The Department for Communities and Local Government has finally published its response to the Consultation on reform of the business rates appeal system. Despite the significant response to the Consultation and the concerns raised in respect of the proposals, the proposed reforms are to be implemented on 1 April 2017, at the same time as the new list comes into effect.
The area of most concern was the proposal providing that the Valuation Tribunal had to determine whether or not a property's RV was 'outside the bounds of reasonable professional judgment'. The reason for this was that it could lead to businesses paying an unfair amount of tax where the Valuation Tribunal considers the RV is too high, but as it is within a spectrum of reasonable professional opinion, it is prevented from lowering the RV by ordering the list to be revised to reflect an accurate RV for the property.
In response to the criticism of this proposal, DCLG is determined to press ahead with a system that maintains the current RV if it is considered reasonable. DCLG maintain that this approach will weed out speculative appeals. However, that is of no comfort to a large or complex business where the figures are high and the valuation range uncertain. Fundamentally, the proposals allow for a RV to be maintained that is in excess of what the actual RV should be. This is a sea change from the current system.
DCLG is dropping the 'outside the bounds of reasonable professional opinion' proposal and replacing it with a requirement on the Valuation Tribunal to determine if the extant valuation is a reasonable valuation. The government will not set an arbitrary fixed percentage boundary on what constitutes a reasonable valuation. Therefore, it will simply be for the Tribunal to determine whether or not the extant RV is reasonable. This retains the basic concept of the reform proposed – namely a system based whether the RV the subject of appeal is reasonable as opposed to accurate.
The new regime will be upon us soon and businesses will have to adapt to a different way of dealing with appeals.