Revaluation anomalies are top priority for rating professionals

Property professionals and rating specialists are stepping up their efforts to tackle the confusion around rates revaluation which is hitting some businesses in the pocket.

Top of their list of concerns is the new check, challenge and appeal system which is paralysing the investment plans of some companies because of its continued complexity.

Adrian Smith of AS rating said: “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.

“In theory, the amounts can be challenged using the Valuation Office Agency website, but in practice there are business owners who don’t have the time or the technical skills to work through what is a complicated process.”

The General Election added to the delays to address the problems, with professional bodies postponing events organised to examine the changes. The Royal Institution of Chartered Surveyors (RICS) has placed the check, challenge and appeal system at the top of its agenda for a conference in September. The Institute of Revenues Rating and Valuation (IRRV) is expected to discuss rates revaluation at its annual conference in October.

Adrian, founder and owner of Adrian Smith Rating, will provide feedback to both organisations and is hopeful that changes will result from other practitioners facing similar experiences.

He said: “When the changes took effect the Chancellor said that businesses which lost small business rate relief would have their increases limited to £600. We warned at the time that this interpretation was incorrect, and we have since been approached by clients who are being asked to pay more.

“We have other clients who are being forced to delay property refurbishment projects, partly because of disputes over the rateable value of premises which are not yet fit for purpose but also because the new system is not even up to date about who owns the building!

“Before embarking on the new process to check a rateable value and then consider whether to challenge it and appeal against it, a business owner must register on the Valuation Office Agency website.

“Unlike the procedure with other taxes, they even have to register themselves before they can appoint an agent to investigate the matter. It’s a complex process which could put some people off checking. There will be business owners who have no idea of what is involved and therefore no idea whether their payments are correct.”

Rating advice in demand at Chamber Expo

The controversial rates revaluation process led to a rush of business for AS Rating and more than justified the company’s decision to strengthen its presence at this year’s Chamber Expo.

Adrian Smith, founder of the company, said he was inundated with enquiries from business owners who remain baffled by the changes months after they were introduced. He added that he expects the confusion to continue as the Valuation Office Agency (VOA) struggles to streamline its “check, challenge, appeal” system.

Adrian said: “This year at Expo I had four times as much space and there wasn’t a gap of more than about five minutes between people coming to see me. That’s because the issue of business rates is so topical this year.”

Various questions arose from business people making assumptions about information which they had heard from other people involved in rating issues. There were also specific questions from people who wanted to know about their rates liability for only occupying part of a property, and who were concerned about having to pay rates on premises undergoing major refurbishment.

Adrian said the confusion is compounded by the need for business rates payers to register on the VOA’s website before they can check the rateable value of their property.

He said: “Under the new check, challenge, appeal regulations a business owner has the opportunity to check their rating assessment, but first that they need to carry out a registration process which can be quite lengthy and complicated.

“You can’t check your valuation until you have been through the registration process, and that requirement could put some people off checking and mean they end up paying more than they should. There will be business owners out there who have no idea of what is involved and therefore no idea whether their payments are correct.”

Businesses face rating confusion from “nightmare” system

Businesses looking to check their rates liability following the recent round of changes are likely to be deterred by delays and complications built into a “nightmare” of an online system, according to ASR.

Adrian Smith said the new “check, challenge, appeal” website which is being phased in by the Valuation Office Agency (VOA) could trip up a lot of users with processes which are rigid and time-consuming.

He said many business owners will need expert help to tackle the procedures and, faced with a waiting time of up to 18 months for a response from the VOA, they may decide not to bother.

Adrian added: “Businesses and their agents need to register with the Government Gateway, identify whether they should challenge their assessment and then start the procedure. Then they wait for up to 18 months, and some businesses could fold in that time.”

Under the revaluation process which came to a head in recent months, some businesses received a cut in the rateable value of their property, and some qualified for 100 per cent small business rates relief as the threshold was doubled to £12,000.

Others were hit with sizeable increases, prompting the Chancellor to try and soften the blow with measures in this year’s Budget. AS Rating’s view that the Chancellor’s provisions were inadequate is reinforced by the outline publication of the VOA’s procedures for rectifying faults.

The new rating list came into effect in theory on 1 April but the website is still under construction, with the Royal Institution of Chartered Surveyors warning that completion is not due until late 2018.

Ratepayers who want to check the rating assessment of their properties must register through the Government Gateway, which may involve setting up a new account. They must also register the details of their agent if they decide to appoint one.

A ratepayer who wishes to challenge their valuation is asked to compare their property with others of similar age, size and character in their area. They must also set out why they think their valuation is incorrect. If their challenge is dismissed – or if the VOA has not responded within 18 months – they have the right to appeal to a Valuation Tribunal.

Adrian said: “The new website is the essential tool for businesses to check their valuations and, if appropriate, challenge and appeal. It is complicated and time consuming and has been imposed by the Government, who don’t seem to be aware of the problems it will cause. It is a nightmare and people will find it very difficult to deal with it.”

ASR advises 50,000-strong nationwide business network

The country caught up with concerns about business rates as the subject became a key talking point in the Budget, and ASR was in demand from nationwide business group 4Networking to supply advise for its membership of more than 50,000.

We offered six tips to help businesses manage their rates and avoid unfair charges.

Be fair to yourself

Every business has a legal and moral responsibility to pay the fair business rates for which they are liable, and the safest and best way is to manage your rates in the same way that you would manage salaries and rent. That means adopting a proactive approach and making sure you are fair to yourself and to HMRC.

Winner, loser or don’t know?

For the 2017 revaluation, the Valuation Office Agency calculated the rateable value of a property based on its hypothetical rental value at 1 April 2015. Some businesses saw a reduction, a minority were hit by a big increase and many face confusion because of errors with the figures. Such errors may have resulted from information being inaccurate, delays in processing appeals and changes announced by the Chancellor in his Budget.

Relieving the pressure

There are various types of business rates relief including for rural areas, enterprise zones and charities. Small business rate relief is the most widespread and underwent a big change as part of the 2017 revaluation. The previous threshold of £6,000 was doubled, meaning that you qualify for 100 per cent relief if your property’s rateable value is less than £12,000. There is a sliding scale of relief to £15,000.

Check, challenge, appeal

A business can contest a ruling on its rateable value through the Valuation Office Agency’s “Check, challenge, appeal” process. It can be time-consuming, and if you go to a Valuation Tribunal you will face a fee of up to £300 which may be returnable if you succeed. We will check the facts on which your rateable value is based, and if appropriate we will challenge and try and secure a revised assessment by negotiation. We will also represent you in an appeal at the Tribunal if required.

Take care when taking advice

Anybody can embark on the “check, challenge, appeal” process but you risk wasting time and money if you don’t get expert advice. There are companies which will offer to help. They may charge you a fee for “obtaining” an “adjustment” which you would probably have secured anyway through a routine relief. As members of the Royal Institution of Chartered Surveyors, the Institute of Revenues Rating and Valuation and the Rating Surveyors’ Association we recommend you take the trouble to check consultants’ credentials.

Planning for change

By planning ahead you can help yourself and identify likely changes to your rates in advance. Influential factors may include extensions to your property, improvements to the part of a town or city in which you operate, or investment in substantial items of plant and machinery. You should consider the rating implications around these issues in the same way as you would when planning a move to new premises.

Accountants add ASR insight to tips for clients

ASR was delighted to assist well-known firm 360 Chartered Accountants in updating their clients on the issues arising from rates revaluation and business rates generally.

360 asked us to provide a blog for their site and they then promoted the key messages through social media to reach as many of their clients as possible.

We took the opportunity to get across the message that business rates are a significant overhead, unavoidable for many businesses, entirely avoidable for others, and certainly manageable for all.

Like the team at 360, we know that every business owner prefers certainty over surprises. We recommend they should manage their rates in the same way as they manage their salaries and rents, although the experience around the 2017 revaluation suggests some took their eye off the ball.

The smart movers were on the case well before revaluation took effect, but the real winners are the people who routinely include rates in their business planning.

Every business has a legal and moral responsibility to pay the fair business rates for which they are liable, and the safest and best way is to adopt a proactive approach, making sure you are fair to yourself and to HMRC.

Key factors influencing your rateable value may include extensions to your property, or improvements to the area in which you operate. You should consider the rating implications around these issues in the same way as you would when planning a move to new premises.

You should also consider the various types of business rates relief. Small business rate relief is the most widespread and underwent a big change as part of the 2017 revaluation. If you’ve got a grievance you need to be aware of the Valuation Office Agency’s “Check, challenge, appeal” process, and of the fact that it can be time-consuming.

And of course you need to remember that in times of regulatory change all sorts of organisations will offer to help, and it is important to make sure you are dealing with professionals rather than opportunists.

At AS Rating we’ve been dealing with business rates for more than 40 years. We take it seriously, and we are delighted that 360 Chartered Accountants does the same.

Call for clarification as Budget bypasses business rates issues

Businesses facing rates increases as a result of the controversial revaluation scheme will not receive any significant benefits from changes announced in the Budget, according to a specialist consultant in East Yorkshire.

Adrian Smith, founder of ASR, said suggestions that no business will be hit with an increase of more than £50 per month could be misleading. He condemned a plan to pay hardship relief through local authorities as “passing the buck” and he said the introduction of a £1,000 discount for pubs was “small beer.”

Adrian added that businesses eligible for a rates reduction will have to play a waiting game because of the slow pace of transitional rates relief.

Adrian said: “When people look at the issue of business rates they’ll see the Budget hasn’t really done anything to improve the situation.”

Adrian highlighted the Chancellor’s claim that businesses which lose small business rate relief will have their increases limited to £600 for the next year. He warned: “What the Budget Policy Paper actually says is that increases will be the greater of £600 or the level of the real terms transitional relief cap.

“So on that basis businesses which lose small business rate relief could end up paying increases of more than £600. It is a situation which is already causing confusion within local authorities and which will be even worse for business owners, and it needs clarification.”

Local authorities which have already set the levels of business rates due from 1 April now have the job of amending those amounts and will also be tasked with managing their share of the “discretionary relief” promised by the Chancellor.

Adrian said: “This is a case of the Chancellor passing the buck. The Chancellor will provide £300 million to help local authorities help out with hardship cases in their area but there is no information on how that will be allocated.

“If every local authority gets the same it will be worth less than £1 million each. We can expect to see local authorities in a bidding war to secure funding which is inadequate for the problems that will emerge.”

Depending on state aid limits for businesses with multiple properties, pubs with a rateable value of up to £100,000 will be given a discount of £1,000 on their rates for one year, but again Adrian said the Chancellor has not gone far enough.

He said: “This shows the Chancellor recognises that the licensed trade faces major challenges, but this discount is no more than a sweetener. It works out at £83 per month.”

Expansion for some, job cuts for others after revaluation

Business rates bills will signal an expansion opportunity for some and possible job losses for others when they drop through the doors of property owners next month.

Adrian Smith, a specialist in rating issues for more than 40 years, says lower rateable values in some areas coupled with a doubling of the rate relief threshold amount to good news. But he warned that some businesses are facing an increase of 300 per cent, and he said some may be forced to shed jobs.

Adrian, who set up ASRin 2000 after spending 25 years working for the Inland Revenue, is bracing himself for a rush of enquiries when companies throughout the region receive their new rates demands during March. He said the demands are likely to prompt a wave of calls from winners and losers confused by the new rateable values which take effect on 1 April.

Adrian said: “Some business owners have been horrified because even with transitional relief the big increases can cause problems. They can even affect staffing levels – one employer I spoke to might have to lose a member of staff.”

The draft rating list published in October 2016 showed that many businesses in Hull could expect to see their rates fall. But in some areas of the East Riding, business owners were facing an increase in rateable values of as much as 300 per cent, and throughout the region many businesses are still unaware of the possible implications.

Adrian said: “Only a minority of businesses have acted on the information so far. Others have not paid any attention to it or have been putting it off because they are busy or it’s not something they understand. It will come to their attention when they get their bill and I expect that’s when I’ll get a lot of calls.”

Adrian added that transitional relief ensures that any major changes are phased in, but he warned that increases will be applied more quickly than reductions. He also warned that businesses which fall under the new threshold should beware of approaches from unregistered consultants.

He said: “The threshold element of the changes is straightforward but there are still consultants who will try and get you to pay them for securing a reduction which you will get anyway.

“Other aspects of the changes are more complicated and I have had a lot of questions from businesses who have become aware of the draft figures and don’t know if they’re correct. They are seeking advice as to whether the figure is reasonable and what the procedures are for challenging it.”

ASR expands in readiness for revaluation

ASR is gearing up for an expected rush of business from the revaluation of business rates by adding to its network of offices in the Hull area.

Adrian Smith, who founded ASR in 2000, said the move will enable the company to provide better coverage across the Hull and East Yorkshire area and will also increase convenience for clients.

The company’s new office is within a business centre which went on the market earlier this year after a major refurbishment and was originally owned by InterBulk, who are still an ASR client.

The business also operates from its original office in Keyingham and from sites at Priory Park, Hessle, and Freetown Way, Hull.

Adrian said: “It is important for us to have a presence across Hull and the wider area. That’s what this expansion gives us, and we also visit clients at their premises.

“Things have become much busier in recent years with business owners looking for good advice when faced with changes around rating, and with various people offering deals that are too good to be true.”

The revaluation of business rates will take effect on 1 April 2017 with businesses able to find out their draft rateable value in October. Adrian said the fact that there has not been a revaluation since 2010 means some businesses could face significant changes.

Adrian said: “Revaluation will add to the confusion and will increase demand for our services so I’ve acted to make sure we’re ready.

“If you pay business rates they will almost certainly change. Many significant economic events have occurred since the last revaluation and they could have a major impact when it comes to assessing a fair rateable value.

“The changes could be up or down and they could be substantial. They will certainly influence business budget decisions and they may warrant an appeal, particularly if errors have been made.

“It is possible businesses will see an increase in their rateable value but there are also increases in the thresholds for relief and that could result in a liability being reduced or even wiped out.

“It is important that business owners are aware of that before they commission consultants to secure savings which they would have made anyway! Our message is to take professional advice from someone with the appropriate accreditations to ensure you understand the changes.”

Are you ready for 2017?

Business Rates Revaluation, 2017

All commercial premises in England and Wales are currently being revalued by the Valuation Office Agency (VOA).  The Valuation Office Agency is an executive agency of Her Majesty’s Revenue and Customs (HMRC) and the new rateable values will be used to calculate your business rates liability over the next 5 years.

These new rateable values will come into effect on 1st April 2017 but a draft rating list will be published on 30th September 2016.  This gives ratepayers or their agents six months to identify any factual errors for the VOA to correct before the list is used to calculate your new business rates bill from 1st April 2017.

Contact us for more advice on checking your business rates liabilities.

From 1st April 2017 ratepayers will be able to challenge the Rateable Value of their premises.  We strongly recommend that you have a professional business rates specialist such as ourselves deal with this on your behalf.

The VOA have introduced a new process which is known as ‘Check, Challenge, Appeal’ which is designed to limit the number of speculative appeals submitted and ensure that challenges to the rating valuation is more evidence based.  These three stages must be completed sequentially and there are time limits between each step.

  • CHECK – In this stage we can review the facts on which your valuation is based and gather evidence to support a reduction. If the Valuation Office Agency accepts our factual argument they will amend the rateable value which will result in a saving on your business rates bill. If the facts are still in dispute we will proceed to the next stage on your behalf.
  • CHALLENGE – We have the experience and expertise to deal with the Valuation Office on your behalf and present evidence, such as accurate and relevant information on comparable properties, to support a revised valuation. If an agreement still can’t be reached following our discussions with the Valuation Office then, with your permission, we will proceed to the next stage.
  • APPEAL – We will represent you in an appeal to the Valuation Tribunal which will require comprehensive evidence supporting our case for a reduction.  In the past there has been no charge for taking a case to the Tribunal, but under the new scheme the Tribunal require a payment of up to £300.  This will be returned if the appeal is successful.

Business Rates is one of your biggest business expenses.  The new rating list will affect how much you pay over the next five years.  Please contact us to see how we can help to keep this cost to a minimum.

Changes to Business Rates 2020

In his speech to the Conservative conference in October 2015, the Chancellor, George Osborne, announced that by 2020 councils in England will be able to keep 100% of the proceeds from business rates raised in their area. Under the current system councils keep 50% and rest goes to central government.

This will be the biggest change to business rates in 25 years

In addition, the Uniform Business Rate (UBR), which currently applies to the whole of England will be abolished. Councils will be able to set their own “Rate in the Pound” which means that the occupier of a property with a Rateable Value of 50,000 in one area, might not pay the same amount of business rates as the occupier of a property with the same Rateable Value in a different area.

Under the proposal local authorities will be able to charge lower business rates but they won’t be able charge higher business rates (higher than what is not yet clear). The exception to this is where there is a directly elected mayor the authority will be able to increase the rate by up to 2p in the pound to finance infrastructure, but only if businesses vote in favour of the increase.

A lot can happen between now and 2020, and there will still be a rating revaluation in 2017, but whatever happens, business rates will continue to be one of the highest outgoings for any business.

For help and advice on reducing your business rates please contact us