Business rates

Business rates - what’s gone wrong?

It has been argued by the Government that the present rating and appeal systems are outdated. At the moment, anyone wishing to submit an appeal simply has to state if the assessment is excessive, incorrect or unfair, with minimal explanation as to why, in order to have their appeal dealt with. This has led to 900,000 appeals against the 2010 business rates listing with 250,000 of these still outstanding. Of those appeals that have been settled, 70% resulted in no change to the rateable value.

At present, commercial properties with a rateable value of &6,000 or less can qualify for 100% small business rates relief (SBRR) providing they fit the criteria. Further relief is available for those properties that have a rateable value of between &6,001 and &12,000 with the achievable discount being tapered.

Currently, those properties with a rateable value of between &0 and &18,000 have a multiplier of 48p in the &1 applied. For any properties with a rateable value higher than &18,001, the higher rate multiplier of &0.493 in a &1 is applied.

The key changes

The Government has committed to increasing the level for which businesses can qualify for 100% SBRR up to a rateable value of &12,000. Properties with a rateable value between &12,001 and &15,000 will potentially be able to qualify for relief with the discount again on a tapered basis. The threshold for which rateable values will be multiplied by the standard business rates multiplier of &0.48 will increase from &18,000 to &51,000.

The new appeal process – Check, Challenge, Appeal

Check

There will now be only one opportunity to check a rateable value once revaluation has taken place. The checking process will take up to twelve months to conclude, with fines payable for providing false information regarding property specifics and measurements.

Challenge

An application to challenge the rateable value must be completed within four months of the end of the check process. Instead of being able to state briefly why the rateable value could be wrong as before, the rates payer must now provide an alternative valuation which must include all rental evidence, a complete argument to justify the appeal and any relevant case law.

Appeal

Following this, the appeal stage could take up to eighteen months for a resolution to be reached. There will be one opportunity to appeal this decision within four months of the initial appeal decision, with a fee of up to &300 payable which will be refunded if the appeal is successful.

Comments

It is clear that the Government intends to make it much more difficult and technically-based to successfully appeal a rateable value. In our opinion, it is difficult to see how the Government has settled on this new Check, Challenge, Appeal process as many businesses were calling for more transparency and a shorter appeal process with local government also calling for a shorter process but higher application fees and fines for the provision of incorrect information.

The changes here will make it more challenging to successfully win an appeal of a listing in a timely manner, particularly with regard to the additional expertise required when submitting an application.

The revaluation will have ring-fenced a considerable amount of people who were not paying rates previously, with particular focus on the renewables market. We have already received a number of instructions and acted successfully in giving business rates advice for rural clients with solar farms, wind turbines and other renewable energy schemes.

Timeline

If you are liable for the payment of business rates, you should have already received a document requesting further information in order to ascertain the rateable value of your entity. We would strongly advise that you respond to this document, if you would like any assistance or advice on how to do this, our team are here to advise you. In the absence of complete information, in our experience, the Valuation Office Agency (VOA) has only proceeded to assume worst case scenarios. This has inflated rateable values and the amounts owed with incorrect commission dates on renewable projects.

The VOA is in the process of completing the 2017 Business Rates list and will spend the next few months liaising with local government to confirm the 2017 uniform business rates (UBR) multiplier. At present, we understand that draft 2017 rateable values will be published on 30 September 2016. Representations can then be made to the VOA in order to make any changes that are required.

Between October 2016 and March 2017, revised draft rateable values will be published which will give rate payers one last opportunity to check their rateable values and inform the VOA of any clear factual errors. During this period, we also expect the announcement of the UBR multiplier for 2017/18 and any transitional or regional adjustment arrangements which will be made.

We understand that, as of 31 December 2016, the Government is to clarify its full review of the rating system and publish it in the public domain.

The new rating list will be published on 1 April 2017 with all values becoming effective immediately. Appeals can then be submitted against a rates listing.

Further information

If you would like to discuss a potential instruction or have any questions about business rates, please contact Rob Haigh of the Commercial team here.

Published in: Fisher German Newsletter Summer 2016

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