Proposed law seeks to ‘cement UK’s position as the best place in Europe to grow a business’ but retailers see proposals as missed opportunity.
The British Retail Consortium (BRC) has been leading the charge for a fundamental reform of our outdated business rates system. While this process is ongoing, with the Government due to publish its review on November 25, one area where there has been total agreement across Government and industry is with regard to the business rates appeals system. At the time of writing, there were at least 200,000 appeals outstanding and everyone involved agrees something should be done to reduce the number.
But what should be done?
More frequent revaluations
The BRC and its industry partners believe a large part of the answer lies in more frequent revaluations, i.e. every three years initially as opposed to five years at present, or actually seven years given the two-year delay in the business rates revaluation. Ratepayers appeal when they have reason to believe their property assessment is inaccurate or where there’s been no explanation of the evidence supporting the valuation. If more frequent revaluations were introduced, the incentive to appeal would be significantly reduced. Frequency of revaluations is not mentioned in the draft of the Enterprise Bill currently before Parliament, but we hope it will be addressed when the Government announces the results of its business rates review next month.
Evidence of valuations should be shared with ratepayers upfront
The Enterprise Bill does provide for greater sharing of information between the Valuation Office Agency (VOA), the body responsible for carrying out valuations and local government, which we welcome. However, many appeals would be avoided if the VOA was able to more freely share evidence with ratepayers indicating why a particular valuation was reached.
This information is only released in the late stages of an appeal. The VOA should be required to provide more extensive evidence about the basis for the ratings assessment upfront, in order to allow a ratepayer to audit their rateable value. Business rates are the only national tax in respect of which the taxpayer is not in possession of the relevant data, which forms the basis of the tax assessment and liability.
Many appeals would be avoided if the VOA was able to more freely share evidence with ratepayers indicating why a particular valuation was reached
Helen Dickinson, BRC
While sensitive commercial information must be safeguarded, ratepayers should have access to information that may affect their individual valuation. Evidence should not be published for everyone to see, but it is reasonable for it to be made available to those it impacts early in the process. If there is no transparency or productive engagement at an early stage a formal appeal is more likely to be made.
A more transparent appeals process in Hong Kong, for example, has drastically reduced the number of challenges and appeals where in 2012/13 less than 1% of ratepayers formally appealed and just 2% challenged assessments.
Businesses shouldn’t be further penalised
Ratings expert Jerry Schurder of Gerald Eve, has characterised the Government’s proposals as “beating business with the stick of higher costs and increased difficulty to appeal”. The Government’s consultation on a ‘three-stage’ appeals system to ‘check, challenge, appeal’ does nothing to address the fundamental issue of the VOA not sharing evidence justifying its valuation with ratepayers.
Instead of modernising the system, the Government has introduced further hurdles for businesses to appeal valuations. Rather than burdening those businesses who believe they have a valid reason to appeal, the BRC believes important changes such as those outlined above will more effectively reduce the attractiveness of, and need for, an appeal in the first place. This will make life easier for both businesses and Government and will, we believe, go some way towards ‘cementing the UK’s position as the best place in Europe to start and grow a business’ as the Enterprise Bill aims to do.
- Helen Dickinson, chief executive, British Retail Consortium