Business rates are a major overhead for any organisation. These
rates can often be reduced by applying, with evidence, to the VOA. Chris Barker explains how to maximise your chances of success.
24 March 2011
Every penny counts in the current economic climate and reducing operating costs is a business critical issue. Business rates can be a significant and often overlooked overhead – typically the third highest cost after wages and rents – but there are simple steps companies can take to manage down their liability and what they pay.
The values for charging business rates are set every five years by the Valuation Office Agency (VOA), which manages the periodic Rating Lists upon which collecting business rates on behalf of the government are based. The last revaluation took place in April 2010 so we are into a new value regime for charging. This is why many businesses will have seen an increase in their rates bills.
How rates are calculated
The government’s system for charging business rates is based on complex calculations relating to property rental value, the uses which are made of that property, and circumstances around the property which are seen to have impacts on it.
The new values are primarily based on the annual rental
value on full repairing and insuring terms that would apply to the property as of 1 April 2008. Before that, of course,
the UK economy has seen substantial turmoil and property values have been affected substantially. In many cases,
the rental value is out of step with the VOA assessment as taken in April 2008 and is considerably lower.
At the same time, because VOA caseworkers can only visit and assess a small proportion of the UK’s total rateable non-domestic stock, a high degree of valuation work is based on past records, without the individual property, its use and locality being fully scrutinised.
How to appeal
There are ways you can appeal against the charges being proposed. By submitting a formal appeal, it is often possible to agree a reduction with the VOA. The most important thing is to provide evidence arguing against the new Rateable Value and explaining why it is not appropriate or justified.
These are some of the things that could help you secure a successful appeal and a reduction in your rates bill:
1⁄ Change of use
Do you still use your property in the same way as you did two years ago? If you have reconfigured your space or are involved in a period of reconfiguration, you may be being charged more than you should. Even relatively minor changes to layouts and how you use your property may make a difference in the rates bill.
2⁄ Material change
Have there been major roadworks or other physical events outside your control which have reduced access to your premises?
They could be grounds for an appeal if these have impacted upon the trade at your premises.
Has any new development in your area changed the balance of competition in the area (eg a new shopping centre, leisure centre or hotel development)? Again, any new development could have a knock-on effect on what you should be paying.
4⁄ Vacant buildings
Has there been any increase in vacant commercial buildings in the locality? This could have had a negative impact on trade.
If your property has been subject to flooding, fire damage or other similar calamity, there may be grounds for a reduction in the rateable value.
If any or all of these apply to your property you should consider appealing and would be well advised to seek specialist representation. The new Valuation Tribunal Regulations for the 2010 Rating List will put greater onus on the ratepayer and the professional representative in producing a coherent case within strict time limits. Seeking professional help early can make all the difference. CVS typically saves its clients 10 per cent on their rates bills at appeal so the rewards can be significant.
Chris Barker is a senior rating consultant at business rates specialists CVS