Government plans for reforming business rates’ appeals will create a system that is “more confrontational, more litigious and more costly,” according to Colliers International, the global commercial real estate agency and consultancy, in a letter to Treasury officials.
Colliers is calling on the Government to consider three-yearly revaluation in order to produce a more accurate rateable value, and to reduce the need to appeal. Research from Colliers shows the backlog of appeals is rising, with a 113.69 per cent increase in outstanding appeals in the 12 months from Q4 2013 to Q4 2014.
Bristol is among the ten councils with the highest rating appeals backlog in the UK, with 2,760 cases outstanding at Q2 2015. It is the ninth highest in the UK, and the fourth highest outside London.
Rating director Steve Plowman, who is based in Bristol and covers the South West and South Wales, said: “The South-West faces a huge backlog in business rating appeals, with Bristol City Council within the top ten local councils with the highest level of outstanding appeals.
“The current system has resulted in long delays in challenges to the rates payable by local businesses. A chronic shortage of resources within the Valuation Office Agency (VOA) who administer the Rating List has left businesses high and dry. The VOA appear more concerned with following processes than making a genuine attempt to resolve ratepayer grievances. It may take several years to clear the backlog.
“The situation for business ratepayers is likely to get worse if proposed reforms to the current system are implemented. Currently the burden of proof already falls heavily on the ratepayer but this is set to increase if the new ‘check, challenge, appeal’ system comes into force with the new Rating List due in 2017.”
It is understood that the government is now analysing feedback following a two-month consultation on reforming the rates’ system, which it believes would make it “quicker, clearer and a more transparent service.” However, in a letter to Treasury officials, Colliers has claimed that the proposed changes will severely reduce the rights of ratepayers to challenge their assessments.
John Webber, Head of Rating, Colliers International, commenting on the letter to Treasury officials, said: “With revaluations only every five years, we have clearly created a culture of appeals. We are calling on government to seriously consider three-yearly revaluation as a way of producing a more accurate rateable value, thereby suppressing the need to appeal.”
In addition, extra-funding is required for the Valuation Office Agency (VOA) in order to deal with the unacceptable backlog of appeals.
Webber continues: “Given there is in excess of 289,000 outstanding business rates’ appeals, it is in everyone’s best interests to reform the system. But what we mustn’t do is create a scheme which almost prevents a ratepayer from challenging an assessment.”
“Business needs certainty and deserves equality – two major planks of any system of taxation. Colliers’ proposals to move to three-yearly revaluation will reduce the level of appeals, while making it easier for legitimate challenges to business rates’ assessments to be dealt with more efficiently.”
In December 2015, Colliers published ‘Business Rates: How the 2017 Rating Revaluation will affect High Street Retailers’. This major study highlighted the likely effects of forthcoming business rates changes for retailers across the UK.
Colliers Manifesto for Business Rates Reform:
More frequent revaluations, three-yearly, at least, by 2023;
Increase funding for VOA in order to deal with existing appeals’ backlog;
Release VOA from pressure exerted by local councils and HM Treasury;
Introduce a register of appeals professionals – removing the ‘cowboy’ element;
Iron out inequalities where small business pays a higher proportion in business rates;
Root and branch reform of current business rates exemptions and reliefs.