Legal advice on challenging your new business rates

New rateable values – has yours changed?​

The Government’s Valuation Office Agency (VOA) has issued new draft rateable values for non-domestic properties (business properties), which take effect from April 2017, seven years since the last valuation was updated. You can check these on the VOA website along with an estimate of your premises business rates from April next year. However, final confirmed rates, taking account of transitional relief and supplements (on which consultation has closed) will not be available until April.

How could rateable value changes affect your premises?​

The rateable value is essentially an assessment of the annual rental value of your property (updated valuations are based on rental value of properties on 1 April 2015). For licensed premises, the rateable value is determined by the annual turnover (excluding VAT) of the licensed premises called the ‘fair maintainable trade’, which takes account of the type of premises, its location, revenue from food and drinks sales, gaming machines, sports screenings, etc.

Your property’s rateable value is important because your local council uses this to calculate your business rates bill. It is also important for licensed premises because the value determines certain fees payable under the Licensing Act 2003. Rateable values are separated into five different ‘bands’ which are labelled A to E. Band A covers premises with a rateable value of £0-£4,300 whereas band E covers premises with a rateable value of £125,001 or above. Fees such as a premises licence annual fees, applications for a new premises licence or variation of an existing licence and late-night levy payments (if adopted in your area and applicable) are all calculated upon the rateable value of your premises and the ‘band’ in which it falls. Consequently a change to your premises rateable value could impact on the amount you pay in licensing fees, if this puts your premises into a different band, as well as business rates.

Checking and challenging your new valuation​

It is important to check your draft premises valuation and details are correct, incorrect valuations could have financial consequences for your business. If a mistake has been made to the property valuation, eg, property information is incorrect, the VOA can be notified of that now. Otherwise, a formal appeal on the new rateable values can only be made from April 2017 using the new ‘Check, Challenge, Appeal’ system. It is anticipated this new system will increase the burden on ratepayers to substantiate claims for a reduction, hence, where you are considering an appeal it is best to seek advice and consult a rating expert before challenging your valuation.

In summary, ensure you review your premises new valuation and any likely impact to licensing fees as well as
business rates. Being proactive now will allow you to plan and prepare for any financial effect on your business in six months’ time, when the changes take effect.