How do you rate yourself?

A new business rating list comes into force this month and it could mean steep rises for some businesses. You’ll need to be quick though if you want to make an appeal.

11 March 2010

A new rating list comes into force on 1 April which will affect the liability of occupiers (or in the case of empty properties, owners) for non-domestic business rates from that date.  

1. What is a rateable value?


Business rates are calculated by multiplying the rateable value of a property (as it appears in the local rating list) by the multiplier set by the government. Local rating lists are reviewed by the Valuation Office Agency (VOA) every five years. The last review took place on 1 April 2005 and properties were attributed a rateable value based on the market rents at 1 April 2003.  

The new April 2010 list is based on market rents at 1 April 2008. It coincides with a 
peak in the market for many places and may also mean steep rises in business rates for some ratepayers. However, the true effect of the new rates will not be felt immediately due to transitional provisions which cap the percentage by which rates bills can increase or decrease each year.

2. Can the value be challenged?


There are grounds on which the 2005 and 2010 rating lists can be challenged. For example, a property should be removed from the rating list entirely (eg, because it is now domestic property), or the rateable value was inaccurate on the day the list was compiled, or has become inaccurate due to a material change in circumstances, such as a change in the physical state of the property, or a change in its locality (eg, new competition or severe road or demolition works).
Time is now very tight, however, for those who want to challenge the 2005 rating list since the deadline for most types of proposals is 31 March 2010. 

Formal proposals to alter the April 2010 list can generally be made from 1 April 2010 until the next rating list (in 2015) is compiled. 

While this may seem plenty of time, the transitional arrangements described here may mean some ratepayers will not appreciate the change in rateable values for a number of years. Since some alterations to rating lists can only be backdated to the date the challenge is made, ratepayers are encouraged to check the new list sooner rather than later.

3. What is the appeals process?


The procedure for challenging an entry in the 2005 and 2010 rating lists is set out in detail in the Non-Domestic Rating (Alteration of Lists and Appeals)(England) Regulations 2009 (the ‘Regulations’), but it can be summarised as follows:

1. Complete a proposal Where an “interested person”, which includes most occupiers and landlords, has reason to believe that one of the grounds for altering a rating list exists, he should submit a written proposal to the Valuation Officer (VO) for the authority for which the list is compiled. 

There is no prescribed form of proposal (although a standard form is available from the VOA), but the regulations require it to include the name, address and capacity of the proposer, and identify the property and the respects in which the list is proposed to be altered. It must also state the grounds for making the proposal and certain other information, which will vary depending on the ground being relied on.

2. Invalid proposals If the VO decides that the proposal is invalid, he will serve a notice of invalidity on the proposer who can then serve a corrected proposal, or appeal to the Valuation Tribunal for England (VTE).

3. Agreed proposals Alternatively, the VO may accept the proposal as both valid and well-founded, and alter the list. Alternatively, a written agreement may be reached between the VO, the proposer and other relevant parties as to an alteration which differs from that proposed, but is, nevertheless, acceptable to all.

4. The VTE If the VO accepts the proposal as valid, but does not consider it to be well-founded and no mutual agreement has been reached, the VO will refer the proposal for determination by the VTE. In most cases the VTE will arrange for a hearing, and parties can attend in person or via their representatives. The VTE has no power to award costs.

5. Further appeals Appeals from the decisions of the VTE lie to The Lands Chamber of the Upper Tribunal and from there, to the Court of Appeal. In both instances, however, a proposer will be potentially liable not only for his costs, but the costs of his opponent too.

6. Get advice The law governing rating challenges is complex and advice from a qualified professional should always be sought before embarking on a proposal to alter a rating list.


Hayley Harris is an associate in the real estate litigation department at Allen & Overy