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Rule change could make business rates appeals 'near impossible'

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Officials are quietly seeking to introduce a new rule that would make it “near-impossible” for businesses to challenge their rates bill, it has been claimed. However, experts have questioned whether the change will make it onto the statute books.

A consultation on the regulations governing the new ‘Check, challenge, appeal’ system for dealing with business rates appeals was published by the Department for Communities & Local Government earlier this month.

It proposes that where the Valuation Office Agency, which is responsible for determining appeals, judges the original valuation as “within the bounds of professional judgement” no adjustment should be made to the rateable value of a business property.

The regulation was not part of the original consultation on the new system late last year. Check, challenge, appeal has since been legislated for in the Enterprise Act 2016 and the latest consultation is on the regulations that must be laid before parliament in order to implement it.

John Webber, head of rating at property services firm Colliers International, described the regulation as “very draconian” and something “completely new that was not discussed before”. He told LGC case law suggested within “the bounds of professional judgement” would be judged as anything up to 10% of the proposed rateable value, or 20% in more complex cases, which could be significant sums of money in a lot of cases. 

“We are urging all businesses to respond to this consultation in no uncertain terms. The government must stop this direction of travel aimed at making it near-impossible for rate payers to contest their business rates,” he said.

Mr Webber warned some of the bigger firms would likely challenge the regulation in the courts. 

Mike Cherry, national chair of the Federation of Small Businesses, said while there were some positive aspects to the check, challenge, appeal system, the new clause failed the “fairness test”.

He said: “It could result in the door being shut on smaller firms who want to correct inaccuracies in valuations and reduce their rates bills.”

The Institute of Revenues, Rating and Revaluation told LGC the inclusion of the proposed regulation in plans for the implementation of check, challenge, appeal had “come out of the blue”.

However, chief executive David Magor said it was unlikely to survive the consultation as the idea had been consulted on previously in a green paper back in 2000 when it was roundly rejected by almost every respondent as “unworkable and unfair”.

“The problem is it denies the rate payer the right to have the benefit of the reduction in value,” he said.

He added: “It’s almost as if someone has sat down and said, ‘How do you reduce the number of appeals?’.”

The VOA currently has 300,000 outstanding appeals on its books. Under 50% business rates retention councils must set aside money to fund any appeals in their area that might affect their income. In 2016-17 they set aside £621m as a result, a figure that it is feared will rise when local government retains 100% of business rates by the end of the decade.

A DCLG spokesman rejected the claim the proposed regulation would effectively prevent businesses from gaining through appeals.

He said: “The truth is our reforms will streamline the process to help resolve cases as quickly and fairly as possible, so that businesses and councils can get on with planning budgets, confident they are getting a fair deal.”

Consultation of the regulations runs until 11 October.


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