EXECUTIVE REPORT
Rating the business
Some hirers could find their business rates rising following recent changes to valuation system. Adam Bernstein discusses the implications and the appeals process.
Every five years the valuations of property which form half of the business rates bill calculation are revisited. The last revaluation took place in 2010 when the economy, commercially, was on its knees. The process was due to be revised in 2015 but was delayed until April 2017 - and not everyone is happy.
The actual bill that businesses receive is a multiplication of the rateable value of a property and the multiplier (‘the rate in the pound’) set by central, not local, government. In terms of the 2017 revaluation, the draft list was made available in September 2016 online at
www.gov.uk/correct-your-business-rates. While some saw their rates drop, others experienced the opposite, particularly in and around London and the South East of England, and other conurbations.
For some time, business has called for a review and help for those needing assistance paying their bill. The former chancellor, George Osborne, announced some reforms in the March 2016 Budget. As a result, from April 2017, those businesses occupying a single property with a rateable value under £12,000 are exempted under small business rate relief (SBRR) from their business rates bill. Those that occupy a single property with a value between £12,000 and £15,000 will be given tapered relief. Those occupying properties with a rateable value between £15,000 and £51,000 will be charged according to the small business multiplier.
The government has further recognised that a sudden change for those leaving SBRR might prove too damaging. In the March 2017 Budget, the chancellor promised to cap business rate rises for them at £50 a month. There is also to be a £300m discretionary relief fund available to local authorities to tackle other rates-related issues in their areas.
Appealing a valuation
The old (2010) revaluation appeal system has become slow and filled up, from the Valuation Office Agency’s point of view (as administrator of the business rates regime), with spurious attempts to reduce business rates that have little chance of success. To speed the process, the government has introduced a tougher
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system, called ‘Check, Challenge, Appeal’, which effectively means that those wanting to lodge an appeal will have to invest time at the start of process and will find it harder to introduce evidence later.
To begin, the ratepayer must supply reasons, with evidence, to support their statements at the first stage of their appeal. There may be several grounds why a ratepayer would want to appeal, such as an incorrect valuation or a change to the property that the valuation has not taken account of. The only acceptable grounds are listed at
www.gov.uk/business-rate-appeals/types-of-appeals. Before the final appeal is heard, applicants will have to pay a fee.
The process has time limits which, if missed, will lead to an automatic cancellation of the appeal. Ratepayers need to be aware that, on appeal, the valuation may rise as well as fall. Further, the government has said that the valuation will only be altered on appeal if it is more than 15% distant from the correct value. Some reliefs are available to small businesses, including rural relief and enterprise zone relief, but only
in special circumstances. More information is available at
www.gov.uk/apply-for-business-rate-relief. Businesses can also apply for help if there is some form of local disruption such as flooding, building or roadworks.
When considering an appeal, it is important to use a chartered surveyor with professional qualifications, looking for the letters MRICS after their name and the RICS logo on their website. It is also sensible to choose a member of the Institute of Revenues & Rating Valuation (IRRV) as well as the Rating Surveyors Association (RSA). Consider also a surveyor experienced in pursuing appeals related to your kind of business, the property type that you occupy and your locality; valuing a property in a small town will be very different from a warehouse on the outskirts of a city. Do not engage anyone without seeking a reference from other clients and, lastly, you should not need to pay anything upfront. Good surveyors will work on a results basis.
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