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Business rates appeals take a tumble in wake of new system

According to Government figures, business rates appeals have fallen drastically since the new ‘Check, Challenge, Appeal’ system was introduced in April 2017.

Between 1 April 2017 and 31 December 2017, only 1,210 valuations were challenged[1]. This represents a 99.3% reduction when compared with the same period in 2010, following a change to the system.

Check, Challenge, Appeal

The 3 steps involved in the new process, for submitting business rates appeals, are as follows:

Checkthis stage sets out exactly how a valuation has been calculated. It provides the ratepayer with all underlying details and allows them to update these if incorrect. The result of this is that all parties understand and agree upon the factual basis for the valuation. The valuation can be amended if necessary.

Challengeit is at this stage that the ratepayer can challenge the valuation if they feel the calculation, based on the facts established at the ‘Check’ stage, is incorrect. Ratepayers, or their agents, provide comprehensive evidence to support their challenge. This gives the Valuation Office Agency (VOA) an opportunity to resolve the issue without need for an Appeal. The VOA then presents evidence to support its decision. 

Appealif ratepayers are not satisfied with the VOA’s decision, having understood all the evidence, they can appeal to the independent Valuation Tribunal for England (VTE). This appeal is undertaken in full knowledge of the evidence and arguments put forward by both parties at the ‘Challenge’ stage.

Business rates appeals decline as small businesses deterred

The sharp decline in business rates appeals has been attributed to the difficulties businesses are facing when navigating the process. This is reflected in the fact that during the same period, to 31 December 2017, only one case made it to the ‘appeal’ stage.

The modified system, introduced last year, places the responsibility of providing ‘proof’ firmly with the ratepayer themselves.

Small businesses are some of those worst affected, often lacking the resources required to manage such an administrative burden.

In addition, new regulations are being introduced which will see businesses deemed to be wrongly appealing face a £500 fine.

The penalty may well deter businesses from appealing, for fear of the repercussions. As a result, these businesses may well end up paying much more than they should be.

In an article we produced late last year, found here, we considered how rising inflation might impact upon those businesses already struggling with growing costs.

Convoluted system damages SME confidence

Business rates increase annually and are calculated based on the rental value of a property. They increase in line with the Retail Prices Index (RPI), currently 3.9%, which is a measure of inflation. This means many businesses may face rates increases, beyond inflation, when they are recalculated in April.

With bills getting bigger and the appeal system more convoluted than ever, there will invariably be issues for SME’s.

It would seem fair to say that the Government has not been properly supporting small businesses of late. Clearly, changes to the way business rates appeals are handled have failed to instil confidence where it was waning.

The Government should ensure that the process of getting rates bills right is as failsafe as it can be. In addition, if businesses are to have a fair shot at challenging rates they believe to be incorrect, the appeal process must be reviewed.

Are you a business owner currently faced with an uncertain future? Seeking professional advice from trusted advisers, such as ourselves, may be the first step towards understanding exactly where you’re headed. We can work with you to put realistic plans in place, that will cultivate confidence within your business and ultimately facilitate growth. Call or email us today to discuss your circumstances in more detail with one of our experts.

You can also read our article in Insight Magazine, Issue 12, entitled ‘Businesses need stability in the face of setbacks’ which identifies steps that businesses can take to improve stability in the face of the challenges that rising costs present.

[1] https://www.gov.uk/government/statistics/non-domestic-rating-challenges-and-changes-2017-and-2010-rating-lists-december-2017-experimental

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