Staircase tax formally axed – Post Budget rates boost as staircase tax formally axed

The Queen has given Royal Assent to turn the bill to reverse the effects of the so-called Staircase Tax into an Act of Parliament. Thousands of firms across England will be able to request tax rebates on their business rates bills, rebates could be eligible for rates as far back as 2010.

A supreme court judgement allowed thousands of businesses to each pay their own individual business rates tax for a unit even though they operated within adjoining units, rooms or with a common corridor in between.

The Government Bill, to reverse that judgment, which was published last December, had been stuck. This was due to the Bill having to go back to the House of Commons for consideration after the amendments proposed by the House of Lords.

The legislation, reversing the effects of the Supreme Court ruling, will save firms in England £40 million a year according to the Office for Budget Responsibility.


Alex Probyn who is President of UK Expert Services at real estate advisor Altus Group, previously described the Government’s commitment to reverse the effects of the ‘Mazars’ ruling affecting as many as 80,000 properties as a “victory for common sense”.

Probyn said: “The Government should be applauded for listening and acting decisively to return firms to the tax position that they were in before the court ruling. Be in no doubt this is a big post Budget rates boost with the Government marking it clear that these appeals will be prioritised.”

Changes to the procedure for contesting Business Rates

Changes to the procedure for contesting business rates have been dismissed as inadequate by an expert who says the new system is no more than a hidden rates increase.

We spoke to Commerce and Industry regarding the hidden rates increase hitting businesses and the changes within the procedures for contesting business rates.
Here’s how our interview went:


Adrian Smith, founder of Adrian Smith Rating, said the low numbers of businesses embarking on the check, challenge, appeal (CCA) process for business rates is an indication that they find it too complicated.

“The result is that people decide it is not worth the trouble of going through the process themselves or the expense of appointing an agent. They end up paying more money to the Government, and it’s basically a hidden rates increase.”


A report by business rates specialist Colliers International, which has offices throughout the UK, shows there are 1.85 million non-domestic properties on the rating list. Current figures show there are more than 130,000 appeals outstanding from the list that was introduced in 2010, yet the VOA says only 23,770 checks were registered under the new system by the end of March this year. Of those, 18,400 were resolved and 5,370 remained outstanding.

“According to the calculations by Colliers, which are based on figures from the VOA, the rateable value has only been challenged on 1.3 per cent of the rateable properties in England. Some might interpret the low numbers as evidence that the new system is working well, but the opposite is the case. The number of checks is low simply because many people don’t understand how to contest their rateable value, can’t afford to engage professional advice and are left with no option but to pay more than they should.”


Changes have been made to the check, challenge, appeal (CCA) process to allow a business which owns several properties to register them all at the same time and to register an agent as part of their company. However a business which has only one property still has to complete its own registration process, and demonstrate specialist knowledge.
A Freedom of Information request submitted by Colliers to the VOA established that 90 per cent of 2,000 respondents were dissatisfied wit the new system, reinforcing the view among business rates specialists that the system is not fit for purpose.

“As a result of the public outcry there have been changes, but for the vast majority of businesses they make no difference at all. The registration process has been simplified for the bigger businesses which have more property, but they still have to address the complications of the next stage.

The VOA used to visit business premises to set the rateable. Now they regularly do it without leaving their desks, but experience shows that in reality properties to not always match the specification shown in planning documents or development proposals, and the result is that a rating assessment can be based on incorrect survey data.

In the past a business could contact the VOA, express their concerns and ask them to check their property. Now they have to do it themselves, and the average ratepayer is not going to know about the details of their business premises that can influence rateable value up or down.”

Rising rates bills set to prompt more challenges

April 2018

Businesses are facing a double whammy with rates bills rising because of the slow pace of transitional relief on top of an increase in line with inflation.

The plight of business owners is aggravated by continuing problems surrounding the “check, challenge, appeal” (CCA) system set up by the government after the 2017 rates revaluation process to enable people to contest inaccuracies.

Adrian Smith, founder of AS Rating, said the higher bills are likely to prompt more people to use CCA, but the complications of a system widely branded as not fit for purpose are still a major deterrent.

He said: “There are still more than 150,000 appeals outstanding from the 2010 revaluation process. The numbers of checks, challenges and appeals from 2017 are still low but that is only because it is still so difficult for people to register their businesses and begin the process.

“There is a view within our sector that the government has achieved what it set out to do in terms of reducing the number of appeals and collecting more money.”

The new bills include an increase of 3 per cent in line with the Consumer Price Index from September 2017. Another issue is transitional relief, which brings the benefit of phasing in increases, but which also forces businesses to wait for their reductions.

Adrian said: “It’s hard to argue against the assertion that transitional relief creates a situation where businesses which are due a rates reduction are subsidising those which have had their rates increased.

“More businesses are contacting me and other professional rating surveyors because they have attempted to deal with matters themselves and they can’t. More issues will emerge as more businesses see the scale of the burden and the scale of the injustices. The system is even more complicated than when it was launched, and the bills are increasing.”


Financial penalties on the way for errors in challenging rateable values

March 2018

Businesses already struggling to come to terms with the complexities of the 2017 rates revaluation process now face financial penalties for errors in trying to challenge the system.

Adrian Smith, founder of Hull-based AS Rating, said on top of the inflation-led increase in rates bills many businesses are also suffering financially because of the complications around the new system. He also warned that recommendations from the House of Lords could lead to the maximum penalty being increased.

Legislation currently going through Parliament will authorise the Valuation Office Agency (VOA) to charge up to £500 from anyone who “knowingly, recklessly or carelessly” provides false information as part of the check, challenge, appeal (CCA) procedure.

The House of Lords voted in favour of the legislation which would bring the introduction of penalties of £200 for small businesses and £500 for all others, but in doing so they urged an increase in the upper limit, which they considered to be insignificant for large businesses.

The House also highlighted problems with the 2017 revaluation process and the CCA procedure. Lord Bourne of Aberystwyth said he would write to the VOA to ensure they are working with businesses and agents to minimise any burden and to ensure that guidelines are being issued about the circumstances in which penalties will be imposed.

The Earl of Lytton, a property consultant and vice president of the Local Government Association, said the risk of businesses incurring a penalty is high because of the complexities around CCA.

By the end of December 2017 the VOA had not received any appeals from the revaluation which took place in April 2017. The current figure is three appeals, but there are still around 200,000 outstanding from the 2010 revaluation.

Adrian said: “No one should be fooled into thinking that the absence of appeals means everyone is happy. Where the VOA says a case is resolved it merely means they have made their decision, so some of those may progress to the appeal stage.

“The figures generally show that the system is slow and cumbersome, and businesses are finding it very difficult to come to terms with the registration process. We would expect the number of challenges to be lower than in 2010 because that’s the whole purpose of the change, but the problem is that a lot of people who have genuine cases are being deterred from pursuing them and may be paying thousands of pounds more than they should.

“The introduction of penalties for providing false information is yet another deterrent.”


Businesses brace themselves for rates increases and nasty surprises

February 2018

Businesses face being hit with higher rates bills as inflation bites – and there could still be shocks from a revaluation process branded a shambles by industry experts.

Adrian Smith, founder of AS Rating, highlights one client whose “Christmas card” from the Valuation Office Agency (VOA) was a notice that their rateable value (RV) had more than doubled in less than a year.

He warned that their situation will be hampered further by the ongoing delays with clearing the backlog of appeals.

Adrian said: “The delays in clearing the backlog from 2010 are not being helped by the complexity of the system set up to manage the changes of 2017 – the backdrop is one of job losses and office closures at the VOA. One industry analyst has likened it to closing a hospital because there are too many sick people to deal with.”

New rates demands will be issued during March to take effect from 1 April and will increase in line with the Consumer Price Index rather than the Retail Price Index – a move which is expected to reduce the rate of the increase by around one per cent.

Small Business Rate Relief is expected to continue but as 2018 dawned it was still not clear whether the government would extend the £1,000 relief for pubs with a rateable value of less than £100,000.

Of immediate concern to Adrian is the case of one client which saw its RV go up from £13,500 in 2014 to £18,500 in April 2017. Adrian and the business owner decided to wait and see before pursuing the check, challenge appeal (CCA) process – and were hit with another increase just before Christmas.

Adrian said: “The business received a notice that the new RV would be £29,000, backdated to October. We want to know how the VOA could come up with an increase from £13,500 at the beginning of 2017 to £29,000 by the end of the year.

“Why has the VOA conducted another review on a business which they have already reviewed? They should be concentrating on clearing the backlog of appeals from 2010 and the challenges from 2017.”

The problems are compounded by the fact that CCA is so cumbersome – Adrian has represented this client for several years yet still has to submit a fresh “check and challenge” for the new system, which could take 12 months to reach the appeal stage.

Adrian said: “In the coming months there will be more reviews by the VOA. That will lead to more requests for checks and to more challenges from people who think their rates valuation is unfair.”


Business owners hit in the pocket as government cuts delay rates challenges

Adrian Smith of AS Rating – more challenges to valuations on way.


Business owners are being warned to expect long delays with challenges to rates valuations as discontent increases whilst the Valuation Office Agency (VOA) faces job cuts and office closures.

Adrian Smith, founder of Hull-based AS Rating, said the number of checks and challenges resulting from the business rates revaluation which took place last April is rising every month – and comes on top of a total of nearly 200,000 challenges still to be resolved from the 2010 revaluation.

Meanwhile the VOA is pushing ahead with plans to reduce the number of offices in England, Scotland (Scottish Assessors Office) and Wales from 52 to 28 by 2023. Hull will survive the cull, but could still be hit by job losses and a larger workload with offices in Lincoln and Sheffield set to close.

Adrian said: “The system which was introduced as part of the revaluation last April was a shambles from the start and the cuts are making it worse. Business owners have serious questions about the impact on their organisations, and there are fewer people to provide the answers.

“One industry analyst has likened it to closing a hospital because there are too many sick people to deal with. The hope seems to be that the issue will just go away, but the reality is that it will just take longer for the real problems to emerge.”

Figures releases by the VOA show that in England and Wales at the end of September 2017 there were 199,160  appeals still to be resolved from the revaluation that took place in 2010. In Yorkshire and Humber the figure was 16,980, with 1,140 in Hull and 750 in the East Riding.

The numbers indicate that the VOA is making slow progress with the backlog. The national figure peaked at 305,120 in March 1016. Yorkshire and Humber reached 27,340 in July 2016, Hull hit 1,800 in the same month and the East Riding climbed to 1,290 in December 2015.

By comparison the number of outstanding cases under the new check, challenge, appeal (CCA) procedure introduced in 2017 is minimal, but Adrian said this is merely evidence that the new system is succeeding in putting people off.

He said: “The figures show that the number of reviews carried out by the VOA following the 2017 revaluation reached 66,080 by the end of September, with 2,260 checks outstanding and around 300 challenges still to be resolved. But the system is so difficult for people to access that they haven’t got figures yet for the number of appeals which have been lodged. These numbers give a clear indication of how complex it is to go through the CCA process.”

The new system created various anomalies around scenarios such as occupying only part of a property, and buildings undergoing major refurbishment. Some people faced higher bills because of inaccurate rateable values and were invited to use the CCA facility on the VOA website, but few business owners have found the time or the technical skills to work through the complicated process.

The Royal Institution of Chartered Surveyors (RICS) has called for changes to the system and the VOA has said there will be improvements, but meanwhile business owners are being hit in the pocket.

Adrian added: “In the coming months there will be more reviews conducted by the VOA. That will lead to more requests for checks and to more challenges from people who think their rates valuation is unfair. Eventually it will lead to rising numbers of appeals as well, and coupled with the job cuts and office closures, the effect will be that some business owners will be paying too much for too long.”

Budget could bring long-term rewards for business

Business ratepayers could be rewarded for the short-term pain of increases in April with the long-term gain of a more efficient and user-friendly system.
Adrian Smith, founder of AS Rating, said the Budget brought mixed messages for businesses seeking help with their rates. He added that the key to improving the process still lies with streamlining the “check, challenge, appeal” system which was introduced this year.
Adrian said: “There were some encouraging announcements about business rates in the Budget but the continuing problems with the new system mean that things are likely to get worse before they improve.”

The announcement by Chancellor Philip Hammond that rates increases next April will be linked to the Consumer Price Index (CPI) rather than the Retail Price Index (RPI) was welcomed, as was the decision to continue the £1,000 business rate discount for pubs with a rateable value of up to £100,000.

Adrian said: “The move to the CPI was something which businesses had called for and it should have the effect of reducing next year’s planned increase of 3.9 per cent by more than one per cent. Of course this is still an increase, and we don’t know how much the CPI will rise in the future, but this was welcome.
“The discount for pubs will also be welcomed, but for many the saving of £1,000 per annum will be considered small beer.”

Adrian said businesses will benefit from legislation to address the “staircase tax”, which in many cases removed Small Business Rates Relief (SBRR) and, for larger firms, quantum relief where firms occupy parts of a property separated by communal facilities such as a staircase, corridor or lift.

He said: “Currently they are treated as separate business premises, which means they may not quality for full SBRR, so this is another positive move because two separate assessments will normally bring a higher total liability than one overall assessment.”

Another positive announced by the Chancellor is the increase in the frequency of rates revaluations to every three years. Currently they are due to take place every five years, although this year’s revaluation was delayed from 2015.

Adrian said the proposed changes should produce a much more efficient system, but he warned there will be a huge backlog to clear, with more than 200,000 appeals still outstanding from the 2010 revaluation.

He said: “The job of processing appeals from 2010 is ongoing, and the number of new challenges will increase once people get to grips with the changes introduced this year and with a system which is still preventing users from challenging their assessments. Changes to the staircase tax will add to the assessors’ workload.
“But there is now light at the end of the tunnel. Once all the appeals wash through – and it will take some time – we should end up with more frequent revaluations and that should bring greater accuracy, which will benefit everyone.”

Rural diversity is reflected in rates bills

Increasing diversity among rural businesses is adding to the complications for property owners when it comes to rates on their premises.

Those businesses involved in traditional agricultural activity were largely unaffected by this year’s revaluation, but some who have turned farm assets to other use have been hit hard, and they may be losing out in other ways.

Adrian Smith, founder of AS Rating, said: “Some commercial uses for agricultural properties have attracted big rates increases, and where people have seen reductions these are often phased in with the result that you have to wait years to receive the full benefit.

“The rates are based on the rental value and, as you would expect in an area of great variety among businesses, there are some big differences between the final figures.”

Adrian explained that agricultural exemption from business rates applies where a property is used purely for agricultural work. But you can lose that if you are storing grain for someone else, if you use your engineering equipment to do work for someone who is not involved in agriculture or if you turn over your farm to other commercial use such as a farm shop.

He said: “There has been change of use to create facilities such as garden centres, and there are many other sectors including various aspects of the motor trade, electrical engineers, offices including professional services, because even if the main business in an area is agriculture it needs support from others.

“If rates are low, the fact that they reflect rents indicates you are already facing the challenge of trying to run your business in a relatively poor area.

“If you’ve seen a large reduction, the effect of transitional rate relief means you could be paying more than the fair amount for up to five years or until the next revaluation.”

Angling superstore open for business – Case Study

A businessman has finally landed his dream of moving his fishing tackle shop into his favourite pub after becoming tangled in red tape from this year’s rates revaluation.

Steve Ashton was locked in discussions with the Valuation Office Agency (VOA) over his conversion of The Crown on Holderness Road, Hull, from a derelict shell into a state-of-the-art angling store. But he is now open for business after help from AS Rating.
Ashton Property Company, which is owned by Steve, bought the pub on 20 March after plans were dropped to turn it into a Netto supermarket. He promptly received a rates bill for £1,500, followed by another for £3,900 for April, and he appointed Adrian Smith of AS Rating to look into the demands.

Adrian advised Steve to challenge the amounts on the basis that the rateable value for The Crown had dropped from around £80,000 to around £23,500 and because of the condition of a building which had been ransacked by vandals during the two years in which it sat empty.
But Steve could not take up the VOA’s “check, challenge, appeal” procedure because the new system had not registered him as the owner of the property.
Adrian’s success in persuading Hull City Council to put a hold on the building’s business rates account enabled Steve to go ahead with the conversion and he has now completed the relocation of Hull Angling Centre.

The project has created seven new jobs with the prospect of more to come once work is completed on three more units. The business has been transformed, with stock expanded to include rods, reels, baits and clothing.

Steve said: “People in the area are telling us how good it is that someone has done something positive with the old building. They were sick of people wheel-spinning in the car park and dumping waste there.

“If Adrian hadn’t been able to help me I’d have paid those initial demands and then nearly £4,000 per month for a building that I couldn’t use to generate any revenue. Or maybe I’d just have sold it on to get rid of it”

Adrian said: “I explained to Hull City Council that the building was not capable of beneficial occupation and I also sent them photographs. They said they would put a temporary hold on the account until we could resolve things, but we couldn’t get the VOA to come and see the building because they don’t recognise Steve as the owner.
“If Steve had been required to pay rates on the derelict building it’s unlikely this project could have progressed. He’s created a new business, new jobs and opportunities for other businesses in a part of the city that really needs investment.”

VOA job cuts will add to delays and frustration


Job cuts at the department responsible for overseeing business rates are expected to pile more frustration on to firms already hit by confusion and delays from a new “check, challenge, appeal” system.

Adrian Smith, founder of AS Rating, said the Valuation Office Agency (VOA) is planning to streamline its online service after acknowledging that it is creating great difficulties for ratepayers. But he added that any benefits are likely to be undone as the Government presses ahead with plans to cut 1,000 VOA jobs by 2021.

Adrian said: “It appears to me that the Government has rushed the introduction of the new system to fit in with the timetable for job cuts. The system has massive flaws which are causing huge complications and delays but the government is pressing ahead with the job cuts regardless.”

The rates revaluation which took effect on 1 April this year has created various anomalies and left some people facing higher bills because of inaccurate rateable values. The new system makes provision for ratepayers to use the “check, challenge, appeal” facility on the VOA website, but the reality is that some business owners don’t have the time or the technical skills to work through the complicated process.

The Royal Institution of Chartered Surveyors (RICS) has called on the VOA to make changes to the system and the Institute of Revenues Rating and Valuation (IRRV) placed the subject at the top of the agenda for its annual Rating Diploma Holders’ Conference.

Mary Hardman, Chief Valuer at the VOA, told the IRRV audience that improvements will be made to the online service by the end of this year, with more planned for spring 2018.

Adrian said: “It was clear she recognised there are problems with the system. They need more people to sort this out but instead they are facing job cuts, with properties likely to be assessed from the plans rather than by proper inspections.

“The job cuts will affect the ability of the VOA to carry out a professional service and I think the system will get worse before it gets better, with ratepayers becoming more frustrated. Any improvements that result from streamlining the online system could be at least cancelled out by the loss of more staff.”