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The committee has been asked to provide further clarification around its practice note published on 6 April 2018 on NPPR.

The confusion arises because unpaid NPPR is a charge on property. Accordingly, it is necessary, on the sale of a residential property to which the legislation applies, to account for NPPR for each of the five years from 2009 to 2013 inclusive. As pointed out in the previous practice note, on a sale of a principal private residence (PPR), prior to 1 January 2012 (the date that of the Local Government (Household Charges) Act 2011 came into effect), it was not possible to obtain a Certificate of Exemption, as the requirement to furnish a Certificate of Exemption on the sale of a PPR was only introduced by the 2011 act.

Large numbers of residential properties changed hands between 2009 and 2011 where, if there was no liability to the tax, a statutory declaration confirming that the property was a PPR was (in accordance with recommended practice) provided by a vendor.

Section 8A(4) of the Local Government (Charges) Act 2009 (as inserted by section 19(1) (j) of the 2011 act) introduced a requirement that a vendor furnish either a Certificate of Exemption or Discharge on the sale of a property to which the legislation applied in respect of each year in which a liability date fell since the date of the last sale of the property. In an effort to assist the profession, the committee has set out a number of examples.

First sale of a PPR since 31 July 2009

On the first sale of a PPR since 2009, where the property was the PPR of the vendor from 31 July 2009 to 31 March 2013 (inclusive), the vendor must furnish a Certificate of Exemption to cover all years from 2009 to 2013.

Second sale of a PPR since 31 July 2009, where the property was previously sold on or after 31 July 2009 but prior to 1 January 2012

Mr Smith is selling his PPR that he purchased from Mrs Jones in December 2010. The property was Mrs Jones’ PPR from 31 July 2009 to December 2010 and, on closing, Mrs Jones, in accordance with the recommended practice at that time, furnished a statutory declaration declaring that the property was her PPR on 31 July 2009 and 31 March 2010. On selling the property in 2019, Mr Smith now provides the following:

• A Certificate of Exemption for the years 2011, 2012 and 2013 to cover his period of ownership,
• The statutory declaration of Mrs Jones covering the period of her ownership (2009 and 2010).

There is no need to obtain and furnish a Certificate of Exemption to cover the period of ownership of the first vendor in 2009 to 2010, as furnishing the Certificate of Exemption to cover the current vendor’s ownership (2011 to 2013 inclusive) complies with the requirement in section 8A(4) of the 2009 act to furnish such a certificate. The statutory declaration of Mrs Jones is acceptable evidence that there is no NPPR charge on the property for the years 2009 to 2010.

Second sale of a PPR since 31 July 2009 where the PPR was previously sold on or after 1 January 2012,/h2>

Mr Murphy is selling his PPR that he purchased from Mrs Doyle in July 2012. The property was Mrs Doyle’s PPR from 31 July 2009 to July 2012. As that sale completed after the enactment of section 19 of the 2011 act, Mrs Doyle furnished a Certificate of Exemption in respect of the NPPR tax for liability dates 31 July 2009, 31 March 2010, 31 March 2011, and 31 March 2012 to Mr Murphy on closing. On selling the property, Mr Murphy now provides the following:

• A Certificate of Exemption to cover his period of ownership (31 March 2013),
• The Certificate of Exemption received from Mrs Doyle in respect of her period of ownership (2009 to 2012).

NPPR

Prior to 1 January 2012, the legislative requirement on the sale of an NPPR was to obtain and furnish a receipt for payment of the charge and/or a letter of discharge of the statutory charge from the local authority. The 2011 act introduced the requirement that a vendor furnish either a Certificate of Exemption or Discharge on the sale of a property to which the legislation applied from the date of the last sale. In practice, for simplicity, solicitors for vendors are furnishing the receipts to local authorities and obtaining Certificates of Discharge in respect of those years.

First sale of an NPPR since 31 July 2009

On the first sale of a property since 31 July 2009, where the property was not the PPR of the vendor from 31 July 2009 to 31 March 2013 (inclusive), and where an exemption is not claimed, the vendor furnishes a Certificate of Discharge of the tax for the years 31 July 2009 to 31 March 2013.