Today Parliament is legislating on the second reading of the Non-Domestic Rating (Lists) Bill which will implement the Chancellor’s Budget promise to bring forward by one year the next revaluation for non-domestic rates in England and Wales to 1 April 2021.
The idea is that more frequent revaluations will ensure that business rates bills are more up-to-date in reflecting property values, and the bill will also shift to 3-yearly cycle of revaluations.
However according to John Webber, Head of Business Rates at Colliers International, the global property advisors, this measure alone will merely scrape the surface of a current business rates system that needs much more drastic reform. As evidenced in the carnage in the high streets today the impact of the delayed 2017 Revaluation which brought about the largest changes to business rates in a generation, over reliance on raising business rates taxes from the retail sector and an appeal system “not fit for purpose,” are having a deep impact on businesses, which a move to three yearly valuations will do little to stem.
As John Webber, said, “While we welcome the announcement that more frequent revaluations will be enshrined in legislation, even the VOA / VTS and MHCLG* fully expect 2017 Rating List appeals to be outstanding at the end of 2021 Rating List and into the 2024 Rating List. It seems pointless having more regular revaluation if you don’t resource it accordingly and provide ratepayers with an IT system that works.“
Webber is referring to CCA**, the “new” on-line rating appeals system introduced in 2017, which two years on, is still failing those trying to appeal their business rates. According to a series of FOI Requests about the system made by Colliers International to the Government’s Valuation Office Agency (VOA) concerning “Find My Business Rates” and the three part : “Check Challenge Appeal” system 87% of users trying to get their business rates checked have been dissatisfied or very dissatisfied (17% and 70% respectfully) out of 2928 respondents in the first 22-month period since CCA was introduced on April 1st 2017.
And in four pages of comments about the system respondents seem most frustrated about the lack of clarity about how to navigate the system and the lack of opportunity to provide comment or explanation about their individual cases and why they are appealing the rating valuation; “There is no opportunity to explain what I actually need to tell you, or need from you. A window such as this would be helpful.” said one appellant.
Their complaints are backed up by the VOA’s own figures that show that in the two-year period since the system was introduced (April 1st 2017 to March 31st 2019) that the number of appeals started in the two years since the 2017 rates revaluation (and since CCA came into play) have fallen drastically compared to the corresponding period following the 2010 revaluation. Indeed, proceedings to challenge VOA business rates assessments have only begun on only 82,400 (Checked) properties in England, which reflect less than 5% of the 1.88 million properties assessed for business rates. There were 440,000 appeals (over 5 times as many) in the same period after the 2010 Rating list.
And of those on the next stage – 12,930 Challenges that have now been registered only around 37% (4,740) of these have been resolved and 6,980 are outstanding. Colliers points out that the 4,740 challenges cleared averages out at less than 198 a month, in the two-year period since CCA began
“Over complicated procedures, lack of guidance and a largely un-navigable new on-line portal discouraged many companies from starting the whole CCA process, despite many with good cases for challenging their bills,” said John Webber, Head of Business Rates at Colliers International. “It now looks like more companies are now gritting their teeth and are registering, but the slow rate at which they are being processed is alarming.”
“At the very least businesses now need to employ agents to help them get through the system, whereas before many could appeal directly themselves.”
CCA was introduced on the day the largest changes to business rates in a generation were published in April 2017. This included significant rate increases across London and the South East alongside a downside transitional scheme for the rest of the UK that offered little respite to rate payers in the depressed areas. This has caused chaos and economic difficulty for many businesses, particularly retailers – as reported in the latest business news.” The fact that it is so difficult to appeal against rates bills comes as a bitter pill on top of the massive rises so many have seen.“
Colliers also point out that lack of manpower at the VOA as an issue too. When the VOA introduced the new CCA system it thought it would be able to shed numbers and several employees “retired.” However, the VO has now been contacting former staff with a view to returning to help with the backlog it is knows it will face with the 2017 list and with the 2021 list on the way too.
As John Webber continues, “We have heard that because the VOA does not have the manpower to turn around the checks in the system quickly enough, it is “parking” some of the earlier submissions and concentrating on new ones coming in, which is distorting the figures. People are calling 2017 “The Lost List” because so few appeals are getting through.
“We are also worried that some companies may miss the deadline for the 2017 list as this deadline date is now being disputed. We therefore suggest that if businesses have any concern about their rate bills, they get CCA in now.”
As Webber concludes, “Lack of planning, insignificant time to trial the system before it went live and apparent lack of desire by the government to engage with agents and their software providers and crucially now a lack of manpower has resulted in an appeal system unfit for purpose, however the VOA tries to dress up the figures.
With the 2017 rating revaluation producing some of the largest increases in liability in a generation, and 2018/9 and 2019/20 building up further rises, it appears this government has proved again that it neither understands the pressures facing businesses or has a willingness to act on calls to change.
“Moving to three yearly revaluations from four or five yearly will only work if the VOA has the manpower and technology to cope with the extra work. So far it sadly doesn’t look likely and things are only going to get worse. If this is the only measure the Government is going to introduce to “save the high street” then this is worrying indeed.”