Substantial inconsistencies in new business rates list

Exciting isn’t normally a word you associate with business rates but there has been a flurry of activity over the last few weeks with budget announcements finally providing some clarity on transitional relief and Small Business Rates Relief, then release of the draft 2023 rating list weeks earlier than expected.

After the explosive headlines (ok, I’m exaggerating) about larger than expected increases in some areas and reductions that haven’t gone far enough in others, the dust has now settled and we’ve been looking at whether the figures adopted by the Valuation Office are supportable.

One thing that’s abundantly clear in the new rating list is the substantial inconsistencies.

An example is prime Warrington offices: some +30%, others -12%. Prime distribution sheds are up 25% but the rent actually supports much more in certain instances.

This revaluation has I suspect, made much greater use of Automated Valuation Modelling which has then slipped through the net when being reviewed by a human. Which explains the chicken sheds valued at £50 sq m. The problem is a lack of evidence around the 1 April 2021 valuation date.

This leads me on nicely to another development. The outcome of one (of many) recent business rates consultations was a pronounced shift in responsibility to report rent changes and property alterations. Until now the onus has always been on the VO and councils to find alterations; the tenant has had no statutory obligation to do anything other than fill out the forms dispensed by the VO, or face fines which were rarely implemented.

But how does the VO know where to send forms? The consultation introduced a change in responsibility so that tenants or owner-occupiers were responsible to report changes promptly or face punitive fines. The VO recently confirmed that the statutory obligation would be introduced some time over the 2023 rating list and the gov.uk website has recently been updated, directing users to “sign in to your business rates valuation account to report changes”.

When you log in, there is nowhere to report changes other than starting a formal check. Confusion from the VO/HMRC – how unusual!

I completely understand why this concept benefits the VO – they should in theory have perfect information on which to produce future revaluations. The problem is how ratepayers know if their floor areas are wrong in the first place and what happens in those many situations where space has been missing from rating assessments for years – something that’s much more widespread than you might think.

The VO has however introduced something that does work. We pioneered Draft List Representations at a previous business back in the 2010 list, reviewing all clients properties and making informal requests to the VO to fix obvious errors before the new rating list went live. This was very successful but it hasn’t been a formally acknowledged process until now.

If you think your new draft list RV is wrong then do something about it now, before you start getting charged on the wrong figures from 1 April 2023. Or call us and we’ll help you out: 07881 503540 / richard.roberts@rvwcs.co.uk