The Royal Institution of Chartered Surveyors (RICS) is urging firms in the North East to check their newly proposed business rates – available from 30 September 2016 – with care and become familiar with the new Check Challenge Appeal system which will be introduced from 1 April 2017.
RICS – a professional body which sets standards in the land, property and construction sectors – has long called on the government for a more efficient appeals system that will offer certainty, consistency and stability to property markets, and says the new appeals process offers no significant advantage over the existing system.
It has been seven years since values for business rates were last assessed, yet there are still almost 300,000 outstanding appeals challenging the 2010 rating lists.
RICS argues that the new three stage appeal system – which replaces a two-stage process – is overly complex and will not improve transparency or fairness for the taxpayer. Therefore it does not serve their best interests, particularly the suggestion that the powers of the Valuation Tribunal to revise assessments, following an appeal, should be limited.
The new proposed three stage ‘Check, Challenge, Appeal’ process
- Check: Rate payers will need to ensure the facts on their new rateable value are correct. Details of what will be required are not yet known, but are likely to include information about the property’s tenure.
- Challenge: This stage can only be instigated by the ratepayer within four months of the conclusion of the check stage, with a further 18 months allowed to conclude the challenge. It could therefore be nearly three years from starting the process until the ratepayer is allowed to make a formal appeal.
- Appeal: Those granted an appeal have up to four months to do so and must pay a fee of up to £300, which is refundable only if successful.
RICS says this new system could also prove confusing to many business owners and increase the volume of litigation surrounding business rates, with the proposal that Valuation Tribunal would be unable to order an adjustment to their proposed new rates unless they are ‘outside the bounds of reasonable professional judgement.’
Paul Easton, Head of Business Rates at Lambert Smith Hampton in Newcastle, said: “Rateable values have always been set based on the rental value of a property. This latest suggestion of permitting a margin of error is madness and unjust.”
He adds: “What is being proposed is more complex, less transparent and more unwieldy than the current system, which is itself in crisis. The Government needs to stop tinkering and needs to start listening to those who actually use the rating appeal system.”
Geoff White, RICS Policy Manager, North & Mids commented: “If it is the Government’s intention is to dissuade ratepayers from investigating, understanding and challenging their assessments, then these measures may have a degree of success but surely in circumstances where an explanation and justification of an assessed tax is sought, brevity and transparency should be the aspiration.
“In the interests of expediency the ‘challenge’ stage itself should last no longer than six months. We would also like to see a three year business rates revaluations cycle introduced to help with consistency and transparency.”
If you would like to contribute to RICS’ response to the Government on business rate reforms e: thooper@rics.org
The 2017 business rates revaluation will come into effect on 1st April 2017 and will re-assess all business properties based on rental value as at 1st April 2015. For further information visit www.gov.uk