Tax & admin · 8 December 2017

“Tortuous” business rates appeals under fire after just 400 firms challenge bills

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Of 5,650 requested business rates checks, 2,260 remain unresolved

Only 400 company owners have been able to formally challenge new property tax revaluations, official figures have revealed, as firms struggle to take claims forward under the new business rates appeals system.

The latest statistics from the Valuation Office Agency (VOA), the body within HMRC responsible for handling business rates appeals, have raised questions regarding the complexity of the three-stage “check, challenge, appeal” process, amid concerns owners of small firms are struggling to understand to system.

According to the VOA, just 5,650 owners across England asked for their business rates to be “checked” between 1 April 2017 and the end of September 2017, compared to the 115,220 during the same period in 2010.

Of the 5,650 checks, 2,260 remain unresolved and just 400 have progressed to the formal “challenge” stage.

Meanwhile, separate data from the Valuation Tribunal Service revealed that no challenges from this year’s business rates revaluation had reached the final “appeal” stage by the end of September.

The complexity of the business rates appeals process has been put directly to government, after cross-bench peer John Lytton told the House of Commons earlier this year that “the most tortuous” system had been designed to “prevent appeals”.

500,000 business owners face property tax rise

After the latest business rates revaluation came into effect on 1 April 2017, thousands of firms were hit with increases reflecting seven years of property price increases, with high street retailers and pubs among those hit hardest.

It was anticipated that many of the 500,000 business owners facing a property tax increase would challenge new bills, particularly given that after the previous revaluation in 2010, 17,500 appeals were lodged within the first month.

Despite the 95 per cent drop-off in business rates appeals, a Freedom of Information Request to the Office for Budget Responsibility (OBR), from ratings advisor Atlus Group, showed that councils in England had made provisions for an average of 3.2 per cent of property tax receipts to be returned to owners following successful appeals – a total of £4.5bn over the current business rates regime until 2022.

Paying over the odds for your premises? Read our guide to the business rates appeals process

Responding to the latest figures, Alex Probyn, president of UK business rates at Atlus Group, warned that “genuine concerns” remained over changes to the appeals process.

“The reality is that since April there has been a big push to clear appeals going back to the 2010 ratings list in order to get rebates spanning seven years back to business. Work on the revaluation is now starting in earnest which has allowed time for the ongoing improvements to the new system to be implemented and bed in,” he said.

However, Probyn suggested that once ratings specialists got their heads around the new process – Atlus Group itself is currently undertaking due diligence on over 63,000 properties that could be subject to appeal under 2017 revaluations – the number of successful challenges could rise. 

He added: “The new regulations are here to stay and need more time to be made to work. While there remain genuine concerns in the ratings community, we believe the new regulations can be made to work through co-operation and anticipate the numbers rising dramatically in the new year as advisers assemble the evidence required.”

A spokesman for the VOA has claimed the figures were skewed due to failings in the old process.

“The previous appeals system was broken and encouraged speculative appeals – around 70 per cent of appeals did not result in any change in valuation.

“These statistics cover the first six months of a brand new system. It’s still early days and we continue to improve the functionality of the service.”

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Tax rebates

 

Seven-year business rates appeals backlog leaves thousands of rebates pending

A fifth of all business rates appeals made since 2010 remain unresolved, new data has revealed, with thousands of company owners still due a government tax rebate.

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ABOUT THE EXPERT

Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.

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