What are the most common issues for pub licensees and pubcos?
Certainly the most frequent enquiries are fuelled by the belief that the business rates payable on licensed premises are excessive. This assertion may be based on nothing more than intuition. For example, licensees and pubcos may not see their profitability improve during a period in which their rates bills have progressively increased, and it is only natural to scrutinise and question if you think there is a disparity.
Is there a particular issue that you have seen more often in the past 6 months?
The revaluation of rateable values, which came into effect from 1 April 2017 onwards, coupled with increased public scrutiny and media coverage of business rates, has led to publicans becoming ever more aware of their ability to challenge their assessments. The view in the trade, understandably, is that pubs are being particularly hard hit by this revaluation and the hikes in business rates costs as a consequence.
The high profile media coverage which tends to imply that business rates are too high and unfair to operators generally is encouraging many more publicans to make a formal challenge.
Please share some anonymous examples of how licensees have made the issue worse by dealing with it inappropriately? (most common mistakes)
The single biggest mistake made by publicans is in instigating a business rates appeal with the Valuation Office Agency (VOA) before a proper appraisal has actually been undertaken, with financial information submitted early on in the process. This can actually lead to a worst case outcome, where instead of attaining an equitable ‘status quo’ position on rateable value, the VOA may actually determine that the assessment is too low, and they can and will adjust the valuation accordingly.
It is worth considering that, though your rateable value may be higher than that applied to a nearby property of the same sort, this does not necessarily mean that yours should be reduced. It is possible that both valuations are wrong.
Outline the broad steps that you would take with the licensee to help them resolve the issue.
Fundamentally, it isn’t possible for pub licencees and pubcos to fully understand the calculation behind their valuation, and in instances where the valuation is visible, the comparable evidence between different properties is not, which makes it extremely difficult to see if an assessment is reasonable. The ‘fair measurable trade’ principle is also an important part of calculating the rateable value of licensed premises, but that isn’t openly disclosed either.
The only tangible way to resolve concerns around rates valuation and achieve the best outcome is through formal appeal, though as mentioned it isn’t something that should be rushed into head first, and it may not always lead to the outcome you’d wish for. It is wise to be as fully appraised as possible of all the facts and available information before you proceed with a challenge, and expert advisers can help smooth this process considerably.
What can licensees do to avoid these common problems?
As mentioned, rating valuation is a very complicated process, and careful consideration of all available information about the method of valuation should be given before making an official challenge. Further complexity is added by the VOA’s new “Check Challenge Appeal” process, which can also be onerous to navigate and complicated.
However, for those who want to be self-informed then the VOA website does contain a great deal of helpful information, and if you’re seeking professional advice then Chartered Surveyors will usually also provide 30 minutes of free advice to those seeking help.