West Midlands commercial property specialists Bulleys report on the Enterprise Bill currently under consideration in Parliament:
There is widespread agreement that the Business Rates Appeal system is in need of reform and that too many appeals are made with little supporting evidence and take too long to be concluded. The Enterprise Bill had its second reading in the House of Commons on 2 February 2016 and recommends a reform built around an initial ‘Check’ and ‘Challenge’ to the Valuation Office Agency (VOA) before proceeding to the Valuation Tribunal for an ‘Appeal’.
The ‘Check Stage’ will ensure the property’s rating assessment is based on accurate and up to date facts and the ‘Challenge Stage’ will allow the ratepayer to challenge the assessment whereby the VOA will consider and issue a decision on whether the assessment can be altered. Only then will the ratepayer be able to appeal his assessment to the independent Valuation Tribunal.
Further changes proposed include fines for ratepayers providing inaccurate information and being charged an upfront fee to proceed to the ‘Appeal Stage’.
As part of the ‘Check Stage’, the intention is to provide ratepayers with individual personal protected access codes to a new Government portal via personal computer log in information. It is anticipated that ratepayers or their rating advisers will not be able to access comparable valuations for other ratepayer’s assessments via the VOA website, as present.
The key driver for Government appears to require a system which works more efficiently so that the cost can be reduced. However, at the same time, the rating system should provide an easy to use and prompt opportunity for ratepayers to understand their Rateable Value and to check and challenge it if necessary with alterations concluded as quickly as possible.
What is most essential is that the relevant rental evidence upon which assessments are based is provided in the public domain. However, the current proposals for change place the burden of proof on the ratepayer to provide all necessary information, and failure to do so can result in a fined.
Given that there is a growing consensus that the life of a Rating List should be shortened with revaluations every 3 years rather than 5 or 7 years as was the last case, the current proposals will also lead to unacceptable delays whereby it is proposed that the ratepayer will not be able to proceed from the ‘Check’’ to the ‘Challenge’ stage for at least 12 months, where after the VOA are able to take a further 12 months to respond before an appeal can be submitted to the Valuation Tribunal. If 3 yearly revaluations were introduced to reduce the variations in the property market this could potentially result in a situation where very few appeals are settled before the next Rating List is to be been implemented.
The ‘Check Stage’ may also further encourage unqualified advisors who will charge an upfront fee for carrying out a “Check”, of no more than logging into the Government web portal and reporting that “the assessment is correct”. Further insult would then be added that under the proposals, the right to make a subsequent ‘Check’ and ‘Challenge’ will have been lost by the by the actions of the unqualified advisor.
The proposal of imposing penalties regarding provision of incorrect information by ratepayers is also not necessary. There is already a lack of understanding completing the current rent return forms which leads to errors or accidental mistakes being made. Such a proposal may encourage ratepayers to withhold completing the forms and providing useful information at an early stage which will be counterproductive.
The proposals also include charging an ‘appeal fee’ of approximately £300 – £500 which although can be refunded for successful appeals is unclear on refunds for partially successful appeals and also does not cover any additional costs incurred by the ratepayer. This proposal will form a disincentive, particularly for small individual ratepayers who will have to commission and pay for a full survey and valuation adding further delay to the appeal process.
The system proposed makes the rating appeal system more difficult and costly albeit discouraging the number of spurious appeals submitted. If there is a genuine desire to deal with the issues before an appeal, the VOA will need to provide the necessary rental information at the ‘Check Stage’ and also receive an increase in its current resources to enable it to respond to ratepayers during the ‘Check’ and ‘Challenge’ stages. In our opinion, if the VOA provide the evidence at the initial ‘Check Stage’ then appeals will lessen considerably as a consequence.
2017 Business Rates Revaluation
The VOA are currently well underway with preparing, collecting and analysing rental information for the revaluation of over 1.8million commercial properties across England and Wales to be effective from 1st April 2017.
The last revaluation undertaken was in 2010 based on rental information 9 years ago in 2008. A lot has changed since then including the UK entering into a double dip recession and more recently a significant improvement in the commercial property market.
As a result, there have been diverse changes in property values across all sectors during this time which will potentially lead to errors and inaccuracy by the VOA when determining ratepayer’s new assessments. Consequently, we believe there is considerable scope for appealing and reducing ratepayer’s rate liability going forward.
Ratepayers need to be aware of the following ‘key dates’ in the lead up to the 2017 revaluation as follows:
February 2016
Uniform Business Rate Multiplier to be confirmed.
Estimated 0.497 pence in the pound. Current 0.493 (RV’s over £18,000)
Estimated 0.484 pence in the pound. Current 0.480 (RV’s below £18,000)
The Enterprise Bill – Business Rates Appeals Reform has its second reading in the House of Commons.
March 2016
2016/2017 Business Rates Demands are issued to Ratepayers.
16 March – Summer Budget
The Department for Communities and Local Government (DCLG) report into the Business Rates Review to be announced.
31 March
Appeals for alteration made after this date will only be backdated to 1 April 2015 unless the appeal was lodged before this date.
September 2016
Announcement on the estimated Uniform Business Rate Multiplier for 2017/2018.
30 September
The draft 2017 Rating List is published ‘on line’ when assessments should be checked for any factorial errors.
1 April 2017
The new Rating List comes into effect.
Check, Challenge and Appeal if necessary.
Business rates are a major occupational cost and yet surprisingly many ratepayers do not check the accuracy of their assessment. Furthermore, changes in the use of business premises and ever-changing complex legislation such as the Enterprise Bill will have a significant financial effect on business occupiers.