Great British business rates debacle hits offices, says Colliers

Outstanding business rates appeals by year

An estimated 20,000 business rates payers will be forced to remove their appeals in the latest Supreme Court decision on business rates, according to Colliers International, the global commercial real estate agency and consultancy, having seen a leaked VOA internal document.

For 60 years, a business that occupied more than one floor of office space in a building with multiple firms, had its business rates assessed as one unit and was also eligible for a quantum or bulk discount of up to 15 per cent.

The Supreme Court has overturned this long-standing protocol at the request of the Valuation Office Agency (“VOA”) and, in a leaked VOA document, valuation officers have now been instructed to assess each and every floor individually for business rates.

As a result, an estimated 20,000 business rates appeals – around eight per cent of the 280,000 outstanding appeals – must now be withdrawn while the VOA splits existing assessments. However, because of the Chancellor’s one-off rates cap, any fresh appeals will be capped to April 2015, denying ratepayers their legitimate right to appeal from the start of the last valuation.

A detailed analysis of Canary Wharf in London by Colliers International has shown an estimated £17 million business rates windfall over two years for Tower Hamlets council. Nationally, the potential increase may be somewhere in the region of £200 million going back the last valuation in 2010.

John Webber, Head of Rating, Colliers International, said:

“60 years of pragmatism is being washed down the drain just so firms up and down the country can be milked for more money.

“In a masterstroke, the VOA has been able to delete eight per cent of outstanding business rates appeals, remove bulk discounts and extract what might be over £200 million in business rates revenue for cash-strapped local councils.

“It is a ratepayer’s right to challenge their business rates valuation. But with the cap now in place, the clock ticking for new appeals and this major change to how we assess this type of tenant, it is businesses who will be caught in this scandalous ‘catch twenty-two’.

“Today, we have written to the VOA requiring them to expedite the process of splitting out the hitherto joint assessments. And we fully intend to re-lodge appeals on behalf of clients who, quite rightly, will be feeling the unfairness of the Supreme Court ruling.”

Colliers also recently 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:

1.     More frequent revaluations, three-yearly, at least, by 2023;
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.