The headlines continue to be dominated by the 2017 revaluation and the disappointing approach to reform delivered by the Chancellor's Spring Budget, which simply repeats the government's commitment to more regular revaluations with yet further consultation to follow before 2022. However, if you look behind the headlines, this revaluation is being somewhat overshadowed by a complete overhaul of the business rates appeal system, which brings with it yet more worrying changes for ratepayers.

The new appeal system is known as Check, Challenge, Appeal (CCA) and will apply to any appeal brought against rateable value (RV) in the April 2017 list. Under the new system, a valuation does not have to be right as long as it is reasonable. What does this mean in practice?

The regulations

The regulations implementing CCA are proposed to come into effect on 1 April 2017 but, at the time of writing, have yet to be published. The Department for Communities and Local Government (DCLG) published its long-overdue response to its summer 2016 consultation on CCA just after the Chancellor delivered the Spring Budget. A link to the response can be found here.

The response to the consultation makes it clear that CCA will be implemented in substantially the form envisaged by the draft regulations, notwithstanding overwhelming objections received from businesses, surveyors and agents.

John Webber, Head of Rating at Colliers International, commented that CCA "points to a system that would become more confrontational, more litigious and costly" and notes that the proposed changes will "severely reduce the rights of ratepayers to challenge their assessments and their right to a fair hearing".

So what is CCA?

Ratepayers will continue to submit proposals to change the RV of their assessed properties in the list. This will be done through a new digital platform (which the consultation paper alarming refers to as still in the process of being built with less than two weeks to go).

The check stage is in line with the overriding duty of the Valuation Office Agency (VOA) to maintain an accurate list by enabling factual errors to be identified early on. If the VOA accepts the factual changes sought, it will amend the list. If not, the onus is on the ratepayer to proceed to the challenge stage.

A detailed report will need to be lodged with the VOA outlining arguments, supporting evidence and the proposed new RV. It will not be possible to rely on evidence at the appeal stage that was not put forward at the challenge stage – thereby requiring significant frontloading of costs to get it right.

The onus is on the ratepayer to evidence, with limited visibility as to the data on which the VOA has based its assessment, why the valuation is incorrect. Discussions are then held with the VOA, which will issue a decision notice as to whether or not to alter the RV. If the VOA refuses to alter the RV, the ratepayer can, in theory, proceed to appeal.

The regulations will introduce a fee structure to bring any appeal, as well as creating penalties for the provision of false information (even if such information was provided unintentionally).

The most controversial aspect in the draft regulations is the requirement that RV had to be "outside the bounds of reasonable professional judgement" in order to successfully progress an appeal. Following consultation, this wording has been replaced so that "where the VTE do not think it is a reasonable valuation they will continue to be able to make a change to the list".

The reaction to this change has largely been to view it as semantic wordplay described by Jerry Schurder, Head of Business Rates at Gerald Eve, as no more than "tinkering", leading him to ask, "Can you spot the difference?".

If something is outside the bounds of reasonable professional judgement it is, by definition, not a reasonable valuation. The "tests" are two sides of the same coin and both come very close to imposing a requirement to show that the VOA has acted negligently in establishing RV – no easy task.

The margin of error for what is reasonable is arguably just as wide as the margin of error as to what is outside the bounds of reasonable professional judgement. The government's response to the consultation makes it clear that it does not intend to impose an arbitrary fixed percentage boundary on what constitutes a reasonable valuation.

Consequently, we are left asking the question: how bad does a valuation have to be before it is unreasonable?

If the aim was to increase certainty and reduce the number and backlog of appeals, CCA clearly fails in its objectives.

Some ratepayers will no doubt be put off seeking access to justice due to the cost and increased hurdles involved. However, it is quite possible that the number of legal challenges brought will actually increase due to the significant rise in business rates liability under the new regime and the amount at stake for ratepayers.

Consequently, the appeal process will take much longer, particularly if the new reasonableness threshold is itself the subject of judicial review proceedings – which seems inevitable.

The injustice of being stuck with an incorrect RV is compounded by the government's failure to take any action to introduce more regular valuations, with the next revaluation being confirmed for 2022. The Chancellor answered that there would be a consultation on making revaluation smoother and more efficient, with a view to revaluation taking place every three years. We have heard this before. John Webber further notes: "For five years you are stuck with a valuation which could be anything up to 20 per cent higher than it should be. We are staggered – almost lost for words – it is that draconian."

Final judgment on Check, Challenge, Appeal is reserved pending publication of the regulations, which we can only hope will give more specific guidance as to what constitutes a reasonable valuation. However, a taxation system that relies on inaccurate valuations cannot be left unchallenged: wrong but not unreasonable clearly cannot suffice.