An industry-wide letter has been sent to the Joint Committee on Statutory Instruments concerning proposed changes to the business rates appeals system. New Regulations governing rates appeals are proposed to come into effect from 1 April 2017. However, the Regulations have yet to be laid before Parliament. Further, the Department of Communities and Local Government (DCLG) has failed to respond to the outcome of its own consultation on the appeal changes which closed on 11 October 2016. The situation is now time critical with the 1 April 2017 Revaluation about to come into effect at the same time as the new appeals regime.
We are extremely concerned that DCLG has not commented on the consultation and that there is complete uncertainty surrounding what is happening with the new appeals regime.
The industry letter focusses in particular on the inherent uncertainty in only permitting a change to the list where the rateable value is shown to be 'outside the bounds of reasonable professional judgment'. We simply do not know how this would be interpreted. It could in theory allow a 20% margin of error. That means an appeal will fail unless the determined Rateable Value (RV) is outside the bounds of what the Valuation Tribunal considers to be reasonable professional judgment.
Bryan Johnston, Head of Property Litigation at Dentons in London, comments: "This flies in the face of the current obligation of the Valuation Office Agency to maintain an accurate ratings list. The Tribunal should determine what the actual rateable value is, not engage in assessing whether or not the actual RV falls within a wide margin of error. The consequence of this is that a property which the VOA assesses to have a RV of £1,000,000 could have an actual RV of c. £800,000, yet the Tribunal would not be able to alter the RV unless it considered this to be outside of reasonable professional judgment. There is no reasonableness in this flawed system."
Business rates is an issue of primary concern to the property industry. The spotlight will be very firmly on it in the run up to revaluation and beyond.