Summary: The 12 month outlook for ratepayers is mixed. Rating surveyors struggle with the Government gateway for valuation challenges. Government is transferring to ratepayers the onus of providing relevant information. If Brexit leaves Parliamentary time for legislation, civil penalties for incorrect information will arrive in 2017-18. Meanwhile, BLP partner Roger Cohen suggests a solution for winning an appeal that a rateable value is not reasonable.
The National Rating Day conference is an annual opportunity to hear from all sides in the business of business rates what’s happening and what to expect. This year’s conference was held on 29 June 2017.
There is a high level of frustration from the rating surveyors in private practice around the need to register for a Government gateway in order to be able to challenge a rateable value on a client’s behalf. Having registered with the gateway, further difficulties are experienced in commencing the challenge procedure.
The ratepayers who instruct reputable firms of rating surveyors will not be bothered by these technicalities. For ratepayers, the overall tax take, the impact of rates as compared to corporation tax, the levelness of the playing field between property companies, their retail tenants, the virtual retailers, IT phoenixes and the multi-national IT behemoths are all up for discussion.
The rating surveyors will eventually and with much blood, sweat and tears master the gateway. What’s next?
Since 1 April 2017 the new challenge process known as “Check, Challenge, Appeal” is now in force for appeals against assessments in the rating list that came into force on 1 April 2017.
The regulations giving effect to this change did not include the civil penalties for giving the Valuation Office incorrect information (for example, as to the amount of the occupier’s rent) which were included in the consultation papers for “Check, Challenge, Appeal”.
None of the speakers from the Valuation Office or the Department of Communities and Local Government said that civil penalties are no longer a policy objective. My take is that the introduction of civil penalties needs an affirmative Parliamentary vote. The draft legislation was not ready in time for 1 April 2017. Now that milestone has been passed, the question is whether the demands of Brexit will mean that there is no spare Parliamentary time for that legislation to be passed. My impression is that civil penalties will be enacted in 2017-18.
The “Check, Challenge, Appeal“ regime provides for a ratepayer, aggrieved by a rateable value, to request a check of the information held by the valuation officer. In response, the VO must make reasonable disclosure and can request the ratepayer file any missing information.
The ratepayer must say if any information produced by the VO is inaccurate and confirm that the information it has provided is accurate.
If this checking does not produce a consensus, the ratepayer can make a proposal to alter the list. The information filed by the ratepayer in support of the proposal will shape the appeal proceedings, if they prove necessary. It is the proposal which is the “challenge”“ stage.
If the ratepayer does not secure an agreement, it can appeal. An appeal against a rateable value must be made on the ground that the valuation of the rateable value was “not reasonable ”.
What can this mean?
One view is that there can be no successful appeal against a rateable value if the rateable value is within the range of reasonable valuation for that property (or hereditament).
In my presentation to the conference, I suggested another reading.
The collection of further information is at the heart of “Check, Challenge, Appeal”. The process is designed to check and/or supplement the information available to the valuation officer when making the original assessment. By the time the appeal comes to have been heard:
- the valuation officer may have disclosed information to the ratepayer;
- the ratepayer may have corrected inaccurate information received from the valuation officer;
- the ratepayer will have disclosed information not previously available to the valuation officer;
- it is also possible that the billing authority may have had some information to contribute.
Just think of all that data, not available when the list was compiled.
In legal/procedural terms, the original assessment could not be a reasonable assessment because the valuation did not have all the relevant information to hand. It follows that in an appeal where the information available has been corrected or supplemented, the original valuation cannot be reasonable. Accordingly, the Valuation Tribunal is entitled to substitute its own view of what is an accurate valuation.
At the conference, the President of the Valuation Tribunal for England assured the delegates that the VTE would find a fair solution.
Unless and until my alternative reading is approved by an authorative decision of a tribunal or Court, I remain concerned that the new regulations compromise the accuracy of the list for a range of “reasonable” value to the detriment of ratepayers.
Before the last Parliament was dissolved BLP represented a number of property and business organisations in complaint about the reasonable valuation ground of appeal to the Joint Committee on Statutory Instruments. They may yet comment as Parliament gets back to business as usual. And one peer may seek to raise the matter on the floor of the House of Lords.
Medium range forecast
The outlook for rating and its practitioners is unsettled. Civil penalties are threatened and may cause some turbulence. It may take 2 years or more for the first 2017 appeals to come to a hearing. Once heard, the promises of fairness and the time for creative analysis may allow ratepayers may give to ratepayers an appeal system in which the accuracy of the rating list will remain the objective.
Ratepayers need responsible and reputable rating surveyors who have managed (against the odds) to get through the gateway.
Make sure you treat requests by your surveyors for information seriously and promptly.