Why we still need to keep Business Rates High on the Government’s agenda “MPs must continue to challenge the Government on its progress with business rates reform,” says John Webber Head of Business Rates at Colliers, “Or all promises of a levelling up agenda will be meaningless.” Webber’s call is in anticipation of a Parliament Backbench Business Committee Debate taking place this week, led by Peter Aldous, MP for Waveney which will be discussing the question of business rates. The debate will receive a Ministerial response. Webber’s call is despite welcome decisions in the Autumn Statement where the Government not only froze the Multiplier but abolished downwards transition in the next revaluation, allowing rates bills to immediately reflect falling rental levels The new Revaluation in April 2023 will also provide some reprieve for retailers with rateable values (RVs) down an average of 10% for the sector and a greater share of the tax burden passing to the distribution and industrial sector – RVs averaging a rise of 27%. This will mean the likes of Amazon will see around a 38% rise in their rateable value come the new list, taking off some of the pressure of the tax burden from the high street retailer. However, according to Webber these measures are the tip of the iceberg. “In his Autumn statement, the Chancellor was, in reality, merely putting a sticking plaster on a gaping wound.” “Whilst we welcome the freezing of the multiplier and removal of downwards transition, the fundamental flaws of the business rates system remain.” Colliers call MPs to Challenge the Government on Manifesto Promises for Reform and Levelling Up Agenda These are the issues Colliers believe MPs in Parliament need to be discussing this week: Fallout from the New Rating Revaluation List - 2023 Firstly, headline figures are obviously averages and there are still large discrepancies on the new rating list, probably unsurprising given the VOA was assessing properties in the midst of Covid when many properties were temporarily closed, or deals were being struck with landlords. What is now becoming apparent is a two-tier system is appearing: those occupiers and owners of properties that either themselves or via agents made representations to the VOA during the assessment process appear to have been more successful in negotiating lower and more correct values. That means the big stores in Oxford Street, or the big hypermarkets or shopping centres, will see the biggest drops in their RVs and ultimately rates bills from April 2023. But some of the smaller shop traders in market towns across the UK, often without any representation to the VOA, may not see much reduction at all. Obviously the VO they did have a difficult job to assess values - but as Webber points out, “You have to ask yourself a very simple question- what would a tenant pay to rent a pub / hotel / office or shop when on the valuation date of 1 April 2021, they either couldn’t open it or if they could there were significant restrictions? Unless this discrepancy between those well represented and those who are not is dealt with, the Government’s levelling up agenda will be meaningless.” Lack of Transparency from the VOA and an Unfriendly and IllEquipped Appeal System Meanwhile the valuation process that allocates shops their rateable values is not transparent. The VOA does not share the evidence that it uses to form the basis of its valuations. The only way business occupiers not happy with their RVs can access this evidence is by challenging the valuation through the “check challenge appeal” system (CCA), a lengthy and costly process for the occupier. We expect that many challenges to the valuation process will be submitted over the coming months following concern that the VOA uses flimsy evidence when conducting property valuations. The difficulty is that the current system makes it extremely hard for businesses to appeal their assessments. Recent tinkering with (CCA) and removing the Check part of the system has only added to the confusion. The request for the annual provision of information from the ratepayer, not only confirming physical details of the property on an annal basis but also updates on rent and lease and trading information has also added a significant administrative burden. Colliers believes the current system of appeals is therefore not fit for purpose – only those companies that can afford professional advisors That means the big stores in Oxford Street, or the big hypermarkets or shopping centres, will see the biggest drops in their RVs and ultimately rates bills from April 2023. But some of the smaller shop traders in market towns across the UK, often without any representation to the VOA, may not see much reduction at all.
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