Businesses could be forced to pay up to 20% higher business rates under new government proposals
Posted on August 26, 2016.
If the proposals are introduced by the UK Government, an unprecedented number of appeals from business ratepayers is predicted.
The proposals to increase the rates were contained in draft regulations for England which were put forward by the Department for Communities and Local Government, on which consultation began earlier on this month.
The Department has proposed that when considering appeals, the Valuation Tribunal for England should order changes in the rateable value; only where its outlook is that the original valuation is “outside the bounds of reasonable professional judgement
Stuart Woolgar, Security Director at Global Guardians
, said "The increase in business rates will have severe cost implications to those with vacant commercial assets, and many won't be able to afford to pay the charges. There will be many businesses and private owners looking for alternatives ways to reduce these costs, and this is something that we will be able to help with".
He also commented: “We see significant numbers of empty buildings with high rateable values every day and this is only going to increase in light of the Governments propositions because of the 20% rise in fees, and the vast amounts of empty buildings within the UK".
An example posed by a leading property professional: A rateable assessment of a vacant property
£100,000 challenged by a tax payer who believes it should be £80,000. If the Government were to consider that within the bounds of reasonable professional judgment – in line with the established “margin of error” applied by courts that is typically between 10 and 15%, but can be as high as 20% – that would leave the ratepayer paying over the odds.
For major business ratepayers, even a 10% rise in rates could be worth millions of pounds over a couple of years.
If implemented following consultation, it is believed that the new approach could be challenged successfully in the courts, meaning that it could have the unintended impact of dragging out appeals further.
Additionally, it would lead to a 'flood of appeals' from businesses and the end of the current rating list, as ratepayers would fight for every penny if they thought they were going to be harshly treated under the 2017 list.
The Government consultation on the draft regulations, intended to bring forward the business rates reforms under the Enterprise Act 2016, will run until 11th October.
On its website, the DCLG says: “The government is committed to delivering an improved business rates appeals system. There is widespread agreement that the current system is broken and in need of reform. By the end of March 2016 the VOA had succeeded in clearing nearly 666,000 appeals on the 2010 rating list."
“Whilst further progress will be made as the VOA resources are transferred from Revaluation 2017 to resolving appeals, too many appeals remain held up for too long, creating costs and uncertainty for businesses and for local authorities. Longer term performance is dependent on successful implementation of the reforms outlined.”
Utilising the Guardian Solution, you are able to mitigate or significantly reduce the rateable value associated with your vacant assets due to the change in the ancillary use of the building from commercial to residential.
If you have any questions regarding your empty building and we are able to mitigate your empty business rate charges, please contact us on 0208 370 0288 and we'll be happy to answer any of your questions.