Business rates are a considerable burden for many companies. Whether it occupies a small chain of corner shops or a number of prime office blocks, the company could face difficulty when it wants to challenge the value of the property it leases to get an accurate rates bill reflecting correct values.
Effective from the 1990 revaluation, the Local Government Finance Act 1988 replaced the General Rate Act of 1967 and resulted, among other changes, in the introduction of the antecedent valuation date (AVD), where the antecedent valuation is the hypothetical rental value from which rates payable would be calculated on every separately assessed unit of property.
These would be based on the economic circumstances or market conditions two years before the list became live. Where there has been no correction to the list by a valuation officer – for example, to reflect physical changes or on appeal – the ratepayer remains liable for bills that, recently at least, could have been derived from rental levels up to eight years earlier.
On 1 November last year, new primary legislation, the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Act 2018, received Royal Assent. Where applied it could reverse the valuation implications of the Supreme Court's decision in Woolway(Appellant) v Mazars (Respondent)  UKSC 53. This case is considered the most relevant precedent in determining the correct unit of assessment, which is otherwise known as the hereditament, and which gave rise to the term 'staircase tax'. The Act aims to allow premises that, while physically contiguous, would under the decision form separate hereditaments, to be treated as a single assessment.
The accompanying regulations therefore provide, under specific circumstances, for further appeal under the 2010 rating list as result of the Act coming into force. This ability to lodge new appeals under a rating list that had been closed is, as far as I am aware, unprecedented. Following the recent switch to three-yearly revaluations in England, it is likely to result in the valuation officer maintaining three rating lists at once by 2021 and simultaneously gearing up for a fourth. This underlines the importance of ensuring the Valuation Office Agency (VOA) has adequate resources.
The commencement of the 2017 revaluation in England also introduced an entirely new appeal system – check, challenge, appeal (CCA) – that necessitated significant regulatory amendment by way of the statutory instrument the Non-Domestic Rating (Alteration of Lists and Appeals) (England) (Amendment) Regulations 2017 and the Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) (Amendment) Regulations 2017.
Although the fundamental single right of appeal under the same specific grounds remains, CCA was ostensibly conceived to fix what was perceived by many toward the end of the previous 2010 rating list to be a broken system because a large percentage of appeals or proposals lodged with the VOA were not being settled without involvement of the Valuation Tribunal. Under the previous system, appeals would be listed for hearing automatically once a statutory time period expired.
Consequently, the burden of administering appeals, most of which would not result in a hearing, was being felt too keenly for what was only intended as a recourse after proper negotiation between parties had been exhausted.
In order to stem the flow of unnecessary cases, the new process therefore aims to:
As a result, the ratepayer must register with the VOA via an online portal using a Government Gateway ID, which requires a National Insurance number and leads to delays when ratepayers and landlords are based outside the UK. The ratepayer is then required to provide proof of their interest in the relevant property – usually a copy of the rate demand – allowing them to claim the corresponding assessment. Only when the VOA processes this can the ratepayer nominate a professional adviser, should they wish to, using a unique agent code. The adviser can then take formal action in respect of their client's assessment.
After factual matters pertaining to the hereditament in question and the wider property have been confirmed, a challenge can be lodged; in most cases this must be done within four months. At this stage, the statute directs that the valuation officer receive a fully developed case citing all relevant evidence. The ratepayer still has to prove that their assessment is inaccurate. However, the VOA has up to 18 months to consider a challenge, in which time they might ask for further information or enter into discussion with the relevant party, before issuing a decision notice. This may or may not result in a rating list alteration.
Only when a decision notice has been issued – or failed to be issued – within 18 months can a formal appeal be made to the Valuation Tribunal. The unrepresented ratepayer may thus think the requirements of CCA are at best off-putting and at worst an almost insurmountable hurdle; though it should be noted that a decision notice may be forthcoming far sooner.
Thus far, VOA statistics indicate that many checks are being resolved swiftly although the system is still at an early stage of operation so it may be hard to draw conclusions. The complexity of the mandatory electronic interfaces and regulation that underpins them remains, but the VOA is working to speed up data input. Users should check the agency's targets and give feedback when it does not meet them.
Clearly, the effectiveness of the new system will depend on the professionalism, responsiveness and diligence of all parties, but it remains too early to draw any firm conclusion about whether it can. The government, keen to reduce the number of appeals, seems so far to have done so. According to VOA figures, in the first year of the 2017 rating list only 23,770 checks were submitted in England, compared with 222,960 appeals in the first year of the 2010 list. This contrasts with Scotland, where the system has not been altered and where there has been a slight increase in appeals. However, the first year's figures for England probably reflect the more tentative approach taken by advisers.
It has been two years since the 2017 list was introduced, and bearing in mind that a check can be lodged at any time by an interested party before the list expires, it is possible that a flood has yet to come as experience with and confidence in the CCA process gains momentum. A recent update to the process announced in December 2018 may also increase the number of checks lodged in future.
The RICS Rating and Local Taxation Group and wider organisation, the Institute of Revenues Rating and Valuation, the Rating Surveyors' Association and the VOA continue to work closely together to help simplify the process; but one particular concern was for those who could not engage with the online platform due to a lack of identity credentials. As a result of this collaboration, the VOA has allowed the option of appointing a person or company to trusted helper status, making the process simpler and more accessible.
The chancellor addressed the concerns of high-street retailers in his 2018 autumn budget. He announced that their bills will now be cut by a third for the next two rate years on qualifying premises, provided the rateable value falls below £51,000. The relief is subject to state aid limits. While this relief – and the intention to grant 100 per cent relief for all stand-alone public conveniences – will no doubt be welcomed by those likely to benefit, I believe it demonstrates that in the medium term at least there are no plans to alter the appeal system any further, much less the fundamental basis of the tax.
Therefore, although it is probable that CCA is still largely too untested to form a view on whether it improves on the old procedures, it is important to recognise the role of the individual and how they work within the legislative framework. Surely any system will only be as effective as those who use it, so only by approaching it in an honest and professional manner can we expect other parties to do the same.
Related competencies include: Capital taxation, Valuation