Spring Budget 2017: An Opportunity to Address Unfairness in the Business Rates System | Altus Property Services

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Spring Budget 2017: An Opportunity to Address Unfairness in the Business Rates System

Comment by UK President of Business Rates at Altus Group, Alex Probyn, March 2017

Reform of the business rates system

“The system should not be dismissed as broken. A tax based on property values makes it very hard for large companies with expensive advisers to wriggle out of a fair contribution to public services. It has a very high collection rate. Some sensible and positive adjustments will address the unfairness in the system.”

Support for small businesses

“Small business facing large increases need support, but Britain isn’t just a nation of shopkeepers and innkeepers. There are too many jobs in manufacturing and its supply chain for us to take these larger companies for granted. We shouldn’t assume that major employers will suffer in silence. If they vote with their feet, especially given other pressures for them to do so, we will struggle to get them back.”

The system of transitional relief

“Many ratepayers in economically disadvantaged areas of England and Wales will be shocked to find their bills barely changed in comparison with substantial falls in rateable values. Larger business premises in these areas, in particular those with the most significant revaluations, may never receive the full benefit of this decline in values.”

“The weight of transitional relief is a result of soaring values, especially in London and in the prime retail sector. Other areas and sectors throughout the UK have struggled in comparison. For them, this will offer no meaningful relief at all as they must subsidise those regions that are prospering. It won’t feel like the fair deal that many were expecting after so long.”

Reliance on appeals to correct unfairness

“The Chancellor has taken comfort in about one million appeals being lodged against the two million properties valued. If we are going to rely on appeals, as the Chancellor has suggested, it is absolutely vital that the appeals system is efficient.”

“An efficient appeals system would allow the reason to be discovered quickly when something was manifestly wrong. Under the new system, the valuation office has no obligation to share information before the appeal stage is reached. Ratepayers are forced into making appeals that the system can’t cope with.”

Government response to consultation on Check. Challenge. Appeal

“We need to see the long awaited final detail of the appeals system and that it addresses the flaws in Check Challenge Appeal. We will be disappointed if that is not published alongside the Budget, three weeks before the new system comes into operation. We want reassurance this new system is fit for purpose and properly resourced.”

“The aim of Check Challenge Appeal seems to be to discourage appeals, which isn’t consistent with the Chancellor’s reliance on it to correct unfairness. The draft regulations promised an unforgiving system that gives leeway to the valuation office, but demands prompt decisions and high standards of care from the ratepayer.”

“Our greatest concern is in the new definition of “inaccurate” rateable values that are therefore appealable. Inaccurate now means “outside the bounds of reasonable professional judgement”. Without any further detail in the regulations, and no body of case law to guide interpretation, this is a very soft and uncertain test that allows a large, and costly, margin of error. In effect, the valuation office can refuse to correct the rating list on the ground that it was “pretty close”.”

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