The North West


Business Rates - Significant Changes as Modernisation Bites?


It’s the headline grabbing 2023 rating list increases that have absorbed most of the Business Rates column inches in recent months, but the big story is actually the Non-Domestic Rating Bill


that’s making its way through parliament and due its second reading in the House of Lords mid-June. reports Richard Roberts Bsc MRICS Director of Roberts Vain Wilshaw


Richard Roberts, Managing Director


Consultation on improving Business Rates has been going on forever and the new Bill crystalises all of this into some serious and significant changes


designed to support more regular revaluations. One of the past criticisms has been that rateable values were out of synch with rental values – the rateable value is meant to be a hypothetical rental value, but when you have rating lists that have run for 7 years for the 2010 list and 6 years for the 2017 list, its easy to see how the market moves on and RV’s don’t. The 2023 list has corrected all this but the Bill includes some massive changes that go way beyond supporting more frequent revaluations.


The ability to deliver more frequent revaluations from 2026 is dependent on the Valuation Office getting more data. Everything is about data these days isn’t it. The VOA now want more data on the properties we occupy and the rents that we pay. At the moment the VOA have statutory powers to obtain rental info using rent return forms and then use the same property data websites that the rest of us surveyors use to hunt for information. That’s all going to change. Ratepayers will soon have to notify the VOA of occupier or physical property changes and to provide rent, lease and, where appropriate, trade and other information used for valuation purposes. This will be submitted via a new online portal together with an annual confirmation statement within 60 days of the start of the financial year. On the plus side, there will be a 100% rate relief for eligible improvements including the generation of renewable energy.


One saving grace is that the government is keen to avoid the farce from other prematurely released IT systems and as such the annual confirmation will only be mandatory when they are satisfied it actually works. At that point there will be some hefty penalties for non-compliance or deliberately providing misleading or incorrect information. And rightly so.


But by far the most significant change however is to the 2026 onwards rates ‘appeal’ process. Since 2017 we have had Check Challenge Appeal – a multi stage sequential process that first involves a Check to confirm or correct the facts, before moving on to the meaty valuation arguments at Challenge, followed by an Appeal if you still can’t agree. From 2026 there will be no check stage – the requirement to report changes and the annual confirmations statement will do away with this. The big difference is the imposition of restrictive timescales. Since the start of the modern rating system in 1990, appeal action could be started at any point during the rating list. To put that in perspective, for the last rating list we had 7 years to start the process and for the 2023 list there will be 3 years. From 2026 there will be only 6 months. Gulp. Its sobering to think that the valuation date for the next rating list is less than a year away.


The requirement to provide info will also encompass the need to link each property a business occupies to HMRC within 60 days of occupation or introduction. What happens with group companies or multiple businesses on the same shared site? Digitalising Business Rates (DBR) has backed away from a centralized system to display business rates information alongside tax information and will instead focus on just making it easier for businesses to identify the relevant reference number and submit it to HMRC through the same portal that will be used to capture property changes. DBR will allow greater sharing of information between councils with the aim of reducing the amount of fraud and evasion but also to allow the more targeted application of relief – exactly how remains unclear. The Government have missed an opportunity to vastly improve the


50


management of rates bills by creating a single integrated billing system- anyone who gets bills from more than one council area will understand the lack of consistency in presentation and calculations that are incomprehensible to many ratepayers. The Bill also introduces new rules on a variety of additional points identified through consultation including relief on improvements made to a building, for 12 months until 2029 but with further consultation in 2028 to see whether this should be extended.


A very welcome addition is an amendment to when local authorities can award discretionary relief. At present any relief must be applied within 6 months of the end of the relevant rate year. I’ve had two instances recently where the property would have absolutely received retail discount had it not been for the VOA’s failure to assess the properties until several years later – we’ve had to then jump through hoops to resolve the situation.


There are additional legislative changes to allow the VOA to share information upon which the rating valuation is based which will help determine whether action to reduce the RV is appropriate but exactly when this will be divulged and how it will be accessed is unclear. We do know that it will be via a digital platform but will this be readily available or only when a Challenge has been submitted?


The Bill will allow the government to link annual increases to the business rates multiplier to Consumer Prices Index (CPI) rather than the Retail Prices Index Following on from the Covid related Material Change of Circumstances farce the Bill will stop legislation ever being accepted as a MCC and therefore removing the possibility of it resulting in mid list changes to RV’s. Business rates is a fully devolved power but unusually a number of provisions apply to Wales as well as England at the request of the Welsh Government, most relevant - relief on new improvements & heat networks, disclosure of information to ratepayers and Digitalisation of Business Rates.


So, all told, there are a lot of changes that are all centered around making the system more robust and the tax base more stable, minimizing the potential for leakage, fraud and it would seem appeals. The biggest problem faced with getting rateable values right first time is currently finding relevant and accurate supporting comparable evidence. The new statutory requirement to submit information goes some way to change this but doesn’t provide a guaranteed of accuracy because ratepayers will still need to be able to interpret the facts to provide the right answers. The governments answer to this is that ratepayers should take reasonable steps to find out what their obligations are by reading the VOA’s guidance. Can the guidance really cover deconstructing complex lease terms, identifying rent free periods, who is responsible for alterations undertaken at the start of a lease or recalculating Zone A measurements post alterations? Some rating valuations consist of line after line – how does the average occupier know if every line is correct or whether every historic alteration has been reflected? It’s a case of Rubbish In, Rubbish Out but exacerbated by submitted information being treated as gospel by the VOA and then fed into the Automated Valuation Models that will be essential for the even more frequent annual valuations that have been suggested from 2026 onwards.


A lot of these changes are long overdue but I do have serious concerns about the majority of organisations ability to accurately capture the information for onward transmission to the VOA in a way that complies with the timescales and level of detail required. The VOA needs to invest in a robust information platform that allows effective interaction with occupiers and their agents to get this right but any way you look at it, this is a burden that some will find extremely difficult to comply with because the answers are just unknown.


Richard Roberts – Principal Director richard.roberts@rvwcs.co.uk


www.rvwcs.co.uk / 07881 503540 - 01925 20 50 60 Roberts Vain Wilshaw, Unit 5, Abbots Park, Preston Brook, Cheshire. WA7 3GH


COMMERCIAL PROPERTY MONTHLY 2023


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  |  Page 73  |  Page 74  |  Page 75  |  Page 76