 35 (i.e. the gross amount at line 1 less reliefs and other deductions in respect of 2019/20): less
•	deductions at line 44: plus
•	additions at line 47: less
•	deductions in respect of TIF income at line 49: less
•	deductions in respect of BRIS income retained income at line 50. 
Test 39 - Local rates relief
Auditors should obtain evidence that any figure for local rates relief is properly stated.	
126.	A local authority is empowered by section 140 of the Community Empowerment (Scotland) Act 2015 to establish a scheme to reduce or remit any rate levied by it in respect of lands and heritages. The authority should report the cost of any scheme in line below the notified amount and provide details of the scheme in the comments box.

Section 3
Completion procedures 
Purpose of section
127.	This section sets out the completion procedures that auditors should carry out after they have conducted testing of the return.
Completion procedure 1 - Conclusion on return
Auditors should conclude whether the return is:
•	fairly stated
•	in accordance with the relevant regulations.	
128.	Auditors should:
•	evaluate the results of their testing procedures set out in section 2
•	undertake additional procedures where they judge that to be necessary
•	agree with the local authority any amendments necessary to correct errors found in the return. This is appropriate where auditors conclude the errors are isolated or have extrapolated findings and are satisfied that after amendment the claim or return is fairly stated and in accordance with the business model. A qualified conclusion in a covering letter is not required though auditors should draw attention to the amendment. 
Completion procedure 2 - Auditor's certificate and covering letter
Auditors should complete the auditor's certificate and include any qualified conclusion in a covering letter.	
129.	Auditors should use the format and wording shown at Appendix 3 to this Technical Guidance Note as the auditor’s certificate.
130.	The auditor's certificate states that auditors have examined the entries in the year end statement and accounts and records of the authority, and have obtained such evidence and explanations, and carried out such tests, as they considered necessary.
131.	Auditors should complete the auditor's certificate and any covering letter in accordance with section 3 of TGN/GEN/20.  Where in the auditor’s professional judgment the return is fairly stated and in accordance with the relevant regulations, auditors should:
•	delete the words ‘Except for the qualification in the attached covering letter dated …..’;
•	sign and date the certificate.
132.	Where auditor testing has been completed and, in the auditor’s professional judgement, the return is not fairly stated and in accordance with the regulation, auditors should:
•	prepare a covering letter explaining the qualified conclusion
•	enter the date of the covering letter to the certificate
•	sign and date the certificate.
Completion procedure 3 - Submission of certified return
Auditors should submit the return, completed auditor's certificate, and any covering letter, by 6 October 2020 to the Scottish Government.	
133.	Auditors should submit the income return, completed auditor's certificate, and any covering letter, by 6 October 2020 to:
Nikola Fanton
Local Government and Analytical Services Division
Scottish Government 
Area 3G North
Victoria Quay
EDINBURGH
EH6 6QQ
134.	Due to the COVID-19 crisis, the Scottish Government have indicated that they recognise the difficulties in meeting this deadline for 2019/20. Where submission is not possible by that date, auditors should aim to do so as soon as practicable.

Appendix 1
Auditor action checklist
Preliminary procedures	Yes/No/N/A	Initials/date	W/P ref	
1	Have you evaluated whether: 
•	the authority’s arrangements for the completion of the return appear adequate
•	all relevant parts of the return been completed, including certification by the director of finance
•	all arithmetic on the return is correct
•	the entries on the return agree to the authority’s financial ledger or other underlying records? 				

Testing procedures	Yes/No/N/A	Initials/date	W/P ref	
1	Have you obtained evidence that the amount payable in lines 1 and 5:
•	has been properly calculated by using the rateable values shown on the valuation roll for the year multiplied by the rate per £ specified by Scottish Ministers
•	is gross of reductions in the yield arising from reliefs other deductions in respect of 2019/20?				
2	Have you obtained evidence that:
•	the amount in line 2a is the gross amount payable in respect of the large business supplement; or 
•	where the gross amount is not available that the net amount is shown at line 2b? 				
3	Have you confirmed that the amount included at line 3 for church and religious relief exemption equals the amount included at line 9 for deductions? 				
4	Have you confirmed that any adjustments to the amount payable for in-year rateable value changes are included at line 4?				
5	Have you obtained evidence that the reduction in rate yield for unoccupied properties in line 6 has been properly stated and includes:
•	100% relief on industrial properties for the first six months they are empty and the 10% relief thereafter
•	50% relief on non-industrial properties for the first three months they are empty and 10% thereafter
•	the yield loss from properties exempt from unoccupied property rate of 90%?				
6	Have you obtained evidence that the amount included at line 7 in respect of New Start relief is properly stated and:
•	applies to empty new build properties entered on the valuation roll since 1 April 2013
•	is limited to a 15 month period?				
7	Have you obtained evidence that the amount included at line 8 in respect of Fresh Start relief is properly stated and:
•	100% relief has been granted for properties that were unoccupied for at least 6 months before becoming occupied on or after 1 April 2018 
•	relief has been awarded only where an application has been made 
•	does not apply where payday lending takes place at interest rates of 100% or above?				
8	Have you obtained evidence that the reduction in rate yield for churches, etc in line 9 has been properly stated and includes:
•	buildings occupied by a religious body used for worship
•	church halls used for purposes connected with that body
•	premises used for administrative activities?				
9	Have you obtained evidence that the mandatory reduction in rate yield for charities at line 10 has been properly stated and:
•	reflects the granting of 80% rate relief 
•	relates only to properties occupied by a registered charity 
•	the amount of relief granted to ALEOs has been separately reported at line 10a? 				
10	Have you obtained evidence that the mandatory reduction in rate yield for registered sports clubs at line 11 has been properly stated and:
•	reflects the granting of 80% rate relief
•	relates only to properties used by registered sports clubs 
•	the amount of relief granted to ALEOs has been separately reported at line 11a?				
11	Have you obtained evidence that the reduction in rate yield for disabled persons at line 12 has been properly stated and:
•	includes any institutional building where half or more of the floor area is used for specified qualifying purposes
•	reflects the amount of rates attributable to that part of the building used exclusively for qualifying purposes? 				
12	Have you obtained evidence that the mandatory reduction in rate yield for rural settlements at line 13 has been properly stated and:
•	relates only to qualifying businesses in settlements on the authority’s rural settlement list
•	relates only to settlements which have been designated by Scottish Ministers as rural areas
•	relates to properties where rateable values are below thresholds
•	reflects 100% rate relief granted? 				
13	Have you obtained evidence that the reduction in rate yield for small business mandatory relief at line 14 has been properly stated and:
•	relates only to businesses with a cumulative rateable value of £35,000 or less not involved in pay day lending
•	been awarded over and above other reliefs 
•	reflects total reliefs granted of between 25% and 100%?				
14	Have you obtained evidence that the reduction in rate yield for renewable energy relief at line 15 has been properly stated and:
•	relates only to properties used solely for production of renewable energy
•	been awarded only where applications have been made? 				
15 	Have you obtained evidence that the reduction in rate yield for district heating relief at line 16 has been properly stated and:
•	relates to properties used wholly or mainly for the purposes of a district heating network
•	has been awarded only where applications have been made?				
16	Have you obtained evidence that amounts included in line 17 in respect of enterprise area relief have been properly stated and:
•	relates to new properties or properties vacant for 3 months
•	relates to properties in enterprise areas
•	is in respect of specified activities
•	has been awarded only where applications have been made?

17	Have you obtained evidence that the reduction in rate yield for transitional relief has been properly stated and awarded only where applications have been received in respect of:
•	specified properties used for hospitality (line 18)
•	offices in Aberdeen and Aberdeenshire (line 19)?				
18	Have you obtained evidence that the reduction in rate yield for day nursery relief at line 20 has been properly stated and:
•	relates only to properties that are used wholly or mainly as a day nursery
•	has been awarded only where applications have been made
•	reflects 100% rate relief granted?				
19	Have you obtained evidence that the reduction in rate yield for Business Growth Accelerator relief has been properly stated and:
•	awarded only where applications have been received in respect of:
•	improved (line 21a) or new (line 21b) properties added to the valuation role after first occupation
•	newly added properties added to the valuation role having never been occupied (line 22)
•	reflects 100% rate relief granted?				
20	Have you obtained evidence that the reduction in rate yield at in respect of mobile masts at line 23 has been properly stated and: 
•	awarded only where applications have been received in respect of entries added to the valuation role from 1 April 2016 for lands and heritages occupied by a tower or mast used for electronic communication services in pilot areas 
•	reflects 100% of the rate relief granted?				
21.	Have you obtained evidence that the reduction in rate yield in respect of fibre infrastructure relief at line 24 has been properly stated and:
•	awarded only where applications have been received in respect of new fibre infrastructure for telecommunications
•	reflects 100% of the rate relief granted?				
22	Have you obtained evidence that the reduction in rate yield in respect of lighthouses at line 25 has been properly stated?

23	Have you obtained evidence that the reduction in rate yield in respect of hardship at line 26 has been properly stated and:
•	the authority is satisfied that the rate-payer would sustain hardship if relief was not granted, and it is reasonable to do so having regard to the interest of council tax payers
•	the relief has been awarded in line with the authority's policy
•	reflects 75% (or 95% in some cases) of the rate relief granted?				
24	Have you obtained evidence that the reduction in rate yield in respect of charities and other organisations at line 27 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy
•	reflects 75% of discretionary rate relief granted for up to 20% of charities bill 
•	reflects 75% of discretionary rate relief granted for other non-profit making organisations
•		separately reports 75% of discretionary rate relief granted to ALEOs at line 27a?				
25	Have you obtained evidence that the reduction in rate yield in respect of sports clubs at line 28 has been properly stated and
•		the discretionary relief has been awarded in line with the authority's policy
•	reflects 75% of discretionary rate relief granted for up to 20% of the bill for CASCs or sports clubs which are registered charities
•	separately reports at line 28a 75% of the amount of discretionary rate relief in relation to ALEOs included at line 28?				
26	Have you obtained evidence that the reduction in rate yield in respect of sports clubs at line 29 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy
•	reflects 100% of the discretionary rate relief granted for not for profit clubs, societies or organisations used for recreation
•	separately reports at line 29a the amount of discretionary rate relief in relation to ALEOs included at line 29?

27	Have you obtained evidence that the reduction in rate yield in respect of rural settlements at line 30 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy 
•	reflects 75% of the discretionary relief granted to properties with a rateable value of less than £17,000 which are of benefit to the local community? 				
28	Have you obtained evidence that the reduction in rate yield in respect of stud farms at line 31 has been properly stated and:
•	the discretionary relief has been awarded in line with the authority's policy
•	reflects 75% of discretionary relief granted on stud farms
•	established on or after 1 April 2003
•	with a maximum rateable value of £7,000?				
29	Have you obtained evidence that the authority considered the state aid implications of awarding discretionary benefits where de minimis levels have been breached?				
30a 	Where the authority does not take the option to report only the net change, have you obtained evidence that the reduction in rate yield in respect of bad or doubtful debts at lines 33 and 36 and the increase at line 45 have been properly stated and:
•	the write off of bad debts has been properly approved
•	provisions have been calculated on a reasonable basis 
•	line 33 reflects reductions to the yield for rates relating only to 2019/20
•	line 36 reflects reductions to the yield for rates relating to 1993/94 to 2018/19 
•	line 45 reflects increases in the rate yield for bad debts written off in previous years which have been collected or are now considered collectable?
OR
30b	Where the authority takes the option to report only the net change in bad or doubtful debts, have you obtained evidence that the adjustments in rate yield in respect of lines 33, 36, and 45 have been properly stated and
•	the write off of bad debts has been properly approved
•	provisions have been calculated on a reasonable basis 
•	line 33 reflects reductions to the yield for rates relating only to 2019/20
•	line 36 reflects any net reduction to the yield for rates relating to 1993/94 to 2018/19 
•	line 45 reflects any net increase in the rate yield for bad debts written off in previous years which have been collected or are now considered collectable?				
31	Auditors should obtain evidence that the reductions in rate yield in respect of appeals at line 37 have been properly stated and:
•	repayments are included only where an overpayment has been caused by error or an incorrect entry in the valuation roll
•	transitional relief has been taken into account where relevant?				
32	Have you obtained evidence that the reduction in rate yield at line 34 in respect of interest payable on overpayments has been properly stated and reflects amounts paid in the year?				
33	Have you obtained evidence that adjustments to the rate yield at lines 38 and 46 due to late changes to the valuation roll have been properly stated and:
•	relate to a preceding year and have not been taken into account in previous notified returns
•	line 38 reflects late deductions from the roll
•	line 46 reflects late additions now due? 				
34	Have you obtained evidence that amounts at lines 39, 40, 41 and 43 in respect of backdated relief have been properly stated? 				
35	Have you obtained evidence that any TIF income at line 49 is properly stated? 				
36	Have you obtained evidence that any BRIS income at line 50 is properly stated? 				
37	Have you obtained evidence that any other additions or reductions in rate yield at lines 43 have been properly stated and the reason notified to the Scottish Government?				
38	Have you confirmed that the notified amount at line 51 is the sum of the gross amount adjusted for reliefs, additions and deductions? 				
39	Have you obtained evidence that any figure for local rates relief is properly stated? 				

Completion procedures	Yes/No/N/A	Initials/date	W/P ref	
1	Have you concluded whether the return is:
•	fairly stated
•	in accordance with the relevant regulations? 				
2	Have you completed the auditor's certificate and included any qualified conclusions in a covering letter?				
3	Have you submitted the return, completed auditor's certificate and any covering letter to the Scottish Government by 6 October 2020? 				

Appendix 2
Rules for completing claim
The key source of guidance in respect of the return is the guidance notes provided by the Scottish Government which can be accessed by following the hyperlinks and can be downloaded from Audit Scotland's Technical reference library.

The following legislation provides the basis for the operation of NDR and the compilation of the return, but it should not be necessary to refer to them unless there is uncertainty or disagreement
•	Schedule 12 of the Local Government Finance Act 1992 sets out arrangements for payments to local authorities, contributions, and accounts.  It also confers upon the Scottish Ministers the power to make regulations.
•	The Non-Domestic Rating Contributions (Scotland) Regulations 1996 are the principal regulations which provide rules for the calculation of the contribution to the pool.
•	The Non-Domestic Rating Contributions (Scotland) Amendment Regulations 1997 amended the rules concerning discretionary relief for certain premises in rural settlements and the backdating of discretionary rating relief for charitable organisations.
•	The Non-Domestic Rating Contributions (Scotland) Amendment Regulations 1999 removed requirements no longer necessary as a result of the removal of crown exemption and introduced requirements for local authorities to calculate a separate sum for adjustments attributable to bad debts and appeals retrospectively for the period prior to and subsequent to devolution.
•	The Non-Domestic Rate (Scotland) Order 2019 sets the poundage rate for 2019/20.
•	The Non Domestic Rates (Levying) (Scotland) Regulations 2019 make provision for additional amounts due for properties valued at more than £51,000, and sets out reliefs where valuations are less than £18,000 under the small business bonus scheme.
•	The Non-Domestic Rates (Renewable Energy Generation Relief) (Scotland) Regulations 2010 introduced the Renewable energy relief scheme.
•	The Non-Domestic Rates (Renewable Energy Generation Relief) (Scotland) Amendment Regulations 2017  provide for a community benefit or new build requirement for renewable energy relief from 1 April 2017.
•	The Non-Domestic Rates (Renewable Energy Generation Relief) (Scotland) Amendment Regulations 2018 abolishes the new build requirement for renewable energy relief from 1 April 2018 and introduces a new 60% relief for hydro schemes from 1 April 2018.
•	The Non-Domestic Rating (Payment of Interest) (Scotland) Regulations 1992 provide for the payment of interest where an authority makes a repayment of rates.
•	The Non-Domestic Rates (Enterprise Areas) (Scotland) Regulations 2012 (as amended 2013, 2016) provide relief, to businesses in defined enterprise areas.
•	The Non-Domestic (Unoccupied Property) (Scotland) Regulations 2018 make changes on the rate relief available to unoccupied industrial and non-industrial properties.
•	The Non Domestic Rating (Rural Areas and Rateable Value Limits) (Scotland) Amendment Order 2010  sets out the designated areas for rural rate relief.
•	The Non Domestic Rates (Rural Areas)(Scotland) Regulations 2017 increase rural rate relief to 100% for qualifying businesses.
•	The Valuation (Stud Farms) (Scotland) Order 2005 covers discretionary relief for stud farms.
•	The Non-Domestic Rates (Steel Sites) (Scotland) Regulations 2016 provide for relief in respect of two addresses in Motherwell and Glasgow.
•	The Non-Domestic Rates (Telecommunication Installations) (Scotland) Regulations 2016 as amended in 2018 and 2019, provide for relief in respect of new tower or masts used for electronic communication services in mobile masts pilot areas to 31 March 2029.
•	The Non-Domestic Rates (Telecommunications New Fibre Infrastructure Relief) (Scotland) Regulations 2019  provide 100% relief from business rates for new telecommunication fibre infrastructure. 
•	The Non-Domestic Rating (Telecommunications New Fibre Infrastructure) (Scotland) Order 2019 provides that where new telecommunications fibre infrastructure are installed on land, separate entries are to be made on the valuation roll and separate valuations obtained for the new fibre infrastructure and for the existing land and buildings on the site.
•	The Non Domestic Rates (District Heating Relief) (Scotland) Regulations 2017 introduce a 50% application based relief in respect of property used for the purposes of a district heating network. Applications must be made in writing and be signed by the rat payer or person authorised to sign on their behalf.
•	The Non-Domestic Rates (Transitional Relief) (Scotland) Regulations 2017 introduce an application based transitional relief scheme for 2018/19 for some business sectors following the revaluation exercise applicable from 1 April 2017. The 2018 amendment regulations extend the scheme and make changes to former full relief, entitlements to splits, introduce a £1.5 million rateable value threshold for hospitality subjects and no longer cover renewable energy properties. The 2019 amendment uprated figures used to calculate the relief and also to make amendments to reflect that 2020 is a leap year.
•	The Non-Domestic Rates (Day Nursery Relief) (Scotland) Regulations 2018 introduce a 100% relief for properties used as a day nursery where a new entry has been made on the valuation roll on or after 1 April 2018.
•	The Non-Domestic Rates (New and Improved Properties) (Scotland) Regulations 2018 introduce a new 100% relief upon application for properties newly added to the valuation role after first occupation and for properties having never been occupied. 
•	The Non-Domestic Rates (Relief for New and Improved Properties) (Scotland) Regulations 2019  and the amendment regulations provide relief for improved properties in receipt of new build relief where the rateable value increases as a result of the improvements will not pay rates on the value attributable to the improvements until 31 March 2020. 
•	The Non-Domestic Rating (Valuation of Utilities) (Scotland) Amendment Order 2019  and the amendment order makes amendments for pieces of land that are occupied by fixed line operators and to be treated as if they are only one entry in the valuation roll, despite being situated across a number of areas covered by different rolls, and it also makes amendments to add solar and biomass as primary sources of energy in the generation of electricity.
•	Merchant Shipping Act 1995 provides 100% relief to lighthouses, buoys and beacons, and all premises or property belonging to or occupied by any of the general lighthouse authorities,

Appendix 3
External auditor's certificate
I/we have examined the entries in this non domestic rates income return for 2019/20 and the related accounts and records of [insert name of council] in accordance with Technical Guidance Note TGN/GEN/20 and Technical Guidance Note TGN/NDR/20, and have obtained such evidence and explanations, and carried out such tests, as I/we have considered necessary. 
Except for the qualification(s) set out in my/our letter dated…………….., I have concluded that the return is 
•	fairly stated
•	in accordance with the relevant regulations. 

Signed…………………………………….. (Audit Appointment Lead) 
Date……………………………