Despite some valid criticisms and difficulties with the new appeal regulations for business rates, as of 30th June, 100,740 non-domestic properties in England – from shops to offices to pubs to public sector buildings – have registered a ‘Check’ since 1st April 2017, the first stage of a formal appeal under Check. Challenge. Appeal.
Although historically low, it was pleasing to see that the volume of ‘Checks’, being both registered and settled, rose by 8% and 14% respectively for the quarter ending 30th June compared with the previous quarter.
Whilst there is an increase in the number of appeals currently being resolved at the ‘Check’ stage, many disputed valuations proceed to ‘Challenge’, and this is where the Valuation Office Agency must now focus their attention on the speed of response and the resources being deployed. Worryingly, the number of outstanding ‘Challenges’ are increasing, with diminishing confidence that they will be resolved before approaching the deadline for ‘Appeal’.
The number of outstanding ‘Challenges’ has risen by nearly a third during the last quarter alone from 6,980 at the end of March this year to 9,260 as of 30th June 2019; with many ‘Checks’ seemingly being shuffled to ‘Challenge’ unnecessarily – which is exactly what the ‘Check’ stage was put in place to avoid.
Given that the numbers are still relatively low, one of the primary reasons for this bottleneck has to be a mix of too little experience at the ‘Check’ stage, meaning too many unnecessarily progress to ‘Challenge’, and then a lack of experienced caseworkers allocated to deal with this increasing ‘Challenge’ workload. All said, more resource is required to solve these unpopular delays.
There are further simple improvements that could be made.
For example, regarding the hospitality sector, the system maintains that the ‘Check’ stage should only consider what is termed ‘correct property information’, but such a narrow view excludes, for example, factual information relating to licensed properties where the level of trade is either factually incorrect or even estimated. Surely it makes more sense that such simple and obvious errors be considered and rectified at ‘Check’ to quickly resolve these?
There is also a common theme in that buildings requiring a nominal value to be applied in the Local Rating List, because redevelopment works are being carried out, are routinely rejected and needlessly go forward into ‘Challenge’. ‘Check’ stage caseworkers often ignore or wrongly interpret submitted documents and reach conclusions which have already been overturned by the Courts about the impact that works have on a property’s business rates position.
The VOA has had a large reduction in resource in recent years through successive spending reviews and they now have the 2021 Revaluation to finalise. What this means is the limited numbers of experienced Valuers are overwhelmed and, as such, only the basic of cases are being resolved at the ‘Check’ stage.
With just 1,560 ‘Challenges’ settled during the last quarter, it seems very clear that the correct blend of experience and resources are needed to engage with ratepayers and their advisers to settle ‘Challenges’ far quicker.
The new system was designed such that more work and evidence is required at the start of the process by the ratepayer and their advisers but, in return, the VOA committed to faster responses and settlement of well founded ‘Challenges’ to circumvent unnecessary backlogs in the Valuation Tribunal. Positive improvements are required – and the system can work, but only if the Valuation Office Agency uphold their end of the bargain.
If the pace does not increase then it is highly likely that far too many unnecessary ‘Appeals’ will, once again, clog up the independent Valuation Tribunal which is exactly what the Check Challenge Appeal regulations were designed to circumvent, in turn, incurring unnecessary delays and fees for ratepayers.
The Valuation Office Agency is recruiting and training which is good news. I accept this takes time but, with volumes increasing and more than half way through the 2017 Rating List, time is of the essence.
More can and needs to be done now.
Alex Probyn is UK President of Expert Services at the real estate adviser Altus Group.