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Explanatory note

Original text. Later amendments are not shown.

(This note is not part of the Order)

Prior to the financial year commencing on 1st April 2013, the Local Government Act 1988 (“LGFA 1988”) required non-domestic rates collected by local authorities to be paid over to the Secretary of State who then redistributes them. The operation of this pooling system was governed by Schedule 8 to the LGFA 1988. The Local Government Finance Act 2012 replaced this system in England with a system for the local retention of non-domestic rates. This Order makes provision for accounting arrangements for the transition between the two systems.

Under Part 1 of Schedule 8 to the LGFA 1988, the Secretary of State was required to keep an account for each financial year, called the non-domestic rating account. The purpose of this account was to demonstrate the operation of the pool by recording all payments into and out of it. At the end of each year any balance on the account was transferred to the account for the following year. Each account was audited by the Auditor and Comptroller General.

Part 1 of Schedule 8 to LGFA 1988 has been amended by the Local Government Finance Act 2012 so that it does not apply in England to financial years commencing on or after 1st April 2013. There is therefore no requirement for the Secretary of State to maintain a non-domestic rating account for 2013-14 (although the rates retention system imposes similar requirements in relation to the operation of that system).

This Order requires the Secretary of State to record payments that relate to years in which the pooling system was in place, but are not made until the financial year commencing on 1st March 2013 in an account, to be called the non-domestic rating transition account. It makes arrangements for the audit of this account and the laying of the account and audit report before Parliament. Article 4 provides for the balance on the non-domestic rating account for 2012/13 to be transferred to this transition account.

An impact assessment has not been produced for this Order because no impact on the private or voluntary sectors is foreseen.