A Nottingham Surveyor has branded a Supreme Court ruling to overturn a landmark decision on business rates as ‘another blow for business ratepayers’.
The ruling means companies occupying multiple but unconnected floors in a building could now face higher charges.
James Bailey, partner at Bruton Knowles in Nottingham, says now is the time for a major shake-up of the business rate system.
He said: “This case has been rumbling on for a number of years and rating consultants and tenants have been eagerly awaiting the outcome as it will set a precedent for future rating appeals involving occupiers of multiple but potentially unconnected floors.
“Sadly, for those occupiers it looks like any hope of being able to appeal for a reduction on the business rates they pay has been dashed.”
Accountancy firm Mazars, which has offices on the second and sixth floors in Tower Bridge House in London, had successfully argued at a Valuation Tribunal and Upper Tribunal that the two floors should be treated as one for the purpose of setting business rates.
The floors are separated by common areas in the building and were assessed separately in the 2005 rating list.
By merging the floors a reduction of the total rateable value would be possible as lower rates may be applicable for a larger occupation.
The Valuation Office Agency (VOA), which advises the Government on property valuations for the purposes of taxation and benefits, challenged the decision in the Supreme Court, with the Court ruling in favour of the Valuation Officer, who argued the two floors are not connected and should therefore be rated separately.
“Whilst the decision may be the right one if you stick to the absolute letter of the law, unfortunately it lacks any common sense and only serves to highlight just how out of touch the Valuation Office is with the business community and modern day office practices,” James added.
“This is yet another blow for ratepayers and has the potential to stifle future business growth. It’s almost as if the Valuation Office has an anti-business agenda.
“This case highlights the flaws and inflexibility in the current system,” he said.
“Rateable Values (RVs) along with the current Uniform Business Rates (UBR) sets what the ratepayer is liable for year on year. The RV, in most cases, is arrived at by establishing what is essentially a hypothetical rental value of the property at a specific point in time.
“What we need instead is a fairer system in which the calculated rateable value takes into account the type of business in occupation and not just the space they occupy at a snap shot in time.”
