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Introduction

Rates payments are a significant property cost for both occupiers and landlords.  Previously, rateable values which determine the actual payments were typically revised every five years. The last general revaluation was on 1 April 2017. The next scheduled rates revaluation should have been on 1 April 2021 in England and 1 April 2022 in Scotland. Due to the COVID pandemic, both have been delayed until 1 April 2023.

2017 rateable values (RVs) should reflect the rental value of a property as at 1 April 2015. After the 2023 Rates Revaluations, rateable values in England will represent rental values as at 1 April 2021 and in Scotland they will reflect rental levels as at 1 April 2022.

The actual rates bill will be based on the rateable value x multiplier (see the Multiplier / Rate Poundage page).

Rateable values are determined by the VOA in England & Wales and the Assessors Department in Scotland. These rateable values can be challenged albeit the respective appeal systems are very different. Rateable values can be checked here:

England & Wales – Find and check your business rates valuation – GOV.UK (www.gov.uk)
Scotland – Scottish Assessors – Scottish Assessors Association website (saa.gov.uk)

In England & Wales the ‘Check, Challenge, Appeal’ system has been introduced.  This requires the ratepayer to provide information to the Valuation Office relating to the physical aspects of the property’s valuation.  Only once these factual matters have been checked, can the rateable value be challenged, with ratepayers then making further detailed representations to the VOA. The VOA should then revert to the ratepayer either agreeing or disagreeing with the ratepayers. If the ratepayer is dissatisfied with that response, they may then pursue an appeal to the Valuation Tribunal and charges will apply at that stage.

In Scotland, the appeal process is currently under review. It is highly likely that the new appeal system will initially allow the ratepayer to lodge a proposal after draft rateable values are published in November 2022. This proposal will require detailed supporting evidence. The proposed timetable for proposals will be restrictive. If the Assessor does not agree with the proposal the matter can escalate to an appeal.

Appeal Rights

Revaluation Appeal Process – England & Wales

The English / Welsh appeal system involves 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 into 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.

Revaluation Appeal Process – Scotland

There will shortly be a significant revision of the appeal process and it is recommended that ratepayers take specialist advice. A Scottish Government consultation on appeal reforms was conducted in December 2021 and the outcome is not yet published or finalised at the time of writing.  Based on the consultation documents, it is likely that a ratepayer will be able to lodge a proposal after draft rateable values are published at the end of November 2022. This proposal will require the ratepayer to provide detailed supporting evidence, which may be challenging for unrepresented ratepayers. The proposed regulations intend that, after a proposal is lodged, further evidence will not be able to be submitted at a later date, unless satisfying particular criteria.  The intended timetable for submission of proposals will be restrictive, with all proposals required to be lodged by 31^st July 2023. The Assessor will issue a determination and if the Assessor has not agreed with the terms of the proposal, the matter can escalate to an appeal. An appeal can only be pursued where a valid proposal has been completed. The appeal will be determined by a local and independent Valuation Appeal Committee.

Material Change of Circumstance Appeals (MCC)

Beyond the revaluation appeal process, 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.

Multiplier / Rate Poundage

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 and also for certain hospitality categories in Scotland which may distort this bill calculation. Advice should be sought on transitional relief.

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

Retail, Hospitality and Leisure Reliefs (COVID Response)

England Retail Rate Discount – England

Since 2019/20 the UK Government has provided retail properties in England with a rates discount. In 2020/21, as part of the Coronavirus response, this discount was extended to hospitality sectors and the discount increased. Retail, Hospitality and Leisure (RHL) properties received 100% rates relief for the entirety of 2020/21. In 2021/22 this relief continued with qualifying properties receiving 100% rates relief until 30 June 2021, followed by 66% relief from 1st July to 31 March 2022, capped at £2m for businesses required to close premises on 5th January 2021 and capped at £105,000 for other eligible businesses. In 2022/23 the relief will be 50% up to a cash limit of £110,000 per business.

 Scotland – Retail Hospitality, Leisure and Aviation Relief

Unlike England, until the coronavirus pandemic, there was no specific retail, hospitality and leisure relief. However, from 1 April 2020 RHL (and aviation) properties received 100% rates relief for the entirety of 2020/21 & 2021/22. In 2022/23 the RHL relief will be reduced to 50% for 3 months only and this will be capped at £27,500 per ratepayer. These businesses will pay 100% thereafter. These reliefs apply to properties being used for these purposes on any given date within the relevant period.

Wales – Retail Hospitality, Leisure and Aviation Relief

Since 2019/20 the Welsh Government provided ‘High Street’ properties with a modest rates discount (up to £2,500 for RV’s <£50,000). As part of the Coronavirus response, in 2020/21 & 2021/22 retail, hospitality, leisure and charities with properties with an RV <£500,000 received 100% rates relief for the entirety of those years. In 2022/23 the relief will be 50% for the entire year, and this will be capped at £110,000 per business

Small Business Rates Relief

England – Small Business Rates Relief

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 will keep getting any existing relief on your main property for 12 months.  You can still get small business rates 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)

Business rates relief: Small business rate relief – GOV.UK (www.gov.uk)

Scotland – Small Business Rates Relief

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 

Wales – Small Business Rates Relief

The Welsh Government provides non-domestic rates relief to eligible small businesses. Eligible business premises with a rateable value of up to £6,000 will receive 100% relief; and those with a rateable value between £6,001 and £12,000 will receive relief on a tapered basis from 100% to zero. Business Rates Relief in Wales | Business Wales (gov.wales)

Liability Calculation

The actual rates bill will be determined by multiplying the rateable value by the appropriate rate poundage / multiplier.  However, this calculation may also be influenced in England by ‘transitional relief’ (which phases in larger increases or decreases in a bill, which would follow a rateable value change at a revaluation).

Empty Property Relief

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

England – Empty Relief

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

• Listed buildings
• Charities
• Community Amateur Sports Clubs (CASCs)
• Insolvency
• Properties with a rateable value less than £2,600

Anti-avoidance provisions have been introduced, preventing owners from constructively vandalising their own properties. Business rates relief: Exempted buildings and empty buildings relief – GOV.UK (www.gov.uk)

Scotland – Empty Relief

A vacant property qualifies for 50% relief for first the 3 months with only 10% relief thereafter.  Industrial properties qualify for 100% relief for the first 6 months they are vacant, with 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 (or 6) months 50% empty property relief. There are Limited exemptions which qualify for indefinite 100% relief whilst vacant.

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

Responsibility for empty rates relief will be devolved to each local council area with effect from 1 April 2023. Changes to the relief system should be anticipated. Reliefs for empty or newly re-occupied properties – mygov.scot

Wales – Empty Relief

Empty business properties are exempt from paying business rates for 3 months after the property becomes unoccupied. Vacant industrial properties have a 6 month exemption.

There are additional exemptions for certain types of property or for properties under a set rateable value. These include:

• listed buildings which are exempt until they become occupied again
• buildings with a rateable value under £2,600
• properties owned by charities, which are exempt if the property’s next use is likely to be wholly or mainly for charitable purposes
• community amateur sports club buildings which are exempt if their next use is likely to be wholly or mainly for a sports club
• a business whose owner is a company which is subject to a winding-up order made under the Insolvency Act 1986 or which is being wound up voluntarily under that Act
• a business whose owner is a company in administration
• a business whose owner is entitled to possession only in his or her capacity as the personal representative of a deceased person.

Business Rates Relief in Wales | Business Wales (gov.wales)

Scotland – Fresh Start Relief

A ‘Fresh Start’ scheme will give new occupants of all property types which have been empty for +6 months, 100% relief for the first year of occupation. The rateable value of a qualifying property must be beneath £95,000. Reliefs for empty or newly re-occupied properties – mygov.scot

Scotland – Business Growth Accelerator

New build premises

If your premises are new build, you’ll not have to pay non-domestic rates until 12 months after the building was completed. Non-domestic rates also do not have to be paid on new builds until they’re occupied. New tenants will then qualify for business growth accelerator relief for 12 months. From 1 April 2021, new builds that are unoccupied may be able to claim relief for up to 3 years.

Expanding or making improvements to your premises

If you have to expand or make improvements to your property the non-domestic rates you’re charged will not change for 12 months. They will continue to be based on your old rateable value for this period of time.

 Business Growth Accelerator Relief – mygov.scot

Contact our head of rating for further advice:

Craig Wilson – 0131 558 5145 email: cwilson@eyco.co.uk