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News Release

London

We need to voice our displeasure with government proposals to reform business rates appeals

There could be huge ramifications for rate payers and the entire rating system says JLL’s Head of Rating


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There have been calls for reform to the business rates system for some time now and in response to this the government proposed a new system of ‘check, challenge and appeal’.

 
JLL was one of many who replied to the initial consultation providing a balanced response and highlighting areas of concern taking into account the practical realities of the changes.

 
On 6th July 2016 the government released the outcome of the consultation which did nothing more than simply confirm they were planning to move forward with the ‘check, challenge and appeal’ process and that the next consultation would deal with statutory implementation. This consultation was released this month (16th August).  The proposed plans, which are up for consultation until October 2016, will make it almost impossible for businesses to contest their rates and potentially has huge ramifications for a the entire rating system. 

 
The proposed changes include:

 
Fees – to be charged when making an appeal
Penalties – for providing false information knowingly, recklessly or carelessly
Valuation Tribunal - to have a limited in its ability to order a change in rateable value to circumstances where the VOA’s valuation is “outside the bounds of reasonable professional judgement”
Material change in circumstance (MCC) appeals – their treatment under the new three-stage system is not yet defined and the government has requested further feedback on this through the consultation process.  As presently drafted, the revised regulations would preclude MCC appeals being made  
Local authorities – will be able to receive information from/provide information to the Valuation Office Agency (VOA) regarding ‘checks’ and ‘challenges’ on properties in their area

 
JLL is very concerned by these proposals, particularly the suggestion to introduce a valuation tolerance test for appeals as to whether a reduction to the existing rating assessment sits “outside the bounds of reasonable professional judgement”. Who sets these thresholds and who decides if a change in valuation, whilst merited, sits within these bounds? Will it be the VOA?

 
Most taxpayers would consider any inaccuracy in the amount of tax they pay to be significant enough to merit a revised tax bill and reduced liability and they will rightly be horrified by the changes that are being proposed which appear to make the VOA judge, jury and executioner.

 
The lack of rigour that will be facilitated by such a change will result in an under resourced VOA being emboldened to make assessments they perhaps would not have otherwise made and rate payers having very little chance of challenging these decisions.  This will result in increased unfairness and inconsistencies and bring the system into disrepute.  

 
The government will argue that the majority of cases should be dealt with at ‘check’ and ‘challenge’ stages. The reality is that if the VOA is presented with evidence by an agent or rate payer suggesting that a 5% reduction is appropriate, it would appear that they can simply decide to do nothing and let the matter proceed to VTE who will not change the rating list.

 
Rate payers want to know that the tax they are paying is both correct and fair between competing businesses.  Even if reductions and valuation issues are sometimes small, rate payers should be entitled to the correct answer and pay a tax based upon the right value. JLL believes this proposed change is a step too far and will be prejudicial to ratepayers so it is encouraging all businesses to respond to the consultation voicing their displeasure with this change in an attempt to get it reversed.

 
Tim Beattie, Head of Rating, JLL UK
 
For more information, read JLL's recent business rates research paper