The latest government plans to reform the business rates’ appeals system will all but remove the ability of business owners to appeal their business rates’ bill, according to Colliers International, the global commercial real estate agency and consultancy.
Published at the height of the summer recess, ‘Check, challenge, appeal – reforming business rates appeals – consultation on statutory implementation’ makes clear the government’s intention to introduce its wide-ranging programme of business rates’ appeals’ reform from 1 April 2017.
These latest proposals will prevent Valuation Tribunals from amending the Rateable Value of a business unless it is “outside the bounds of reasonable professional judgment.”
So, for a business with a Rateable Value of £100,000 that believes its rates’ bill should be £90,000, the Valuation Tribunal would now be directed to rule that because the figures are within the same ball-park i.e. 10 to 20 per cent, that the higher figure is allowed to continue, denying a proper appeal based on the evidence presented.
John Webber, Head of Rating, Colliers International, said:
“For businesses with a £200m portfolio, an unchallengeable 20 per cent margin of error is going to pile tens of millions of pounds on to business rates bill. And at a time when many firms, particularly in London and the South East, can expect their bills to skyrocket, this adds insult to injury.”
These new regulations would also have a significant impact on Material Change in Circumstance (MCC) appeals. Currently, if a business lodges a MCC appeal (it might be the road outside a shop is being dug up or, for a hotel, another hotel opens), the appeal is usually for a reduction in rates of less than 10 per cent. Under the new system, an MCC appeal would effectively disappear if it were to reach the Valuation Tribunal, as it would be within the new “bounds of professional judgment” test.
Webber continues:
“This clear infringement of a rate payer’s right to appeal their Rateable Value must not be allowed to form part of the government’s business rates’ appeals’ whitewash. And with only weeks to go until the VOA publishes new Rateable Values for every non-domestic property in the country, 300,000 businesses are still awaiting decisions about appeals lodged up to seven years’ ago. These proposed regulations are very draconian.
“We are urging all businesses to respond to this consultation in no uncertain terms. The government must stop this direction of travel aimed at making it near-impossible for rate payers to contest their business rates.”
Colliers has said previously that the government’s decision to delay the last revaluation will come home to roost in a matter of weeks with massive business rates hikes across London and the South East. This will leave HM Treasury with no alternative except to introduce significant relief to ease the pain.
The government is expected to publish the new draft 2017 rating list on 30 September; providing every company with its ‘Rateable Value’. Colliers is still campaigning for genuine business rates reform including the need to offer more funding to the Valuation Office Agency (VOA) so it can deal with the estimated 300,000 outstanding business rates appeals in the system.
Colliers Manifesto for Business Rates Reform:
1. More frequent revaluations, three-yearly, at least, by 2022;
2. Increase funding for VOA in order to deal with existing appeals’ backlog;
3. Release VOA from pressure exerted by local councils and HM Treasury;
4. Introduce a register of appeals professionals – removing the ‘cowboy’ element;
5. Iron out inequalities where small business pays a higher proportion in business rates;
6. Root and branch reform of current business rates exemptions and reliefs.