Government's business rates proposal would 'fail' to deliver meaningful reform

Government's proposed section of the Enterprise Bill aims for a quicker, clearer and more transparent appeals system, but BNP Paribas Real Estate claim the proposals fail on all three fronts.

Head of rating Jim Ruthven said: “These proposals are missed opportunity for meaningful reform.

“If introduced, the proposals mean businesses will wait for almost three years for an appeal to be decided.”

The proposed reform would see three stages – check, challenge and appeal. 'Check' involves a top-line look at how the rateable value is calculated and allows businesses to point out obvious errors.

The 'challenge' stage involves a more detailed dialogue with the Valuation Office Agency (VOA) on contentious points, which then makes a judgment. The final stage allows a business to make an appeal against this judgment to the Valuation Tribunal.

“This pain could be avoided by the Valuation Office Agency (VOA) letting ratepayers see the evidence it has used to value properties at a much earlier stage,” Ruthven said.

“As it stands, the VOA insists that legislation prevents it from releasing such information, meaning businesses will need to enter the tribunal arena in order to obtain the information that has been used to assess their property -  if they haven’t aren’t deterred by a proposed entry fee.

“While this secrecy remains, the proposed reforms will unfortunately result in the same number of challenges as we see at present.”

 The British Beer and Pub Association (BBPA) and Association of Licensed Multiple Retailers (ALMR) are keen to see the appeals system streamlined but both have concerns about the new plan.
The industry bodies stress the importance that the VOA makes enough information available to publicans on their valuation.

The ALMR says the system could be time-consuming and benefit nobody if transparency is not guaranteed early in the process.

In response to the government consultation, BNP highlighted the following points:

• The success of an appeal system is dependent upon early disclosure of rental evidence which the VOA insists legislation prohibits them from releasing. The proposed ‘check’ stage is, on the face of it, an opportunity for early dialogue in order to narrow down the issues in dispute at the next two stages of the process. However, the timescales are too protracted – the first two stages from start to finish will take almost three years (34 months).  And then a further appeal to the Tribunal may be required.​
• There has been a missed opportunity to bring forward legislation in the Enterprise Bill that could have explicitly set out that the VOA is able to disclose rental information to ratepayers, thereby bringing greater confidence in assessments and reducing the number of appeals (the VOA claims it is barred from doing so by the Commissionaires for Revenues and Customs Act). This means ratepayers will still need to enter the tribunal arena in order to obtain the information that has been used to assess their property, albeit some will be deterred by the proposed entry fee.​
• Should the VOA not state at the earliest point in time the information it has used then the ratepayer will never have confidence in the system, and so multiple checks and challenges will still be made in order to extract this information from the VOA. The proposed system will still result in broadly the same amount of checks and challenges as currently experienced in the form of proposals.​
• The VOA is to be the judge and the jury as to whether or not the ratepayer’s challenge is compliant.  Such a measure would be wholly iniquitous as the VOA would be the sole arbiter as to what constitutes a valid challenge. There needs to be a right of appeal to the Valuation Tribunal for England (VTE) on the grounds of the validity of a challenge.​