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Revaluation - General

The Valuation Office Agency and Scottish Assessors typically revise the rateable values of all non-domestic (business) properties every five years, with the last revaluation taking place on 1 April 2010. However the scheduled revaluation in 2015 was postponed and has recently taken effect from 1 April 2017. There was a revaluation in Northern Ireland in 2015 (rateable values in Northern Ireland are set by the Land and Property Services www.lpsni.gov.uk).

A rates revaluation is designed to redistribute the tax burden by reflecting changes in property values in the preceding revaluation period. Rateable values will broadly reflect the annual open market rental value of each property prevailing at the statutory valuation date. The statutory valuation date for the 2017 Revaluation is 1 April 2015.


2017 Revaluation

Current rateable values effective from 1 April 2017 reflect the rental value of the property as at April 2015. Rateable values for all properties in England & Wales can be accessed via the VOA web site https://www.tax.service.gov.uk/view-my-valuation/cca/search. The rateable values for Scottish properties can be accessed on the Scottish Assessors Association portal at www.saa.gov.uk.


Appeal Rights

Revaluation Appeals

England

The English appeal system has been subject to significant change with the very recent introduction of the ‘Check, Challenge, Appeal’ process. The Non-Domestic Rating (Alteration of Lists and Appeals) (England) (Amendment) Regulations 2017 (SI 2017/155) and The Valuation Tribunal for England (Council Tax and Rating Appeals) (Procedure) (Amendment) Regulation 2017 detail these amendments which are summarised below. 

The ratepayer or the appointed agent must first of all register via the Government Gateway portal to ensure they have the legal right to review the rateable value. Both ratepayer and agent must register and offer authentication to use the portal.  Once this process is satisfied, the ratepayer or appointed agent can progress to the ‘Check’ stage.

CHECK – Upon request the VOA must provide information it holds relating to the property that has been used in the valuation of that property. The VOA may then specify any missing information that they expect to be returned by the ratepayer. The ratepayer must then confirm the accuracy of the VOA information or highlight any error or inaccuracy. The ratepayer must also confirm the accuracy of the information they have provided to the VOA.

This ‘Check’ stage is finalised when the VOA either confirms the accuracy of the information OR that any proposed changes have been accepted. If the VOA makes no response, the stage is assumed complete after 12 months has elapsed from the confirmation of the information to the VOA.  This agreed information is then accepted to be the factual information to be used through the remainder of the appeal process. Only once the check stage has been completed, the agent or ratepayer may progress to a ‘Challenge’.

CHALLENGE – A proposal to ‘Challenge’ the valuation can be made only once the ‘Check’ stage is complete. There will be a 4 month deadline after completion of the ‘Check’ stage. If the 4 month time period has elapsed, it will be necessary to repeat the ‘Check’ stage referred to above. The ‘Challenge’ will require (i) grounds for the challenge (ii) detailed reasons and evidence and (iii) an alternative and specific revised valuation (not a generic figure that was previously considered acceptable under the earlier appeals process).  The VOA determines if sufficient information is provided to satisfy the requirements of the ‘Challenge’ process. This stage can either lead to an agreement and revision of the rateable value OR withdrawal of the proposal. If no agreement is reached, the VOA will issue a ‘Decision Notice’ setting out its decision together with reasons. Only once a Decision Notice has been issued OR if 18 months has elapsed from the date of the proposal without a decision, will it be possible to make an appeal to the Valuation Tribunal.

APPEAL – An ‘Appeal’ must be made within 4 months of (i) the date of the decision notice OR (ii) upon the expiry of the aforementioned 18 month time limit. The appeal can be against the notice itself OR the failure to issue a notice. This process will involve an appeal fee, generally of £300 unless the proposer is a small business. The appeal must include a copy of the Decision Notice, a copy of the proposal and any evidence forming part of it and any information provided by the VOA as part of the check stage. The Tribunal will be restricted to considering only this evidence OR any agreed additional evidence, if it could not have been reasonably known at the time of the proposal being made. The Tribunal must not take in to account matters that did not form part of the initial grounds of the proposal and were not raised in evidence. The appeal fee will be refunded for successful or partially successful appeals.

Scotland

There has been no significant change to the current appeal process in Scotland. An appeal against the revaluation figure must be lodged by 30 September 2017. This appeal must properly identify the appeal property and contain an outline of the grounds of appeal, an alternative rateable value and an effective date.

Interim appeal rights also exist when a ratepayer acquires a new interest in a property or if there has been a change in circumstances. In Scotland, a new occupier appeal must be lodged within 6 months of acquisition. Also, if the rateable value is amended by the Assessor in Scotland, an appeal must be lodged within 6 months of the date of the Valuation Notice.

Material Change of Circumstances (MCC)

In addition to the above, an appeal can be submitted where a change has occurred whether in physical terms to the property or if the amenity has been affected in some way (material change of circumstances or MCC). Such changes must have had a direct effect on the level of value of the property. Alternatively the beneficial occupation of the property by the ratepayer may have been affected to some degree. The most relevant examples are increased vacancy rates, competitor openings, roadworks or general disturbance.

In England, MCC appeals are once again subject to the constraints under the new ‘check, challenge, appeal’ changes detailed above.

In Scotland, various Court decisions make successful 'material change of circumstance' appeals difficult to achieve. It is now a complex area of legislation and further guidance should be sought.


Rate Poundage - see the figures here

The rate poundage varies between England, Scotland and Wales and determines the actual bill that the ratepayer will pay. Typically the rates bill will equate to the ‘RV x rate poundage’. However a transitional relief scheme exists in England which may distort this calculation.

Non-Domestic Rates are devolved to the Scottish and Welsh Parliaments and as such decisions on matters such as the rate poundage and the various reliefs in Scotland and Wales are made by those parliamentary bodies.


Small Business Rates Relief (SBRR) - England

A ratepayer with a single property with an RV less than £12,000 will qualify for 100% rates relief. If that property has an RV between £12,001 and £15,000 the relief will reduce gradually from 100% to 0%.

If you acquire a second property, you’ll keep getting any existing relief on your main property for 12 months. You can still get small business rate relief on your main property after this if both the following apply:

  • none of your other properties have a rateable value above £2,900
  • the total rateable value of all your properties is less than £20,000 (£28,000 in London)

https://www.gov.uk/apply-for-business-rate-relief/small-business-rate-relief

Small Business Rates Relief (SBBS) – Scotland

A ratepayer with an individual property with an RV up to £15,000 will qualify for 100% rates relief. If the rateable value is between £15,001 and £18,000 the relief will be 25%. If the ratepayer has more than one commercial property with a combined RV between £18,001 and £35,000, they will get 25% on each individual property with an RV less than £18,000

 https://www.mygov.scot/business-rates-relief/small-business-bonus-scheme 


Liability Calculation

The actual rates bill will be determined by multiplying the rateable value by the appropriate rate poundage. However, this may also be influenced in England by transitional relief.


Transitional Relief – What is it?

Transitional relief limits bill increases and decreases between rates revaluations. The TR scheme only applies in England (although there is a scheme for small properties in Wales). There is no TR in Scotland.

The TR scheme sets out the % increases or decreases permitted ‘year on year’ in a revaluation period, which will cap rates bill increases OR reductions, until the true rates bill eventually becomes payable.

As a guide, a medium sized property with an RV between £20,000 (£28,000 in London) and £100,000 where the rateable value has increased at the 2017 Revaluation by more than 16.5% will benefit from TR in 2017/18. If the rateable value has fallen by more than 6.5% the bill reduction will be limited by TR in 2017/18. 

A large property with an RV more than £100,000, where the rateable value has increased at the 2017 Revaluation by more than 47%, will benefit from TR.  If the RV has reduced at all, it is likely that downwards TR will limit the bill decrease.

The transitional limits for the 2017 Rates Revaluation are shown below:

  2016/17 to 2017/18 2017/18 to 2018/19 2018/19 to 2019/20 2019/20 to 2020/21 2020/21 to 2021/22
  + limit / -limit + limit / -limit + limit / -limit + limit / -limit + limit / -limit
Small  Property RV <£20,000 (£28,000 in London)  to £100,000 +5% / -20%
+7.5% / -30%
+10% / -35%
+15% / -55%
+15% / -55%
Medium  Property RV >£20,000 (£28,001 in London)  to <£100,000 +12.5% / -10%
+17.5% / -15%
+20% / -20%
+25% / -25%
+25% / -25%
Large Property RV >£100,001 +42% / -4.1% +32% / -4.6% +49% / -5.9% +16% / -5.8% +6% / -4.8%

 


Empty Property Relief

There are different schemes for the rating of unoccupied property in Scotland and England & Wales.

England and Wales
Persons entitled to possession are liable for 100% of the occupied liability after three months 100% (six months for industrial properties) relief. There are however limited exceptions summarised below:

  • listed building
  • charities
  • Community Amateur Sports Clubs (CASCs)
  • Insolvency
  • Properties with a rateable value less than £2,600

Introduction of anti-avoidance provisions which prevents owners from constructively vandalising their own properties. Provision has been made that unoccupied property whose physical condition has been changed could be valued in its previous state.

Scotland
A vacant property qualifies for 50% relief for first 3 months (industrial 6 months) with only 10% relief thereafter. The relief is associated with the property not the ratepayer. Therefore if a property has been vacant and, for example, the landlord then becomes responsible for rates payments, the previous ratepayer will have exhausted the 3 months 50% empty property relief.

There are Limited exemptions which qualify for indefinite 100% relief whilst vacant.

  • Listed building
  • Industrial properties
  • Insolvency, bankruptcy or administration
  • Legal prohibition for occupying the property
  • Properties with a RV less than £1,700

A ‘Fresh Start’ scheme will give new occupants of shops or offices which have been empty for at least a year 50% relief for the first year of occupation. This is, however, applicable to shop, office, restaurant, pubs or hotels with a rateable value of £65,000 or less.

The 'New Start' scheme also offers developers up to 100% relief on new build vacant properties, which would be applicable for a maximum of 18 months. This scheme will apply for a 3 year period and is subject to EU limits capping the relief at €100,000 over the 3 year period.