Summary: On 1 April 2017 new business rates assessments came into force. Where rating assessments have increased, ratepayers may want to appeal. Ratepayers and rating surveyors need to engage with the new appeal process known as “check challenge appeal”. But how wrong must the assessment be to win? A “motion of regret” in the House of Lords has revealed how Government thinks.
My company pays business rates – what's the concern?
The rateable value of your premises went up on 1 April 2017. You want to object. In mid-March 2017,the Government introduced the regulations for a new objection process for rating assessments. It applies to objections to the new rateable values introduced on 1 April 2017. The process is called “check challenge appeal” and it is flawed.
Who says so?
Ask any rating surveyor and they will have their tales of woe. And on one topic for complaint, BLP have led the charge and supported the lobby against the regulations.
The culmination of these efforts was a debate in the House of Lords on 11 September 2017.The debate was on a motion tabled by the Earl Of Lytton regretting that the regulations had been introduced without adequate regard for the concerns of rating experts, following incomplete testing and on a truncated timetable. The motion followed a critical report by the Secondary Legislation Scrutiny Committee with which BLP had corresponded on behalf of a group of rating surveying specialist firms.
How is CCA flawed?
Check challenge appeal (CCA) requires ratepayers and advisers to register through an online portal or gateway. The systems were described in the debate as “overcomplex and substandard”. The surveyors with their tales of woe must be right. The Parliamentary Under Secretary of State, (Lord Bourne of Aberystwyth) was forced to acknowledge that “the functionality of the systems was tested prior to launch. However, while pre-launch testing was carried out,… there have been some challenges around the online portal of the new system.”
Also, time limits for appeals are being tightened. Worse, the grounds for an appeal have been changed with the intention of making a successful appeal more difficult.
What's that about a time limit?
The Government is concerned that 72% of appeals against assessments in the 2010 rating list did not result in any change to rateable value. So, the Government intends to review the early implementation of CCA before bringing forward proposals before 2018 for setting a fixed time limit for appeals. This will make the appeal system that much more inflexible and, in our view, unhelpful to business.
How are the grounds for appeal being changed?
The Valuation Officer has a duty to maintain an accurate rating list. Before these changes were introduced, a ratepayer could appeal on the ground that the assessment of rateable value in the rating list was “inaccurate”. If the Valuation Tribunal thought that the rateable value was inaccurate, it would substitute the figure which it decided was correct.
The Government has changed the rules so that a late payer can appeal against a rateable value only on the grounds that the assessment is not a “reasonable valuation” of the rateable value.
Over the course of 2016/17, the Government tried to raise the bar. The regulations now stipulate that a ratepayer can appeal against an assessment of rateable value only if the valuation in the list is not a “reasonable valuation”.
BLP wrote on behalf of a number of property organisations and professional advisors protesting at an earlier, more aggressive proposal. We followed this up with the Committee referred to above. In the House of Lords debate, Lord Bourne said that this was the most contentious issue during the development of these regulations. He added “it lead to concerns – unfounded in my view – that the Government were introducing some kind of margin of error for the Valuation Office”.
Much will be made in comments from the retired Law Lord, Lord Hope in his speech in the debate. He considered that to require a valuation to be accurate may be asking too much, because a valuation is, an expression of the valuer’s opinion, expertly using his art as best as he can to arrive at a valuation that meets the statutory standard. We respectfully disagree with Lord Hope’s comments which relate “accuracy” to identifying precisely what the unit is that is to be valued and “reasonableness “ to the valuation. In passages not addressed by Lord Hope, the regulations use “accuracy” as a test of all the ingredients in a valuation. Also, this was a speech in a debate not a judgment following forensic argument.
The Minister added that the provision clarified that the Valuation Tribunal should consider whether the current valuation is reasonable and “there is no fixed margin”.
The effect of the regulations may be, as the Minister contends, to preclude a Valuation Tribunal from interfering if it considers that a valuation is within an acceptable range, notwithstanding that the Tribunal would have reached a different result. This remains an open question until tested in a Tribunal or on an appeal or judicial review in the Courts.
Formally, the Earl of Lytton withdrew his motion. However, he is to be congratulated for having secured the debate and for having enabled the real difficulties being suffered to be placed on the record.