p.12 talking shop 8:FOOTWEAR NEW TEMPLAT 10 08 20/07/2009 13:22 Page 12
TALKING SHOP
Business Rates Revaluation –
Prepare to Appeal
B
y the end of September you will have received notifica- contributions from landlords. It is at this point that occupiers
tion of the new rateable value for your premises; this may be able to avoid arbitrary tax by querying or appealing
value is used to calculate your business rates charge. If against the rateable value of their property. Any changes to
you ignore the notification you are virtually guaranteed the neighbourhood or the property which may have affected
to pay much higher business rates. Those that appeal stand a the value of the premises can be reported; the Valuation
good chance of keeping the rise at bay. Office Agency will then investigate further.
Property costs are often the main expense for UK Whilst there has so far been no blanket reduction in
businesses. On top of rents and service charges, occupiers business rates to reflect the reduction in rents due to the
have to pay occupier taxes. Known as business rates, uncertain economy or the abolition of empty rates relief, it
compulsory contributions to the cost of local authority serv- may still be possible to contend, on a case-by-case basis, that
ices are generally in the region of 40% of the yearly rent. the changes to the empty rate relief legislation impact on a
Business rates are calculated by multiplying the ‘rateable property’s rental value. For example, the rateable value of a
value’ of each non-domestic property by a multiplier set property could be reduced if it came onto the rental market
yearly by the Government in response to inflation. The because of the change in the empty rates legislation.
rateable value is reassessed every 5 years, and business rates If the outcome of any further investigation is still unsatis-
are altered accordingly, in order to track changes in the factory, an occupier can formally propose to alter their
property market. property’s rating. A three month period will then ensue
In April 2008 the rateable value of all of the UK’s 1.8 during which most cases are likely to be settled by agreement.
million commercial buildings was re-assessed by the Valua- However, if no agreement is forthcoming, the case will be
PHILIPPA ALDRICH tion Office Agency (an agency of the Inland Revenue). In automatically referred to the local valuation tribunal where
AND CLAIRE April 2010 this revaluation will be implemented. Although
the appeal will be heard. Three weeks before the hearing, an
MACDONALD
values will not be confirmed until September 2009, based on appellant will be informed of the rents of similar properties
the open market value of commercial property in April 2008 that may be used by the valuation office to justify their valu-
and the general trend of rising rents since the last revaluation ation. An agreement can still be reached at any time. If a case
in 2003, it is highly likely that for the majority of occupiers gets to the hearing stage, the appellant does not have to at-
business rates will rise. tend. They can state their case in writing. However, attendance
On top of all of this, legislation abolishing empty property may be wise, just in case any further information is required.
rates relief came into force on April 1 this year. Occupiers Business rates must continue to be paid whilst the appeal
with vacant retail or office premises must now pay full process is underway and until a decision has been reached. If
business rates on spaces which are empty for more than three an appellant is suffering particular hardship there is a chance
months. Previously, after 3 months only 50% rates were that the process can be sped up. Ultimately, if a case is
payable. Warehouses and factories will benefit from 100% successful, the relevant council will refund any overpayment,
relief for only six months before again facing full business with interest. The tribunal is free. Occupiers must however
rates. Industrial buildings used to enjoy 100% relief from bear in mind that a reduction in rateable value, unfortunately
business rates no matter how long the space stood empty. does not always mean a reduction in business rates.
It is yet to be seen whether the Government will take lower In order to stand the best chance of paying fair and
rents into account when calculating the new 2010 business accurate business rates in the future, it is essential that
rates. If not, occupiers will face inflated rates rises in 2010 at occupiers start gathering information on the impact of the
a time when rents have fallen below April 2008 levels. empty rate legislation and collate records of rental incentives
And occupiers will face a further blow from April 2010 being given locally. It is worth also considering appointing a
when local authorities will be allowed to levy a business rate rating agent who can value the property, identify grounds for
supplement of 2p in the £1. a rates reduction, complete the proposal and act as a point of
So what can occupiers do? In September 2009 the Valua- contact with the local valuation office. Any rating agent
tion Office Agency will publish the new rateable values on should have detailed local knowledge of procedures and any
its website. Before it comes into effect, occupiers will have six local conditions which may affect values.
months to check that the valuation of their property is based
on factually correct information. The rateable value should • PHILIPPA ALDRICH AND CLAIRE MACDONALD
reflect the net effective rent of a property and take into Philippa Aldrich is a partner and Claire Macdonald is a
account any incentives such as rent free periods or cash trainee solicitor in the Real Estate Group of Shadbolt LLP.
12
•
FOOTWEAR TODAY
•
AUGUST 2009
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72