• Jan 15 / 2016
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Check, Challenge, Appeal – Could the Enterprise Bill Ensure A Fairer Business Rates System?

In the Government’s proposed Enterprise Bill, significant changes have been made to the appeals system for business rates. Many business groups have been calling for root and branch business rates appeal reform for some time due to huge delays occurring in the past.

Currently, appealing business rates is a free but multifaceted process. As can be seen on the Valuation Tribunal’s website for business rates appeals, there are a number of steps to be taken into account.

The new appeals process known as “check, challenge, appeal” demands an entry fee but has been welcomed by both the British Beer and Pub Association (BBPA) and the Association of Licensed Multiple Retailers (ALMR) as more streamlined.

Such groups are hoping that the new system could result in businesses obtaining much fairer business rates. However, this will demand greater transparency over rateable values, and the Valuation Office Agency (VOA) is presently unable to reveal evidence behind earlier valuations due to legislation.

What does the new business rates appeal system of “check, challenge, appeal” mean?

The new system, which is currently going through parliament, consists of three stages following an entry fee:

  1. Check – the initial stage will see businesses ensuring their rateable value and business rates information is correct and rectifying agreed errors quickly;
  2. Challenge – the next step will allow businesses to challenge their rateable value with the VOA who will then provide a judgement;
  3. Appeal – the final part offers businesses the opportunity to appeal their judgement to the Valuation Tribunal.

As it stands, ratepayers will have to enter the tribunal to discover what information has led to the valuation of their property. However, there are hopes that this can be brought forward to save time for both ratepayers and the VOA.

Early transparency will be essential

Although the procedure seems much simpler, there are concerns about the degree of transparency that will be involved. For example, if it transpires that it will take years for businesses to discover the facts behind their business rate valuation, they may be deterred from using the new system.

In order for “check, challenge, appeal” to improve the current situation, ALMR chief executive Kate Nicholls has suggested that full disclosure of rental valuation should be given at the earliest opportunity. If this does not occur, “the Government may find itself dealing with numerous, time consuming appeals that make life easier for nobody”.

  • Jan 10 / 2016
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Councils to be reassessed for business rates shakeup

Levels of need in council areas will be re-evaluated as part of the planned devolution of business rates to authorities, it has been revealed.

Stuart Hoggan, deputy director of local government finance reform and settlement, confirmed a new way to assess need would be developed as part of the redistribution system for retention and called on his department to help with the development of the new system.

The move comes after George Osborne unveiled a radical new business rates system that will see councils gain full control over rates in their area by 2020. While the changes will allow councils to benefit by keeping the money from any increase in business rate profits, the Government will be withdrawing its support top-up grant.

Critics have warned economic inequality could increase

Some commentators have voiced their concerns that the business rates overhaul will allow wealthy councils with high demand for new business to make even greater profits, while those with less demand or lack space for development will see their spending power drop.

Frances O’Grady, General Secretary of the British Trades Union Congress, said that the communities in most need investment are those with the weakest business revenue base.

Business rates devolution will not help British industry according to major commerce groups. The British Retail Consortium (BRC), Confederation of British Industry and the Association of Convenience Retailers have all spoken out against the proposed changes, with the BRC describing them as a “great panacea” to the government’s many inequities.

A way of measuring relative needs and resources needs to be introduced

The full devolution of business rates will see government rates end as well as additional responsibilities passed to town halls to make the switch financially neutral. Total revenue support grant for 2016/17 is estimated to be nearly £7.2 billion, while total business rate revenue is around £26 billion.

Speaking at the Local Government Association’s annual local government finance conference, Hoggan said a new way of measuring need would be developed to account for the fact that “the instance of business rates is different from the instance of need to spend”.

He added: “There’s a future proofing issue there – we will have a position at day one in the system, but when do we return to reset the needs baseline, and how responsive is that over time?”

“The other side of the coin to being responsive to changes in need is the continuing incentive that you see from business rates growth, so there’s a balance between needs and incentive there that needs to be struck.”

The current system of local retention may become redundant

The baseline for the current system of local retention of half of business rate growth was set in April 2013. A system of top ups and tariffs based on council’s formula grant allocations was introduced to ensure a fair starting point for all authorities. These were reviewed at regular intervals and reset accordingly.

Hoggan said the way resets would work in a fully localised system was also an open issue and it was not yet possible to guarantee that full-scale resets would take place under the new scheme.

He added: “The commitment is to 100% retention to the sector as a whole, but it’s not out of the question that it would be the right thing to do a re-allocation periodically. But there may be other ways of doing this that don’t require these big resets, and that’s the thinking we want to do with you.”